Lower revenue may lead to loss of airline partners
The Commonwealth Ports Authority fears that, with its revenue significantly decreased and its American Rescue Plan Act funds nearly depleted, the most viable option so it could survive would have to impose higher rates, which could lead to a loss in the CNMI’s airline partners.
The poor state that the CPA will soon find itself once it completely exhausts its federal ARPA funding became a focal point of discussions yesterday at a public hearing the Senate Public Utilities, Transportation, and Communications Committee had originally called to talk about the CNMI’s interisland travel issues.
One of the witnesses called to testify on the CNMI’s air transportation issues, CPA executive director Christopher Tenorio, told committee members CPA’s revenue has drastically decreased in the past few years. He said nearly all of CPA’s airline partners suspended their flights to Saipan at the height of the COVID-19 pandemic.
Thankfully, CPA received over $2 million in ARPA funds back in 2021 to help them weather out the storm, he said. Unfortunately, those funds have been stretched as far as possible, but CPA still faces a massive decline in revenue, with the CNMI still trying to regain its economical footing.
CPA fears that, if no subsidy can be provided for CPA to continue operations, it may have to soon increase its airport rates just to get by, possibly risking the loss of airline partners.
“It is also crucial to note that CPA’s revenue has drastically decreased beginning with Super Typhoon Yutu and then later amplified by COVID-19’s impact on the tourism industry. Further, CPA is stuck between a rock and a hard place when it comes to taking on additional airport expenses. This is because taking on additional airport expenses will lead to an increase in airport rates, which could potentially drive away interested airline partners and further compound the problem,” said Tenorio.
On top of the drop in revenue, CPA also faces other dilemmas such as the ongoing litigation between the agency and interisland air service provider Star Marianas Airlines.
He said the commuter airline currently owes CPA over $4 million, which is currently being disputed in the Superior Court.
As a possible remedy, CPA urged the Senate to help CPA in crafting a Small Community Air Service Development Program grant application that could, in turn, address some of the CNMI’s interisland air service issue through much needed funding.
“I urge the committee to not only support the hardworking staff of CPA but to also support collaboration between the CNMI government and CNMI business leaders in crafting an effective Small Community Air Service Development Program grant application. This program can be a vital tool in helping the CNMI address air service and airfare issues. The solutions offered by this program include revenue guarantees and financial assistance for marketing programs, startup costs, and studies. A competitive application requires support from the entire community,” he said.