The airlines plan to file a friend-of-the-court brief seeking to overturn the recent order by state Circuit Judge Daniel Heely. The ruling means the airlines are facing higher landing fees. It also means that a damaging blow is now aimed at the state's economy, said Jeffrey Watanabe, attorney for the Airlines Committee of Hawaii.
He and state officials said the higher landing fees will lead to a reduction of flights and airlines serving Hawaii, threatening tourism, the engine of Hawaii's economy.
The 22 local, national and foreign airlines are concerned because 20 percent of the landing fees they pay for using Honolulu Airport goes to OHA via the state. A part of the airport is on ceded land that once belonged to the Hawaiian monarchy.
At issue is Heely's interpretation of the Hawaii law that says the state must pay OHA 20 percent of the revenue derived from ceded land to aid native Hawaiians with a 50 percent blood quantum.
Siding with OHA, Judge Heely declared the 20 percent must be from the entire revenues generated from the land, even if OHA had no hand in improvements to the land that led to higher profits. The state contends OHA's share should be limited to 20 percent of the value of the raw land.
In a journalists' briefing yesterday, Watanabe and state officials gave a sobering look at what Heely's ruling portends:
nLanding fees for airlines using Honolulu Airport from 1981 to 1995 will be $594 million if the current "site-specific" formula is used. But the amount will skyrocket to nearly $1.2 billion if it is based on the rationale Heely used in his decision.
nAirlines using Honolulu Airport now pay $1.93 per 1,000 pounds of landing weight. That would soar to $32.97.
nTransportation costs will go up. Isle travelers will pay higher air fares and local consumers will pay more for food.
nState services will be scaled back and be more costly as the decision extends OHA's reach to public housing and state health services, which are not meant to be generate revenue for the state. OHA would get 20 percent of the rent from state subsidized housing.
State Attorney General Margery Bronster said the hope "is that we can get this all up before the (Hawaii) Supreme Court before we end up with a judgment entered against the state. Right now, we have an order on liability but not on damages."
Particularly troublesome for the airlines and the state is that Heely used logic that extended OHA's reach to revenue from the Waikiki duty-free shop, even though it is not on ceded land.
If it weren't for the airport, there could not be a duty-free shop in Waikiki, Heely reasoned.
OHA Vice Chairman Abraham Aiona said last night that OHA won't forgo its 20 percent entitlement that the state established 16 years ago. But it is willing to establish some sort of payment schedule for the state, he said.
"The real important thing is that Act 304 is still in effect and it says 20 percent of the revenues are due and payable," Aiona said.
For the past month, OHA trustees have asked Cayetano to say whether he believes both sides can work together, Aiona added, but Cayetano hasn't responded.
The state has paid OHA about $15 million annually for use of ceded land, but has suspended payments of OHA's share of airline landing fees, about $7.2 million a year, until the legal questions are resolved.
The dispute has endangered economic development, Cayetano said, stopping "some projects dead in their tracks. Let's take Kakaako, where we want to build a world-class aquarium. ... Most of Kakaako is not ceded land. But if we add another 50 acres which are close to Pier 1 and 2, that's all ceded land. ... It's a problem for investors and for the state."