Northwest gets $350K incentive from MVA

For coming to the CNMI’s rescue after Japan Airlines announced its planned pullout, Northwest Airlines stands to receive a huge chunk of the Marianas Visitors Authority’s $1-million supplemental budget from the central government.

Yesterday, the MVA board of directors approved a new breakdown of the $1-million budget, granting $350,000 in incentive and direct support to Northwest.

Specifically, the new budget allocates a $250,000 incentive to Northwest for the Osaka-Saipan service; $65,000 for the new flight’s inauguration on Oct. 1; and $35,000 for printing of brochures promoting the new Osaka service.

MVA-Japan managing director Michael Merner said, however, that the latest budget—the third draft prepared by MVA-Japan over the last six weeks—might still undergo another revision, depending on Northwest’s plans regarding the nighttime Tokyo service that would be left by JAL and the result of ongoing market research projects being conducted on the Japanese tourism market.

According to Merner, $380,000 of the $1-million budget will be applied to airline incentives to encourage air carriers to operate new services out of Japan to the CNMI. This includes the $250,000 for Northwest.

The remaining $130,000 will be reserved for other new flights including a possible nighttime Tokyo service which, Merner admitted, was not likely to happen given the lack of available airline slots at the Narita International Airport.

Merner added that, if no other flights are launched, then the $130,000 funds will be used to promote current flights out of Japan.

The supplemental budget will also be tapped to provide a total of $265,000 in incentive funds for travel agents, who actively sell CNMI tour products based on the new Osaka and existing Nagoya and Narita flights.

Merner said that for the Osaka service, class “A” companies such as JTB, R&C, and HIS, would receive $15,000 incentive if they exceed the set target by 5 percent, and $20,000 incentive for sales exceeding the target by 10 percent.

Meanwhile, class “B” companies such as KNT, NTA, and HEI, would receive $10,000 incentive for sales 5 percent over the target and $15,000 incentive for sales 10 percent over the target.

For the Nagoya flight, MVA has set a sales target of 20,500 airline seats from the “Shimoki” period, which runs from October 2005 to March. This represents a 24-percent increase from Northwest’s sales in Shimoki 2004, which totaled 16,500 airline seats.

MVA-Japan, with assistance from Northwest, identified four travel agencies eligible for the incentive: JTB, R&C, HIS, and NTA.

These agencies would receive $10,000 each if they exceed the target by 5 percent, and $15,000 for sales 10 percent over the target.

The $100,000 remaining from the agent incentive budget will be applied either to a new Narita nighttime flight or as an ongoing agent incentive funds for the April to September 2006 period, said Merner.

Another $100,000 is allocated for MVA’s tie-ups with television networks in Japan. Merner stressed that the JAL’s pullout would cause the CNMI to lose advertising dollars. Hence, the CNMI should work harder to secure visibility in Japan.

MVA is also setting aside $100,000 for the printing of marketing collaterals such as CNMI maps, sales guides and manuals for agents, brochures, and posters.

For market research, the budget is $45,000. Merner reported that three research projects are in progress to establish how much Japanese tourists are willing to pay to travel to the CNMI, assess current satisfaction levels of Japanese tourists visiting the CNMI, evaluate current perceptions of the CNMI in Japan, and determine destination enhancements needed in the CNMI.

Some $10,000 is reserved for miscellaneous expenses.