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By Gemma Q. Casas

SAIPAN, CNMI (Marianas Variety, Oct. 12) –The U.S. Federal Aviation Administration has approved Palau Micronesia Air’s application to serve the Guam-Palau route on a regular basis, making it the first locally-owned airline in the Pacific Region to be granted such a privilege.

PMA founder and president Alan Seid said the inaugural flight between Palau and Guam was held on Sept. 21 and the airline is now serving the route regularly.

Seid admitted the airline’s passenger load at this time is still low.

He remains, however, optimistic the trend will change once Palau Air signs "interline" agreements with international airlines that bring tourists from Japan and South Korea to Guam.

"We’re very happy to have been able to inaugurate our flights to Guam.... It’s a very significant milestone that we have been able to achieve – obtaining the rights from the U.S. Department of Transportation, the approval of the Transportation Security Administration, the U.S. immigration and the FAA (Federal Aviation Administration) to fly to Guam," Seid told Variety in an interview.

"This is a milestone in Micronesia’s aviation history. This is the first time that a locally founded airline has ever been able to achieve that. It means that we’ve been reviewed, looked at and we met the standards of an international carrier," he added.

PMA currently uses a Boeing 737-300 leased from the New Zealand-based Airworks.

Aside from Guam, the airline also regularly flies twice a week to Manila.

Many of Palau’s nonresident workers are from the Philippines; thus, the Palau-Manila direct flight is considered by many as a relief.

Seid said their main target market in Guam right now are Palauans going to Guam and vice versa.

But he said they are working on interline agreements with some airlines to bring tourists to Palau.

"...we’re also targeting interline agreements so we can bring Korean and Japanese tourists to Guam from Japan Airlines and Korean Airlines then connect to Palau," the airline president said.

Seid said Palau Air is currently operating on $10-million initial capital.

A majority of the capital came from the governments of Palau, Yap and Pohnpei.

"We have a mixture of investors. We have Palau National Development Bank, $1 million. We have Palauan companies. We have the Yap state government. We have Yap companies. We have Pohnpei state government. So those are the major shareholders," Seid said.

Palau Air, however, managed to raise $6.5 million from the public when it sold shares in Palau.

"We have an IPO (initial public offering) under Palau law now, so we’re operating that now. How much have we raised (so far)? Probably around $6.5 million. It’s $100 per share," Seid said.

He said the airline will not sell shares in the CNMI or Guam because they have not registered these in the U.S.

"We haven’t pursued that under the U.S. and so we’re not raising money in the CNMI and Guam," he said.

There were also a few foreign investors who chipped in to capitalize the regional airline, he said.

The airline also invited the CNMI government to join its business venture for $500,000.

The Commonwealth Development Authority, however, turned down the proposal citing concerns with the airline’s profitability.

October 12, 2004

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