BY MAUREEN N. MARATITA
Top of the list for many business people aiming to try their hand at a dream business is to open a bar.
Keith J. Stewart decided owning an airline would work. What Stewart told the Journal “began as a joke” has turned into a business plan.
The president of Pacific Rim Constructors Inc. is no stranger to building an organization from scratch and has taken Pacific Rim from a fledgling company to a group with gross revenues in 2019 of $44.04 million, according to the Deloitte & Touche ASC Trust list of the Top Companies in Micronesia in the November-December 2020 issue of Guam Business Magazine.
A strong management team at Pacific Rim has also allowed Stewart to spend time on planning the airline and securing finance. Marianas Pacific Airlines is wholly independent of Stewart’s other business interests.
“Right now, we’re working to get our first tranche of financing in place,” he said. “We have talked with the [NMI] government,” Stewart said. Those talks have been with the Marianas Public Land Trust, the Commonwealth Economic Development Authority, the Commonwealth Ports Authority and the Marianas Visitors Authority, he said. “We’ve talked to a number of agencies and everyone of them has been in support of what we’re doing,” he said, based on the impacts we’ll have in a positive way on the CNMI.” In addition, Stewart said, “We’ve been talking to several on the private side as well.”
The group is well-prepared for work on multiple avenues of finance, he said. “We’ve a bankable finance business plan. It’s extremely detailed — hundreds of pages long and extremely well thought out.”
Talks are also aimed at long term needs, he said. “We’re not looking for just one tranche of funding. We’re going to need to be raising several tranches of funding. Our plan isn’t just to get two 757s and a spare and then call it good. What we’re looking to do is to build an airline.” The ultimate aim is to be a regional carrier, Stewart said, and the timing is optimum.
“There’s probably never been a better time in our lives to do it, because of COVID —because there’s excess capacity out there with airlines, with crews, with management teams —getting slots at the airports. … It’s an amazing opportunity right now.”
Marianas Pacific will begin with wet leases for its fleet. “Our intention is to be transferring into ownership,” Stewart said. With wet leases, Marianas Pacific will not initially need a Federal Aviation Administration Air Operator’s Certificate, though the plane will be clearly branded for the airline.
“If you look at the business model of our growth, our growth isn’t only to buy the planes that we are leasing, but to expand,” Stewart said. Marianas Pacific is negotiating with several airlines with available planes, he said.
Initial routes will depend how countries fare with COVID and open and their quarantine processes, Stewart told the Journal. “We don’t want to be the first ones out of the gate — flying planes and finding that we have to stop or that there’s problems associated with quarantine — things like that.”
Marianas Pacific aims to remain informed on developments. “We’re going to be working with the [NMI] government to better understand the plans going forward,” Stewart said. “What is optimistic is the number of vaccinated people in Japan and Korea are going up tremendously right now.” The airline will remain flexible, Stewart said.
“The original plan was to open up Japan, Korea and Australia, as well as fly to Guam. Then we’ll also be going to Clark in the Philippines,” he said.
Clark International Airport will be the crew base and where the airline’s first planes will be maintained, he said. As to the choice of 757s, Stewart said that “757s have got much more cargo space than 737s. You can’t really fly much on a 737, other than passengers.” The larger plane “allows us to get to Sydney and Brisbane in Australia.” The intention is to outsource ground services there, he said.
Flying into Sydney in News South Wales and Brisbane in Queensland, also offers Marianas Pacific proximity to the states of Victoria and South Australia, as well as Tasmania.
Stewart said “89% of the population lives on the Eastern side of Australia and their disposable income is quite high.” Another plus is a typical 28 days of annual vacation in Australia, he said. The population is familiar with travel to islands and tropical destinations and take vacations of 10 to 14 days.
“It’s going to raise the bar a lot. We think there’s going to need to be more hotels and higher quality hotels,” Stewart said.
One advantage of the Marianas Pacific management team, he said is that they are based out of Australia. “They are very familiar with everyone that’s needed within the Australian government tourism side.” A lot of analytics are backing the business plans, he said.
Stewart also anticipates relationships with local businesses in the NMI. “Our success is going to be dependent on how the hotels perform, how well they take care of the guests we’ll be marketing to and bring in.” The same will be true of restaurants and retail outlets, he said.
Possibly as early as third quarter 2022, Marianas Pacific aims to expand to inter-island transport with the introduction of WIGS — boats resembling aircraft, cruising just above the water surface. That information has generated high interest in the NMI. “We get more questions on the WIGs than we do about the airline,” Stewart said.
Marianas Pacific told the Journal its first order specifications from Universal Hovercraft include two Model 28TT Hoverwing units for operations, plus one training unit.
The planes have a carbon-fiber construction/hovercraft base, with a climate-controlled cabin and can carry 12 passengers and a crew of two. The length of 36 feet includes a wingspan of 30 feet, with a cabin width of 102 inches, and can carry a 3,000-pound payload in ground-effect, or a 4,000-pound payload in hovercraft mode.
The units are turbine-powered with a cruise speed of 85 miles per hour, have a range of up to 400 miles and can cruise above the terrain from between three to 16 feet with the capability of rising to between 20 to 25 feet. The airline also has regional manufacturing and distribution rights for the WIGs.
Stewart said the pluses of an additional airline would lift the market.
“What I would hope the public will see is the economic benefit and what it’s going to do for the islands,” Stewart said. Pre-COVID travel business into the NMI was primarily group business with low-cost carriers and low-cost fares sold outside the islands, he said. “What we’re going to be doing is really looking at the higher spending traveler that will be booking their own air fare, booking hotels and spending the money here, so the tax benefit to the CNMI government is going to be wildly different.”
After researching analyzing multiple industries for potential to create industry growth and jobs, he said, “It all came back to transportation. … That’s what we realized we had to do in order to make the CNMI stable and really be able to determine our own future.” mbj