NWA asked to reconsider flight cuts

Gov. Benigno R. Fitial has asked Delta Airlines/Northwest Airlines to reconsider its decision to reduce air services to the CNMI, saying the move threatens to jeopardize the Commonwealth’s primary tourism market, Japan.

The governor, in a letter to Delta Airlines executive vice president Glen W. Hauenstein, said the Commonwealth enjoys a long-standing relationship with Northwest Airlines Japan—ties that have created a win-win situation for both the company, the people, and the hundreds of Japanese travelers who visit the islands yearly.

“The anticipated reductions are of tremendous concern here in the Marianas as they jeopardize our relationship and the balance of the market, as Northwest Airlines is responsible for 100 percent of our lift from the key markets of Tokyo and Nagoya and until just two months ago, 100 percent of the lift from Osaka market,” said Fitial.

Although he said he can appreciate the demands of the current economic crisis that has hit the CNMI hard, Fitial also expressed wonder at the true reason behind the airline’s decision.

“The recent reduction in air service to the CNMI by Delta…only compounds our economic predicament. …While I understand we are all under pressure to return a profit, I am at a loss as to why Delta would reduce capacity at such a significant rate, especially when the CNMI has shared the risk in ensuring that Northwest Airlines achieves its revenue targets,” Fitial said.

He pointed out that industry data indicates that the Narita to Saipan morning flight is performing well, both in terms of load factors and yields, and so the reduction in capacity at Narita confounds the CNMI.

Fitial believes that the strength of the Japanese yen also provides additional positive opportunity from a currency and overseas demand standpoint.

Delta recently merged operations with Northwest. In the process, Delta had announced its commitment to expansion of macro level service and improved services.

“However, the CNMI seems to be receiving the exact opposite of that commitment,” Fitial said.

Given the longstanding relationship with Northwest, Fitial is requesting a reconsideration of the changes announced for the summer schedule.

“I hope we can find some mutually agreeable solution. If not, I will still value our relationship with NW…but I will need to direct our visitors authority to be more aggressive in its negotiations with other airlines,” the governor told the Delta executive.

Fitial said that move to negotiate with other airlines will impact Delta’s bottom line.

The governor said he wants the CNMI to be more than a two-carrier market out of the key Narita and Nagoya gateways.

“But the reality is…as of now, that’s not the case,” he added.

‘Direct, indirect economic impact from lost seats’

In a presentation to members of the House Committee on Commerce and Tourism yesterday, the Marianas Visitors Authority disclosed that the CNMI would lose 320,804 seats this fiscal year with the reduction of air seats from the Japan market.

MVA managing director Perry Tenorio said the downsizing of the Northwest Airlines aircraft from A330 to B757 will result in a total loss of 116 seats. The A330 aircraft has a 298-seat capacity, while the B757 configuration only has 182 seats.

Northwest Airlines has four daytime flights from Japan—two from Narita and one each from Osaka and Nagoya.

Asiana Airlines’ 177-seater planes are also expected to bring only 12,744 in the 72 days of its scheduled flights to the CNMI.

MVA said that, based on a load factor of 75 percent, the economic impact of the loss will translate to a $108.7 million loss annually in direct economic impact, while indirect economic impact to the CNMI is at $356 million.