AT a public hearing in the Marianas High School cafeteria on Wednesday, Nov. 6, Micronesian Air Connection Services or MACS outlined their plan to bring interisland transportation services to the CNMI. They also spoke about their application for a qualifying certificate with the Commonwealth Economic Development Authority.
MACS is owned by J&P Holdings, which is the company that operates Skydive Saipan, Waco Adventures, and Micronesian Air Cargo Services. It has been operating in the CNMI for over 30 years.
MACS would like to offer direct passenger flights between Saipan and Tinian, and Saipan and Rota. If they acquire facilities in Guam, they also intend to offer direct flights between Saipan and Guam, and Rota and Guam as well.
MACS has applied for a qualifying certificate with CEDA in order to be exempted from individual and business income taxes and the business gross revenue tax over a 25-year period.
In a release, MACS states that the qualifying certificate would “reduce their tax burden, making it more financially feasible to begin scheduled passenger flights in the CNMI and to help subsidize their estimated $8.2 million investment into the CNMI passenger aviation industry.”
Part of their investment includes airplanes with premium seating and air conditioning.
MACS’ rates for a Saipan to Tinian flight could be as low as $60 (manamko’ weekend rate at $50), with a $135 ticket for Saipan to Rota flights (manamko’ weekend rate at $99). With a qualifying certificate, MACS could offer flights at these rates “on or before December 18.”
MACS’ tax attorney Tina Azarvand explained why the qualifying certificate was necessary for MACS’ investment.
“All of this really is contingent on being able to get a [qualifying certificate] because, obviously, it’s not sustainable to have these nice planes,” she said. “So you either sacrifice the quality of planes and you’re going to get packed in like a can of sardines into a little tiny plane, or you’re going to have more comfortable planes with higher safety ratings and all of these things. But these prices are only possible if there’s some way to help support them. The government has helped so many other businesses…survive…. All [MACS is] asking is that they also get some kind of help to make this happen. Because without it, it’s just not economically viable,” she said.
At the public hearing, several individuals expressed support for MACS’ QC application.
One of them was Alex Sablan, Saipan Chamber of Commerce director.
He said increased flight frequency and lower air rates will give the economies of Rota and Tinian an opportunity to grow.
“I’m hoping that with this new venture — with the approval of the [qualifying certificate] — that we are able to see these rate structures,…[and] more frequency, and eventually…more individuals coming to Rota to Tinian, and allowing these smaller economies to have a leg up,” he said.
Senate Vice President Donald Manglona of Rota also supported the application.
He said relying on Star Marianas as the CNMI’s sole interisland passenger carrier has led to “limited flight options” and “rigid schedules that fail to meet the travelers’ needs.”
“For Rota, these challenges are especially pronounced as high travel costs limit mobility, particularly for essential travel like medical care, business and family obligations,” he said.
He also pointed out that the “costly transportation of goods to and from Rota raises the cost of living.”
He said lower airfares will “notably reduce travel and commodity costs, [which will have] a significant positive effect on the local economy and quality of life.”
For her part, Saipan Sen. Celina Babauta said interisland transportation is “something we all need in this time.”
She said CNMI is “solely dependent” on Star Marianas and that “this monopoly leaves us vulnerable to disruptions and price fluctuations.”
She said supporting MACS’ application for a qualifying certificate “will inject much-needed competition, which would naturally drive prices down.”
“Some may argue that granting a [qualifying certificate to] MACS creates an uneven playing field. I contend that true fairness lies in fostering competition and a competitive market,” she said. “If Star Marianas is genuinely committed to providing quality services, they should be willing to invest or match the investment of MACS to the tune of $8.2 million to improve their operations by upgrading their 40-year-old aircraft and paying their debt to the Commonwealth Ports Authority.”
She urged CEDA to “favorably consider” the application, and said she is urging Gov. Arnold I. Palacios to do the same.
J&P Enterprises’ John Stewart, left, and attorney Tina Azarvand.
Sen. Celina Babauta and Senate Vice President Donald Manglona at the public hearing.
Alex Sablan speaks at the public hearing for Micronesian Air Connection Services’ QC application.
CEDA board member Michael Sablan and and Chair Francisco Rabauliman.
