A Star Marianas Air ground crew member pushes a luggage cart near a newly arrived Piper PA 31-350 Navajo Chieftain at the Benjamin Taisacan Manglona/Rota International Airport.
A photo taken through a window of a Piper PA-31-350 Navajo Chieftain shows ground crew members of Star Marianas Air at work at the Francisco C. Ada/Saipan International Airport.
STAR Marianas Air Inc. will terminate its Tinian and Rota air services on Oct. 15, 2024.
In a notice of intent sent to Gov. Arnold I. Palacios, Tinian Mayor Edwin P. Aldan and Rota Mayor Aubry Hocog on Tuesday, Star Marianas Board Chair Robert Christian said SMA will end its scheduled flights “if a resolution to the current fee setting dispute with the Commonwealth Ports Authority cannot be found.”
Christian issued the notice almost two weeks after CPA sent him a demand letter asking for payment — on or before Aug. 10, 2024 — of $1.2 million in outstanding debts for SMA’s use of airport facilities on Saipan, Tinian and Rota.
There has been an ongoing dispute in Superior Court between Star Marianas and CPA over their airline use agreement, its Section 7.01 in particular, pertaining to charges for leased premises at the Francisco C. Ada/Saipan International Airport, the Francisco M. Borja/Tinian International Airport and the Benjamin Taisakan Manglona/Rota International Airport.
Christian told the governor and the mayors that terminating its flight service is a “difficult decision … driven primarily by the unsustainable airport fee structure imposed by the CPA, which renders continued service economically unviable.”
He reiterated the following concerns of Star Marianas:
1) Non-Compensatory Fees. CPA’s current fee methodology “fails to adhere to the fundamental principle of compensatory fees. The broad definition of Maintenance and Operation expenses, lack of detailed cost allocation, and ambiguous treatment of common use areas result in fees that do not accurately reflect our actual usage of airport facilities and services.”
2) Disproportionate Financial Burden. “As the sole airline operating at Tinian and Rota, we are disproportionately burdened by the airport’s costs. The pricing structure, designed for multiple airlines with varying sizes, is inequitable in our situation. Furthermore, the lack of transparency in cost allocation raises concerns about cross-subsidization, where we may be paying for services primarily benefiting larger airlines that are not currently operating at the airport. This is particularly evident in the inclusion of ARFF fees at airports where we operate aircraft that do not require such services, effectively subsidizing ARFF costs for marketing purposes or for other airports like Saipan, where larger aircraft necessitate these services.”
3) Unpredictability and Lack of Control. “CPA’s authority to make mid-year adjustments and conduct year-end true-ups, without clear criteria or airline input, creates financial uncertainty for our operations. The lack of transparency in these processes further exacerbates our concerns about the fairness and reasonableness of the fees.”
4) Impact on Essential Air Service. “Both Tinian and Rota airports serve communities that rely on our air service for essential transportation. The current fee structure jeopardizes our ability to continue providing this vital service, potentially isolating the community and hindering economic development.”
Christian said Star Marianas is “not seeking subsidies.”
“However,” he added, “the current fee structure, which is both opaque and unpredictable due to decisions made by the local government, creates unacceptable risks that jeopardize our ability to operate sustainably. This arbitrary and capricious fee structure is a direct result of CPA’s actions and decisions.”
He urged the governor and the mayors to engage with CPA and “facilitate a dialogue to establish a transparent, equitable, and sustainable fee structure that ensures the continuation of vital air service to the community.”
“We believe that immediate intervention is necessary to address this issue and ensure that our services can continue without disruption. We are prepared to work collaboratively to find a resolution that benefits all parties involved,” he added.
Reaction
Tinian Mayor Edwin P. Aldan said he will respond to Star Marianas first, and issue a statement hopefully today, Wednesday.
Rota’s Sen. Paul A. Manglona, who chairs the Senate Committee on Public Utilities, Transportation and Communications issued the following statement:
“The news of Star Marianas’ intent to terminate air service on the islands of Saipan, Tinian, Rota, and Guam is frightening and devastating for the people of the Commonwealth. Aside from private small water vessels, Star Marianas is the only link between the islands. The majority of the people of the Commonwealth rely on air service to travel between islands to visit family and friends and most especially to receive medical services on Saipan and Guam.
“The issue of airport fees is not new. Star Marianas and the Commonwealth Ports Authority … have been battling this issue for many years. I am confident that if Star Marianas and CPA come to the table, in good faith, they can come to an agreement of how to best resolve this issue so that inter-island air service will not be impeded upon. I believe that CPA is willing to work with Star Marianas to meet its obligations. An open discussion is all that is needed to come to resolution of this impending tragedy of our islands’ only air service.
“We need air service to Rota even more now that the Rota Delegation is working with the Department of Public Lands to put out a Request for Proposals to lease the only golf resort on the island to promote tourism.”
