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Increase to cover losses at airport

By Alexie Villegas Zotomayor MAJURO, Marshall Islands (Marianas Variety, April 8, 2011) - Seeing the need to bridge the great divide between their revenue and expenditures with deficit reaching US$300,000 a year, the Republic of the Marshall Islands Ports Authority is proposing to raise port fees to abate the continuing losses in operations at the airport.

Speaking before participants of the 2011 Pacific Aviation Directors Workshop at Fiesta Resort & Spa Saipan on Tuesday, RMI Ports Authority Executive Director Jack S. Chong-gum said, "We are increasing our port fees this year." He said RMIPA submitted its proposed rate increases to the government two weeks ago which it hopes to implement soon.

Chong-gum said, "Most of the revenue we intend to get from the fee increase will come from the port side." Acknowledging the difficulties that RMIPA faces year after year with just one carrier plying the route, "We hope the government approves our fee increase this year."

Chong-gum said they are not touching the landing charges and they are exempting the visiting military personnel from paying departure fees; however, they are looking at raising the fees they charge carriers refueling at their ports.

According to the data he presented, the following are the current rates with the proposed increases enclosed in parentheses.

The current rates and proposed increases are US$20 (US$25) per passenger, international departure fee; US$15 (US$25) per passenger, student fee; US$5 (US$6) per 1,000 lbs MTOW, parking charge; US$40 (US$45) per use, runway and taxi lights; US$50 (US$55) per space per month; reserved parking space; US$0.05 (US$0.10) per lbs, international cargo fee; US$187.50 (US$225) per flight, international handling fee; US$12.50 (US$15) per badge, security ID fee; US$1.80 (US$2.25) per 1,000 lbs MTOW, category I, special flight landing; US$1.90 (US$2.38) per 1,000 lbs MTOW category II, special flight landing; and US$2 (US$2.50) per 1,000 lbs MTOW, special flight landing.

Chong-gum said with an airport as small as the Majuro’s, RMIPA is facing challenges from all fronts. He said, "When you compare the cash coming in, and cash going out, we are looking OK. We are able to sustain our operations with the revenue we generate. The airport gets a lot of assistance from the port side."

He said they are not making money and are not mandated to make profits. But, since 2006, the ports authority has been losing money in the airport operation. This, he said, is mainly due to the government’s seeking payment for land leases.

"We are directed by the government to pay land leases which is a lot of money," said Chong-gum. In 2006, Chong-gum reported that apart from paying land leases, high electricity charges helped pull revenues down. In fiscal 2007, he reported US$159,000 in debts and depreciation increased by 108 percent due to completed AIP projects. He said Airport Improvement Projects started coming in 2004. "We are the ones providing the matching to the AIP fund. We are not getting any assistance from the government."

The airport, Chong-gum said, gets assistance from the port side of the operation. "The airport gets a lot of assistance from the port side."

"Without the port, the airport would be closed. The airport cannot sustain its operation with the cash it generates," he said. He also said it is hard to manage the airport given the high cost of travel to the islands and the existence of a lone carrier.

Each year, he said, he faces a US$300,000 deficit with just the basic costs accounted for. He said basic costs include salaries, utilities, and fuel for firetrucks. "We haven’t taken into consideration the CIP projects, the AIP matching. It’s very, very challenging."

Barry Brayer, manager, FAA special programs staff, said, "Definitely, we have a lot of challenges and we are looking forward to working cooperatively [with RMIPA] to assist you in resolving issues."

Chong-gum also reported on the existing projects -- perimeter security fence, upgrade runway water pumps, road realignment, NDB/DME relocation -- which are among several projects expecting completion in 2011 to 2012. To date, Chong-gum said RMIPA has used up most of the US$50 million FAA funding it has since 2004. He also reported that RMIPA has finalized review of the airport master plan.

Chong-gum said RMIPA also seeks assistance as it looks forward to building a new terminal. He said their terminal was built in 1979 and "it’s time to build a new one."

He also said although modernizing the Majuro airport may not be a priority for FAA; however, he said it is still RMIPA’s priority. He would like to seek financial assistance from AIP in working on a schematic design for the airport and seek donors who will help with the construction.

"All of us are facing the same financial constraints," said Chong-gum acknowledging that the FAA is facing budget constraints as well in the coming year. FAA is bracing for US$4 billion budget cut should the U.S. Congress approve the budget.

FAA Regional Administrator William C. Withycombe told reporters Tuesday that about US$4 billion may be slashed from the FAA budget. With this looming budget cut, he said they would be assessing airport projects and prioritizing airport security projects.

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