JAL bids adios to NMI

Just recovering from the impact of the wars in Iraq and Afghanistan and the SARS epidemic from two years ago, the local tourism industry suffered another blow this year from Japan Airlines’ withdrawal from the Commonwealth.

JAL, which was flying at high load factor when it decided to stop regular flights to Saipan, cited several reasons for the pullout. These reasons included low profits on leisure passengers, low net pricing, Saipan’s crisis sensitivity, high operating costs, and the carrier’s selling off of its old DC-10 and 747 aircraft, which are used on the CNMI routes as part of JAL’s restructuring.

Reports about JAL’s pullout broke as early as May, sending the CNMI government scrambling for ways to get the air carrier to change its mind.

Gov. Juan N. Babauta led a delegation of government and business officials to Japan twice. They met with JAL representatives, as well as other airlines that may fill the vacuum to be left by JAL. Several incentive programs were also put in place to encourage airlines to serve the Saipan route.

Despite these efforts, the airline made the official announcement on July 29, 2005.

Effective Oct. 4, 2005, JAL canceled its daily DC10 flights from Narita and daily Boeing 767 flights from Kansai. The islands lost a total capacity of 182,000 airline seats annually from the pullout.

JAL’s withdrawal from Saipan, a destination it has served for 30 years, was described as the end of an era by the Hotel Association of the Northern Mariana Islands.

“This is really the end of a chapter in our tourism industry,” said HANMI president Lynn Knight.

She recalled that, at one point, the airline ran eight businesses in the CNMI, including Hotel Nikko Saipan and the La Fiesta Shopping Complex, which has been sold to the CNMI government.

“JAL has always been a huge investor in the Commonwealth. I still remember the grand opening of Hotel Nikko and La Fiesta, the JAL executives coming in and out of this island, and all the JAL executives and staff that worked here. So when I think of the pullout, I think about the history of the partnership between JAL and the CNMI,” said Knight.

Indeed, the Commonwealth lost more than the flights when JAL closed its Saipan office at the end of October 2005.

Soon after JAL’s pullout, Continental Micronesia laid off some of its employees. Continental provided ground-handling services to JAL.

DFS Galleria, the biggest shopping venue in the Commonwealth, cut the work hours of its employees. In early December, DFS let go of managers to cut operation costs.

Not even a small program such as the “Call-a-Ride” transportation service for people with disabilities was spared from the negative impact of JAL’s pullout. Pacific Development Inc. stopped the program starting Oct. 1, 2005 in an effort to streamline operations.

But not all hope is lost for the CNMI’s travel industry.

Northwest Airlines has stepped up to the plate and introduced daily nonstop flights between Osaka and Saipan beginning Oct. 1, 2005.

The new service is operated with Boeing 757-200 aircraft, with 20 seats in business class and 162 seats in coach class. It provides the destination 66,430 seats annually, a 24-percent drop from the 87,360-seat capacity of JAL’s old Osaka service.

The Commonwealth Ports Authority is actively lobbying Japan to provide Saipan the slot it needs for a new airline to be able to fly to the CNMI from the Narita International Airport in Tokyo.

There have also been reports of airlines eyeing the possibility of starting new flights to the CNMI. Most recently, the formation of a new company that may become the CNMI’s flag carrier was announced.

Air Saipan Ltd., it has been reported, has acquired two Boeing 757 jets and made an initial investment of $3 million to become a full-fledged airline based on the island.