STAR Marianas Air issued the following statement on Monday:
“STAR Marianas Air notes with concern the recent decision by CEDA to approve a 22-year tax exemption for J&P Holdings LLC under the Qualifying Certificate program. This follows a troubling pattern where new entrants into the CNMI aviation market, including both MACS (Szabo Aerospace) and the now-defunct Marianas Southern Airways, have sought substantial government subsidies as a precondition to entering the market. It raises the question: if STAR has provided sufficient, reliable, and unsubsidized air service to the CNMI for over 15 years, why must new entrants rely on local government sponsored economic advantages to ‘compete’ with STAR?
“The political motivations to undermine STAR’s operations date back to the prior administration, which initiated unfounded claims that STAR was not paying airport fees, and arbitrarily increased airport charges after over-collecting Passenger Facility Charges without fulfilling its obligations as an airport sponsor. If STAR were truly non-compliant with legitimate airport fees, regulatory bodies such as the U.S. Department of Transportation or the Department of Defense — under which STAR holds a designation as a compliant air carrier — would have ample reason to revoke STAR’s operating authority. Yet no such action has occurred, further invalidating these claims.
“Instead, the CNMI government and CPA appear intent on undermining STAR’s operation by favoring airlines like Marianas Southern Airways and MACS through government-backed subsidies designed to cannibalize passengers from STAR and force it out of the market. Such actions do not foster fair competition; they create a predatory environment disguised as ‘competition.’ By MACS attorney’s own admission, its operation is not economically viable without government subsidies, which include a ‘free ride’ on all taxes across its revenue streams, including non-airline ventures.
“Competition, as STAR understands it, implies winners and losers based on the market’s merit. It should not rely on unhealthy pricing wars fueled by subsidies that drive fares artificially low for short-term consumer benefit while destabilizing the market. Once one airline eliminates the other, passengers often face increased fares as the surviving airline seeks to recoup losses.
“This cyclical disruption serves no one in the long term and underscores the flawed nature of government-backed predatory practices.
“While STAR embraces competition that fosters innovation and benefits passengers, subsidies that ‘stack the deck’ in favor of one airline over another are not competitive. They are anti-competitive, predatory, and contrary to the principles of a free market. STAR has proven its ability to operate sustainably and without government assistance for over 15 years, serving the CNMI with reliable, essential air service. It is concerning that, instead of improving market conditions or addressing regulatory issues, the CNMI government appears focused on replacing STAR with subsidized alternatives, despite the evident risks to market stability and public interest.
“STAR remains committed to serving the CNMI community with the integrity and reliability it has upheld for over 15 years.”
