Marianas Southern Airways (Saipan) has substantially increased its airfares in the wake of the Commonwealth of the Northern Mariana Islands (CNMI) government axing a USD8 million sole-source contract last month.

The airline, a joint venture between a local entity called MP Enterprises and Southern Airways (Atlanta Hartsfield Jackson), only started operations in 3Q 2022 after the CNMI government put out a call for new flights following Star Marianas Air (S2, Tinian) temporarily ending services to Rota International and Tinian in late 2021. Although not widely publicized at the time, Marianas Southern Airways secured the sole source contract to underwrite Tecnam P2012 flights to those airports as well as between Saipan and Guam International.

Southern Marianas Airways now competes with Star Marianas Air on the Saipan - Rota, Saipan - Tinian, and Rota - Guam routes. The airline also takes on the daily B737-800 service provided by United Airlines (UA, Chicago O'Hare) on the Saipan - Guam route. Local media are reporting Marianas Southern has increased its one way fares on the Saipan - Guam route from USD99 to at least USD229 and like its bigger competitor, introduced fare tiers.

"We could no longer provide our services for the same price. We are now offering three levels of pricing as seen on our website,” said Marianas Southern Airways Vice President William Giles told the Saipan Tribune this week.

An election in the CNMI in 4Q 2022 saw the incumbent governor and Marianas Southern Airways supporter, Ralph Torres, defeated and a less friendly governor, Arnold Palacios, elected in his place. Palacios was instrumental in the decision to tear up the contract, saying there was no funding available to support it. The funds were meant to come from US federal funding awarded to the CNMI through the American Rescue Plan Act (ARPA). However, Palacios is claiming widespread mismanagement and overspending of ARPA funding during Torres' term.

In a relatively unusual step, Marianas Southern Airways has posted the entire contract as well as correspondence between the airline and the Department of Finance on its social media channels. The release of the documents is accompanied by a fiery statement that reiterates Marianas Southern's threat to walk away from the islands and warns tearing up contracts will dissuade future investors.

"Never in the history of the CNMI had an airline committed a fleet of brand-new aircraft to our islands. Without the government’s support, Southern Marianas Airways cannot continue our same level of service," the statement reads. "We will soon be forced to decide if/when our flying will end. We hope it will not happen and that we can reach an agreement with the Governor."

"If no agreement is reached, cancelled flights will be refunded, and we will re-locate our aircraft to destinations where governments partner with companies and then stick to their contracts. The CNMI could soon be back to a single airline, with no market competition, little frequency, and no alternative should another cessation of services occur. No new airline will likely ever again come to the CNMI in light of the Governor's decision."