Pacific Wings, Hawaiian Airlines and Aloha Airlines, seeking an anti-trust exemption to coordinate capacity in the interisland market, ran into more turbulence yesterday.
American oppose
airline deal
The carriers object to cooperation
between Aloha and HawaiianBy Dave Segal
dsegal@starbulletin.comMaui-based commuter airline Pacific Wings and American Airlines both raised objections to the Hawaiian-Aloha proposal just four days after the U.S. Department of Justice weighed in with its disapproval in a letter sent to the Department of Transportation in Washington. Yesterday was the deadline for the public to comment on the proposed exemption.
Pacific Wings, which received a one-week extension to comment on the Hawaiian-Aloha application, said in its filing with federal regulators yesterday that approving the exemption would inhibit competition, promote excessive market domination by the two carriers and foster a business climate conducive to fare increases. Pacific Wings also said the exemption would "reward continuing inefficiencies and mismanagement of resources by carriers whose history of high costs and poor returns in some of the nation's busiest air corridors began years before the events of September 11."
American Airlines, meanwhile, said in its filing that it was concerned passengers traveling on American beyond Hawaii gateway cities "may find it more difficult or perhaps impossible to obtain seats when and where they want to travel on a connecting segment within Hawaii." American, which has code-share agreements with Aloha and Hawaiian, requested that current seat capacity not be reduced and that procedures be put in place to prevent pricing coordination if the airlines are permitted to coordinate their schedules. American also asked for an extension of yesterday's deadline to review the Justice Department's comments because they were filed Friday just prior to the holiday weekend.
Spokesmen for Hawaiian and Aloha airlines did not return phone calls.
Pacific Wings, which offers more than 50 daily interisland flights, has five planes and will add three new prop-jet aircraft later this month, according to Pacific Wings President Greg Kahlstorf.
"If the carriers were to lay their schedules on top of ours, or if they were to eliminate interisland flights that don't connect with one of their mainland arrivals or departures, they could effectively capture all the high-yield tourist traffic, leaving the relatively low-yield kamaaina traffic," Kahlstorf said. "That would be devastating to any competitor in this market, particularly if they're acting in collusion under an anti-trust exemption."
Kahlstorf also blasted the two airlines for not providing his company with a copy of the antitrust exemption application despite Pacific Wings' presence as a competitor.
"If the airlines are this arrogant in their handling of this in the absence of an anti-trust exemption, it's not difficult to imagine how they would treat us when they're protected by anti-trust immunity," he said.
Hawaiian and Aloha filed for the exemption in July to coordinate capacity on the five most heavily trafficked interisland routes. They wanted to avoid too many flights running nearly empty at certain times of the day and said they would not discuss routes or fares with each other.
But Kahlstorf insists that fewer flights will mean higher fares.
"They want to cut capacity and increase profits," Kahlstorf said. "That means seats will decrease and profits will go up if they act together. There's a financial disincentive for either airline to capture more market share, which is absolutely foreign to every concept of free-market competition."
Hawaiian and Aloha have asked for the immunity to run through Oct. 1, 2003.
Transportation Secretary Norman Mineta has until Oct. 1 to decide on the application.