Document q33KggaQr0awEy10byk7z1O4K

From: Concepcion, Chris Sent: To: Thu, 17 Jul 2025 20:51:55 +0000 Matesic, Hannah (OST) Subject: Annex VI - Air Service Restrictions to the Northern Mariana Islands Attachments: 2025-02-05 - DOT Sec Duffy - Annex VI.pdf, CNMI One Pager and Additional Information.pdf, 2025-02-26 Duffy - annex vi response.pdf Importance: High CAUTION : This email originated from outside of the Department of Transportation (DOT). Do not click on links or open attachments unless you recognize the sender and know the content is safe. Hi Hannah: Pleasure meeting you and Secretary Duffy yesterday! Per the brief exchange between Congresswoman KHinig-nds and the Secretary, I've attached the letter sent 2/5/2025 and the response we received on 2/26/2025. As outlined in her correspondence, the suspension of Annex VI has had a disproportionately negative impact on the Commonwealth of the Northern Mariana Islands (CNMI), which are highly dependent on international air service to support economic activity, tourism, and connectivity. While we wait for further action from the DOT, the economic conditions in the CNMI continue to worsen. I've included a short writ-uep outlining the context and urgency of the situation on the ground. Given the direct and urgent impact this matter has on the CNMI economy and its people, the Congresswoman respectfully requests that the DOT exercise full compliance with Annex VI and lift the ongoing restrictions on flights between China and the CNMI. We welcome any opportunity to provide additional information or coordinate a discussion between the Congresswoman and relevant DOT officials to further convey the importance of this issue. Thank you again for your time and consideration. We look forward to your response. Best, Christopher A. Concepcion Communications Director Office of Congresswoman Kimberlyn KHinign - ds (M-P 00) U.S. House of Representatives 425 Cannon House Office Building Washington, DC 20515 ( )(6) b chris.concepcion@mail.house.gov king-hinds.house.gov O2S0T2-5-1200 Page 00055 REPRESENTATIVE KIMBERLYN KHINIGN - DS : NORTHERN MARIANA ISLANDS O2S0T2-5-1200 Page 00056 KIMBERLYN KHINIGN - DS NORTHERN MARIANA MARIANA ISLANDS, AT AT LARGE 425 CANNON HOUSE OFFICE BUILDING BUILDING WASHINGTON, DC 20515-5201 (202) 225-2646 Congress of the United States House of Representatives Washington, DC 20515 5201 February 5, 2025 The Honorable Sean Duffy Secretary U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington, DC 20590 Dear Secretary Duffy: Congratulations on your confirmation as Secretary of the U.S. Department of Transportation. Your life of service to our country has been of great significance, and I appreciate the leadership and experience you bring to the Department at this critical time for our nation's transportation networks. I write to urge the Department of Transportation exercise full compliance with Annex VI, Article 6 of the UC.Sh.-ina Air Transport Agreement and lift the ongoing restrictions on international air service between the People's Republic of China and my district, the Commonwealth of the Northern Mariana Islands (CNMI). ' These restrictions conflict with the terms of the bilateral agreement, which explicitly exempted the CNMI from limitations on the number of designations or frequencies of scheduled air services. The failure to adhere to this provision has placed a severe and unnecessary strain on the economic recovery of my district. The CNMI is a U.S. Territory with striking similarities to rural communities across America. The Americans living in my district are proud citizens of this country but face unique challenges due to our distance from major U.S. urban centers, reliance on a single industry for employment, limitations of our transportation infrastructure, and pronounced vulnerabilities to federal policy decisions. Just as rural communities in states like Wisconsin depend on agriculture and manufacturing as economic lifelines, the CNMI's economy is singularly dependent on tourism. Prior to the COVI- D 19 pandemic, international visitors accounted for 42 percent of total economic activity and directly supported 25 percent of all household income in the CNMI. Today, tourism arrivals remain 57 percent below pprae-ndemic levels.The economic impact has been devastating to businesses and individuals across my district. 1 U.S. Department of State. UC.Sh.-ina Air Transport Agreement ofJuly 9, 2007. Available at https://20092017.state.gov/e/eb/rls/othr/ata/c/ch/114749.htm 2017.state.gov/e/eb/rls/othr/ata/c/ch/114749.htm 2017.state.gov/e/eb/rls/othr/ata/c/ch/114749.htm 2017.state.gov/e/eb/rls/othr/ata/c/ch/114749.htm 2017.state.gov/e/eb/rls/othr/ata/c/ch/114749.htm 2017.state.gov/e/eb/rls/othr/ata/c/ch/114749.htm 2017.state.gov/e/eb/rls/othr/ata/c/ch/114749.htm 2017.state.gov/e/eb/rls/othr/ata/c/ch/114749.htm 2017.state.gov/e/eb/rls/othr/ata/c/ch/114749.htm 2017.state.gov/e/eb/rls/othr/ata/c/ch/114749.htm 2 U.S. Bureau of Economic Analysis. Gross Domestic Product for the Commonwealth of the Northern Mariana Islands, 2021 & 2022. (November 21, 2024). Available at https://www.bea.gov/sites/default/files/2024- https://www.bea.gov/sites/default/files/2024- https://www.bea.gov/sites/default/files/2024- https://www.bea.gov/sites/default/files/2024- https://www.bea.gov/sites/default/files/2024- https://www.bea.gov/sites/default/files/2024- 1c1n/ gdp11cngdp21124.pdf4cngdp1.124.pdfpcngddp112f4.pdf 3 Marianas Visitors Authority. Commonwealth ofthe Northern Mariana Islands: Visitor Arrival Statistics. Available at https://drive.google.com/file/d/14BWnd71A2WQxj https://drive.google.com/file/d/14BWnd71A2WQxj https://drive.google.com/file/d/14BWnd71A2WQxj https://drive.google.com/file/d/14BWnd71A2WQxj https://drive.google.com/file/d/14BWhttpns://ddriv7e.go1ogleA.com2/filWe/dQ/14BxWnd7j1A2WQxjvyfRKaxtvaEv4C9G1 /vie ?uw sp=sharing OST -2025-1200 00Pa0 geP5 AY 7 2025-1200 00057 The decline in Chinese tourism has been a primary driver of this economic decline. Between 2015 and 2020, travelers from China represented 40 percent of annual arrivals to the CNMI, diversifying the region's visitor base, expanding exports from my district, and stabilizing the local economy. Since 2021 , that figure has plummeted to 8 percent, leaving the CNMI heavily dependent on a single mar-kSe out th Korea. This overreliance has made the economy particularly vulnerable to external shocks, as demonstrated by the Jeju Air Flight 7C2216 crash on December 29, 2024,4 which led to widespread cancellations and further economic instability. The UC.Sh.-ina Air Transport Agreement was negotiated with a clear understanding of the CNMI's unique circumstances, and Annex VI was specifically designed to ensure uninterrupted air service to the territory in circumstances exactly like the one we see today. The ongoing restrictions imposed under DOT's Part 213 Ordershave undermined this agreement, creating unnecessary barriers to economic recovery and disregarding a longstanding federal commitment to the CNMI. For these reasons, I urge the Department of Transportation to comply with Annex VI, Article 6 of the UC.Sh.-ina Air Transport Agreement and establish unrestricted scheduled air service between China and the CNMI. Adhering to this agreement is essential to rebuilding the local economy, supporting American businesses and workers, and upholding the commitments made in U.S. foreign and transportation policy. Thank you for your attention to this critical matter. I look forward to working with you to ensure that federal transportation policies reflect the needs of all U.S. communities, including those in the territories. Sincerely, KIMBERLYN KING-HINDS Member ofCongress 4 Daisuke Wakabayashi. Jeju Air's Problems Mount After Crash that Killed 179 People. New York Times. (January 5, 2025). Available at https://www.nytimes.com/2025/01/05/business/jeju-air-south-korea-crash.html https://www.nytimes.com/2025/01/05/business/jeju-air-south-korhttpse://wwaw.nyti-mes.ccom/202r5/01/a05/bussiness/hjeju-.air-sohuth-ktorea-cmrash.lhtml https://www.nytimes.com/2025/01/05/business/jeju-air-south-korea-crash.html https://www.nytimes.com/2025/01/05/business/jeju-air-south-korea-crash.html https://www.nytimes.com/2025/01/05/business/jeju-air-south-korea-crash.html https://www.nytimes.com/2025/01/05/business/jeju-air-south-korea-crash.html https://www.nytimes.com/2025/01/05/business/jeju-air-south-korea-crash.html https://www.nytimes.com/2025/01/05/business/jeju-air-south-korea-crash.html 5 DOT. Orders 2020-5-4, 2020-6-1, 2020-6-3, 2020-8-6, 2023-5-6, 2023-8-10, 2023-10-9, and 2024-2-21. O2S0T2- 5-1200 Page 00058 Nature of the Collapse in the Commonwealth of the Northern Mariana Islands The CNMI's economic infrastructure is on the verge of collapse. Major businesses face permanent closure. Hotels report average occupancy rates ofjust 28.5%7, far below bre-eavekn thresholds. Federal pandem-ierca support is expiring, removinga critical buffer. Without swift intervention, government revenues will shrink to unsustainable levels, debt will increase, and the CNMI will be pushed to the brink of insolvency. The economic failure of a U.S. territory in the Pacific would have profound strategic, humanitarian, and fiscal implications. Tourism is the primary engine of economic activity in the Commonwealth of the Northern Mariana Islands. Before the COVI- D 19 pandemic, tourism spending accounted for 5% 4 of all consumer expenditures, and exports of services made up 3% 9 of the CNMI's GDP. While there were signs of recovery in recent years, tourism arrivals in 2024 remained 5% 3 below 2019 levels. In 2025, that fragile rebound has reversed: ye-toa -dar te arrivals have declined an additional 28.%3, signaling a renewed and destabilizing contraction. This collapse has been accompanied by steep losses across nearly every major economic indicator: e Tourism arrivals dropped 6%7, from 653,150 in 2017 to 215,543 in 2022/23 e Total business revenue declined by 5% 1 , from $3.62 billion to $1.77 billion Annual payroll fell 19.%4, while employment contracted by more than a third (22,813 to 14,488 jobs) e Accommodation and food service revenues declined 5%9, and retail sales dropped 26 % Most dramatically, tourist spending plummeted by 96.%7, falling from $1.9 billion to just $62.9 million These figures reflect the compounded effects of a prolonged crisis. Between 2019 and 2022, exports of services fell by 51%, driven by collapsing visitor revenues. Since 2022, business closures have accelerated, employment has eroded, and the private sector has hollowed out. A 2024 survey shows that 20 % of CNMI residents are planning to leave, underscoring the demographic risk of continued economic failure. Collapse ofAir Access The sharp downturn in tourism is being driven by a collapse in airlift: e South Korea, which represented 7% 5 of arrivals in 2024, has seen visitor numbers fall 32.%8 ye-toa -dar te in 2025. Monthly air seats dropped from 24,528 to just 10,500, a 5% 7 reduction, after Jeju Air and Asiana cut service and the number of operating carriers fell from five to two. As of May 2025, all direct flights from China have ceased, following delays in Electronic Travel Authorization (ETA) processing under the newly launched EV -TS AP program. In total, CNMI has seen a loss of 18,176 monthly air seats from the market compared to pprae-ndemic levels. Yet, Chinese arrivals had been rebounding prior to the suspension, with a 41 % increase yea-tr odate, underscoring the market potential lost due to administrative delays. Japan arrivals are down 4% 3, compounding the impact. O2S0T2-5-1200 Page 00059 Tourism Arrivals Total Employment Total Business Revenue Quick Facts 2017 2022/24 653,150 237,498 22,813 14,488 $3.616B $1.771B % Change V 6% 3 V 36.%5 51 % Annual Payroll Retail Sales $419.5M $338.3M VW 19.% 4 $460.4M $340.45M VW 26 % Accommodation & Food Services $335.1M $137.7M Vv 59 % Tourist Spending $1.9B $62.9M V 96.%7 One of only two international brand hotels (Hyatt Regency Saipan) closed permanently One of only two Korean airlines servicing the CNMI announced the suspension of flights in the summer months of 2025, further reducing total air seats by 2% 8. Asiana airlines, after servicing the CNMI for over 30 years, terminated service in 2024 and eliminated 4,956 monthly air seats. In June 2025, the Kensington Hotel, CNMI's largest, announced temporary closure, eliminating 9% of room stock Kanoa Resort announced it will not renew its lease, cutting another 6.%2 World Resort and Pacific Islands Club have announced layoffs and reduced hours, placing an additional 1% 6 of hotel room inventory at risk DFS Saipan Ltd., a subsidiary of Louis Vuitton Moet Hennessy and the largest retail outlet in the CNMI, closed in April 2025, alongside the CNMI's only movie theater (Regal Cinemas) Since January 2024, over 110 businesses and nonprofits have shut do- w7n % of all business establishments Airline United Airlines Jeju Air Jeju Air Jeju Air Asiana Airlines T'Way Air Hong Kong Airlines Hong Kong Express Beijing Captial Airlines Sichuan Air Sichuan Air China Eastern Airlines Route Guam Incheon Incheon Pusan Incheon Incheon Hong Kong Hong Kong Hangzhou Shanghai Guangzhou Beijing # Monthly Air seats 5,976 5,292 5,292 3,780 4,956 5,208 2,080 2,976 2,320 4,800 2.400 3,600 Status Continuing Continuing Terminated Terminated Terminated Suspending Service Suspending Service Terminated Terminated Terminated Terminated Terminated O2S0T2-5-1200 Page 00060 OF DEPARTMENT TRANSPORTATION UNITESDTATESOFAMERICA THE SECRETARY OF TRANSPORTATION WASHINGTON, DC 20590 February 26, 2025 The Honorable Kimberlyn KHii ngn - ds U.S. House of Representatives Washington, DC 20515 Dear Representative KHinig-nds: Thank you for your letter congratulating me on my confirmation as the Secretary of the U.S. Department of Transportation (DOT) and regarding the ongoing restrictions on international air service between the People's Republic of China and the United States imposed under the Department's Part 213 Orders. As you are likely aware, the Commonwealth Ports Authority of the Northern Mariana Islands (CPA) has applied for an exemption from the Department's Part 213 Order for scheduled passenger flights between China and the Commonwealth of the Northern Mariana Islands. A copy of the application may be found on the Docket at D2O0T2-O0S-T0 - 052-0152. As the application is currently pending before the Department, I cannot comment on its merits. Please be assured, however, that we are giving full and careful consideration to CPA's request. As is our standard practice, I will place a copy of your letter and this response in Docket D2O0 T-2O0 ST- - 0052 as a communication outside the record of this case. You may track the progress of this case and view the publicly available documents filed in the docket by accessing the Federal Docket Management System at www.regulations.gov and searching for Docket D 2O0 T2 -OS 0T- - 0052. Thank you, again, for your kind words and sharing your views on this matter. If I can provide further information or assistance, please reach out or contact Hannah Matesic, Deputy Assistant Secretary for Congressional Affairs, at (202) 366-4573 or via email at hannah.matesic@dot.gov. , _- CR Sincerely TPma Sean P. Duffy O2S0T2-5-1200 Page 00061