SAIPAN — The U.S. Department of Transportation “will consider” an additional $30 million in American Rescue Plan Act for the Commonwealth of the Northern Mariana Islands, DOT Secretary Pete Buttigieg said in his response to a letter from Commonwealth Ports Authority Board Chairwoman Kimberlyn King-Hinds.
Saying that the lack of federal assistance to local airports will severely hamper the CNMI government's operations, King-Hinds asked Buttigieg for $15 million for fiscal year 2024 and $15 million for FY 2025 to ensure that Commonwealth airports will remain open up to FY 2026.
In his reply, Buttigieg said, “Your voice is important, and my team will consider your thoughts as we work to meet the department’s mission and support the [Biden] administration’s priorities: to help create millions of good-paying jobs; move people and goods safely; revitalize communities that have been left behind; tackle the climate crisis, and enable our country to compete and win in the global economy.”
“I hope you will continue to share your views and to follow our work,” Buttigieg said.
In her letter, King-Hinds said by the end of FY 2023, on Sept. 30, “we will exhaust all the federal funds we have received.”
Unfortunately, she said, unlike most jurisdictions in the continental U.S., the CNMI's tourism industry has not recovered and is nowhere close to reaching pre-pandemic levels despite “the remarkable investments that the CNMI government has made to invigorate the tourism industry.”
She said as the end of FY 2023 approaches, “it has become apparent that the airlines will not resume service to pre-pandemic levels by the end of this fiscal year.”
As of September 2022, she said, airline enplanements at the Francisco C. Ada/Saipan International Airport were at 21% of pre-pandemic activity. International passenger traffic had decreased from average monthly enplanements of 38,518 in FY 2019 to 7,909 in FY 2022.
In FY 2022, she said, two airlines, Air Busan and Air Seoul, ceased operations. Since the beginning of FY 2023, an additional airline had also ceased operations and another airline had suspended activity.
These reductions in airline activity have led to significant reductions in revenue, King-Hinds said.
She said the CNMI economy “will never recover unless alternative markets are pursued, or alternative industries are created.”
The challenges in reviving the Korean tourism market include an unstable U.S. dollar to Korean won exchange rate, the Bank of Korea’s interest rate increase, the high airline operating costs, the mandatory vaccinations to enter the U.S., and the CNMI’s limited marketing budget, King-Hinds said.
In revitalizing the Japanese tourism market, the challenges are similar, she added. They include the Japanese people's apprehension of overseas travel; the fact that travel abroad is very expensive; Japan’s “national travel discount” program, which makes domestic travel a more attractive option; and the limited and negative media coverage of overseas travel.
Austerity measures
King-Hinds told Buttigieg that without a reliable revenue source or federal assistance, CPA will be unable to maintain its current operational capacity for FY 2024.
She said CPA will have to re-implement austerity measures. These may include a reduction in force and operational hours which means there will be periods when CNMI airports may be unable to accommodate aircraft activities, she added.
CPA will also struggle to maintain and advance critical capital port infrastructure projects because funding that should be used to improve port infrastructure will now need to be reallocated to fund CPA’s limited and reduced operations, King-Hinds said.
“It is not our desire to ask for handouts,” she added. “We have implemented a new rate methodology that is intended to allow CPA to be self-sustaining through cost recovery. However, due to the current challenges CPA and the CNMI face, these new rates will make it cost-prohibitive to travel to the CNMI, further crippling our tourism industry. Worse, the cost of inter-island travel will increase, which will harm the communities of Rota and Tinian who rely on air transportation to access medical care and treatment because there are no doctors or proper medical facilities in those communities.”
