CONDITIONAL APPROVAL FOR CNMI AIRLINE INCENTIVES

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By Lindablue F. Romero

SAIPAN, Northern Mariana Islands (July 16, 1999 – Saipan Tribune)---The Commonwealth Ports Authority board yesterday gave conditional approval to Northwest Airlines’ request to extend the CNMI’s airline incentive program --a reduction in arrival and departure fees -- another seven months, hoping it means the company will bring more tourists to the Northern Marianas.

However, failure to meet the three conditions imposed by January 2000 means that the incentive program would still end on February 29, 2000.

Carlos H. Salas, CPA Executive Director, outlined the following requirements that the airline company must meet:

The decision to extend Northwest's request was arrived at during a special board meeting yesterday.

Four board members were involved in the meeting, which was not attended by CPA Board Chairman Roman S. Palacios, who is on leave.

Salas explained that the ports authority will still press for a meeting with Martin Gross, Northwest General Manager for the Philippines and Micronesia, to clarify once and for all the airline's plans in the Northern Marianas.

In a move to boost traffic, CPA earlier granted a 50 percent cut in departure and arrival fees to all signatory airlines servicing the CNMI, to revive the ailing tourism economy. The incentive took effect on March 1, 1999.

By March 2000, the ports authority will implement new airport rates, as it is under pressure to generate much-needed revenue to meet debt service coverage.

Judge Jose Dela Cruz, counsel for CPA, warned the board that the ports authority would be in technical default if it failed to raise the money needed to pay back its debt.

At the same time, board members agreed that in case an incentive is granted to Northwest, other airlines servicing the Northern Marianas should be given the same extension period to prevent any complaints of discrimination.

Airlines will be able to utilize the incentive if they provide an additional 15 percent increase in the total number of passengers that they bring into the Commonwealth.

CPA will compute the grant of the incentive by using an airline’s first six months of traffic in fiscal year 1998 as the base.

Northwest said it is planning to replace its current DC10 aircraft with a B747 in anticipation of an increased influx of visitors this summer.

In a letter to CPA, Gross earlier warned that the B747 would be assigned to other competing Northwest Airlines' regions, which are simultaneously pushing for an upgrade of aircraft, if the ports authority failed to make a decision.

Upgrading the DC10 to a 371-seater Boeing 747 translates to an additional 49 passengers per flight.

For additional reports from The Saipan Tribune, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Saipan Tribune.

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