To boost tourism, Cayetano puts
a moratorium on the landing fees
air carriers have to pay

By Mike Yuen
Star-Bulletin

In a major effort to boost tourism, Gov. Ben Cayetano has imposed a two-year moratorium on airplane landing fees, freeing carriers serving Hawaii from having to pay about $36 million a year.

The fee suspension went into effect Sept. 1, but was not disclosed until today in a joint announcement with major airlines serving Hawaii. It was supposed to have been announced last week but was delayed because of Cayetano's four-day hospitalization caused by a bleeding ulcer.

"We hope our travel partners take advantage of the moratorium and bring more visitors to the state," Cayetano said.

He added the state can afford to give a significant break to "our visitor industry because of a current cash surplus in the airport revenue fund, resulting from efficient cost saving measures, unplanned reimbursements and steps to reduce debt service cost through refinancing opportunities."

As of June 30, the end of the 1997 fiscal year, the airport revenue fund had an unaudited cash balance of $218 million, said state Deputy Budget Director Neal Miyahira.

The airport revenue fund, which must adhere to federal guidelines, is a dedicated fund earmarked specifically for airport projects; it is separate from the state's cash-strapped general fund that is at the heart of Hawaii's budget crunch.

The state's airport system gets about 14 percent of its revenues from landing fees. In fiscal 1996, the latest year for which figures are available, the state brought in $35.8 million in landing fees, out of total operating revenues of $276.9 million, according to the state Transportation Department.

Landing fees rank second as a source of airport revenues, after concessions such as the duty free shops and airport restaurants, which earned $165.3 million in fiscal 1995-96.

Cayetano's moratorium, which a spokeswoman says he can implement on his own without legislative approval, benefits overseas and interisland carriers that use isle airports.

"I am reserving the right, however, to reinstate the landing fees charge before the two-year period ends," Cayetano said.

"This administration will set a policy of spending only for projects which are necessary to improve Hawaii's airport system. We will not spend simply because a surplus exists," Cayetano added.

"This moratorium is designed to create the best airport system by strengthening our partnership with the airline industry."

Airline officials -- including executives from Japan, United, Aloha and Hawaiian airlines -- hailed the suspension of landing fees.

"The governor's action will send a message throughout the industry that the state is doing its part in making the Honolulu Airport the gateway to a revitalized visitor destination," said Paul Casey, Hawaiian airlines president and chief executive officer.

The moratorium means the state Transportation Department will rework the existing lease agreements with the 26 commercial airlines providing overseas and interisland service in Hawaii, said Transportation Director Kazu Hayashida. Moreover, there will be rule changes so that nonsignatory airlines also benefit from the suspension of landing fees, he said.

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Star-Bulletin reporter Russ Lynch
contributed to this report.