Micronesian Air Connection Services is new entrant to interisland service

BY MARK RABAGO
Saipan Correspondent

NAFTAN, Saipan — The Marianas has a new/old company willing to service the inter-island passenger air service market in the region.

Micronesian Air Cargo Services, owned by J&P Holdings owners John and Paula Stewart, made overtures to launch an inter-island passenger air service in October through Szabo Aerospace LLC.

And like the acronym of its air cargo company, Micronesian Air Cargo Services, the Stewarts have named the burgeoning inter-island commuter carrier Micronesian Air Connection Services.

Last month their intent to provide an alternative to Star Marianas Air, Inc. —the current and only inter-island passenger carrier flying to Saipan, Tinian, Rota, and Guam —took a step closer to reality as the Commonwealth Economic and Development Authority voted to recommend the approval of its qualifying certificate application for Micronesian Air Connection Services.

“We are thrilled and deeply grateful that CEDA has recommended approval of our qualifying certificate application for Micronesian Air Connection Services. This decision represents a transformative opportunity to enhance inter-island connectivity and support the CNMI's tourism renaissance. Our team is ready to work hand-in-hand with the government and tourism stakeholders to launch this vital air service that will provide more access to our beautiful islands and will create new opportunities for visitors and residents like. We're committed to investing in the CNMI's future and playing our part in strengthening the tourism infrastructure that is so essential to our community's prosperity,” a statement from MACS management read.

MACS said it initially requested 25 years at 100% abatement and the Division of Revenue and Tax concurred and recommended 25 years. After deliberating and considering Rev & Tax’s recommendation, CEDA ultimately recommended 22 years at 100% abatement.

Now it only needs Gov. Arnold I. Palacios’ approval of MACS’ QC application to usher in a new age of inter-island passenger service in the Marianas.
In the meantime, MACS plans to submit a bid in hopes of securing a lease for the necessary hangar space in Guam.

It said this is what will make flights into Guam possible. MACS currently is also working out logistics to begin flights to Rota and Tinian in the next one to two months.

Having successfully operated air cargo services in the NMI for more than a decade and managing the region's only skydiving operation for more than three years, the Stewarts bring deep aviation expertise to this venture.

This isn't a start-from-scratch endeavor MACS contends, but rather a natural evolution of its established aviation services.

MACS said once Palacios puts pen to paper in its QC application, it will immediately be operating eight-seater planes between Saipan and Tinian and nine-seater planes between Saipan and Rota. If the necessary Guam facilities are secured, MACS will then fly nine-seater planes to Guam.

MACS said the U.S. airline industry's history shows that many successful carriers grew from modest beginnings.

Southwest Airlines stands as a great example. Herb Kelleher started with just three aircraft serving three Texas cities and built it into one of the world's most successful airlines. Even when competitors attempted to block their market entry, MACS said Kelleher's determination and vision prevailed, leading Southwest to become an industry powerhouse.

MACS said its journey parallels Southwest’s spirit of determination. 

“MACS’ firsthand experience with the CNMI's unique aviation landscape, combined with its proven track record in passenger charters, air cargo, and tourism operations, positions MACS uniquely to expand into scheduled passenger services and meet the region's air transportation needs,” it said.

MACS is banking heavily on the "Southwest Effect" — a phenomenon recognized in Department of Transportation studies where air travel becomes more accessible and stimulates local economies through increased tourism and business travel.

“It’s precisely what MACS aims to bring to the CNMI region. MACS' firsthand experience with the CNMI's unique aviation landscape, combined with its proven track record in air cargo and tourism operations, uniquely positions the company to expand into scheduled passenger services and meet the region's transportation needs. We look forward to filling current market gaps and bringing additional air transportation options to the CNMI. History shows that when new airlines enter island markets, increased competition tends to make air travel more accessible and affordable for everyone. We're excited about the opportunity to serve these islands and be part of the CNMI's recovery story,” the company said.

MACS said those interested in their service can email: info@FlyMACS.com to be added to the notification list for when ticket sales go live.

Palacios, meanwhile, appears to be leaning toward following

CEDA’s lead with regards to MACS’ QC application.

In a previous interview with media, he said he’s all for legally incentivizing businesses in the CNMI, including through properly vetted qualifying certificates that provides local tax abatements for an extended period of time.

“I’ve taken a general position. But I believe we should incentivize businesses where we can, especially businesses that will provide invaluable service for the CNMI. I’m supportive of the QC but I have not seen details of the QC yet so I will hold off on giving my position on the matter,” he said.

Despite needing to review the recommendation for himself, Palacios said he is confident in CEDA’s ability to vet QC applications.

CEDA’s decision to approve a 22-year tax exemption for J&P Holdings LLC under the QC program has drawn sharp criticism from Star Marianas.

“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 Marianas 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 Marianas,” Shaun Christian, president of Star Marianas; said Christian said the political motivations to undermine Star Marianas’ operations date back to the prior administration, which initiated unfounded claims that the carrier 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 Marianas was 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 Marianas holds a designation as a compliant air carrier—would have ample reason to revoke Star Marianas’ operating authority. Yet no such action has occurred, further invalidating these claims.”

Instead, Christian said the CNMI government and the Commonwealth Ports Authority appear intent on undermining Star Marianas’ operation by favoring airlines like MSA and MACS through government-backed subsidies designed to cannibalize passengers from Star Marianas and force it out of the market.

He said that historically, once an airline eliminates its competitors, 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 Marianas 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.”

Christian also said Star Marianas 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 Marianas with subsidized alternatives, despite the evident risks to market stability and public interest. Star Marianas remains committed to serving the CNMI community with the integrity and reliability it has upheld for over 15 years.” mbj