Star-Bulletin file photo
Airlines serving Hawaii airports have enjoyed a two-year
waiver on landing fees but Gov. Ben Cayetano says he
has no intention of renewing the moratorium.

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Airlines’ free ride
in Hawaii nears end

A waiver on landing fees
is about to expire

By Russ Lynch
Star-Bulletin

The airlines' two-year break from having to pay state landing fees at Hawaii's airports, which saved them about $70 million, is almost over and Gov. Ben Cayetano says he won't renew it.

The waiver started in early September 1997 and the fees are scheduled to resume Sept. 1.

However, the airlines said they hadn't expected it to last beyond the planned two years and they are grateful for what they did get.

United Airlines managing director-Hawaii, Norm Reeder, said landing fees are "a cost of doing business in Hawaii" and the airline enjoyed the waiver. "We are very appreciative of the governor's extension of this assistance to the airlines, giving them an incentive to further their investment in Hawaii," Reeder said.

The money United saved -- not yet figured out but estimated for the two years to be about $10.6 million -- supported promotion and "helped stimulate our investment" in the Hawaii market, Reeder said.

Keoni Wagner, a spokesman for Hawaiian Airlines Inc., which saved about $6 million a year in its Hawaii costs, said the end of the waiver is "something we have been expecting and have taken into account in our planning."

Both Hawaiian and interisland competitor Aloha Airlines, which saved $5.5 million a year, have said recent profits were partly due to not paying the landing fees. Lower fuel costs and strong business from the mainland also played a part, they said.

John Thatcher, executive director of the 24-airline Airlines Committee of Hawaii, said the airlines had been told weeks ago that the waiver would not be continued. Now, the state will have to get into negotiations with the airlines to decide on new rates, he said.

Under its rules, the state takes the total cost of running the airport system, subtracts what it gets from concessions such as the duty-free business and airport retailers and restaurants, and holds the airlines responsible for the rest.

That, said Department of Transportation spokeswoman Marilyn Kali, is why there are ongoing talks with the airlines about airport costs and operations.

Kali said landing fees will be due again effective Sept. 1, but just what they will be has yet to be decided.

In the past the airlines have sometimes argued that Hawaii landing fees were high compared to other destinations and they demanded more restraint on the part of the state in spending on airport development and construction.

Continental Airlines Inc.'s Ron Wright, managing director of sales and marketing for the Hawaii region, told a recent travel industry meeting that the public and the industry don't always recognize that the airlines and other airport users must share the cost of all 17 of the state's airports, even though some, like Continental at Honolulu Airport, use only one.

It is necessary to address the "cost-benefit ratio of new airport infrastructure," Wright told a meeting of the Hawaii chapter of the Travel & Tourism Research Association.

For example, Continental will be required to pay a share of any plan to lengthen the runway at Kahului, Maui, or the costs of the state's changes at what was Barbers Point Naval Air Station.

These aren't things that benefit Continental directly, Wright said. He said he would like to see partnerships between the state and the private sector to work out ways to resolve such issues in a way that helps all.

When the waiver was announced, the airlines estimated it would save them a collective $36 million a year.

Most of them increased their spending to promote Hawaii, something Cayetano let the airlines know he wanted, although he made it clear that the waiver contained no "quid quo pro" demand for that.

Basically, the waiver came because the airport fund was oversubscribed and the airports system did not plan immediate expenditure of its surplus. Legally the money couldn't be used elsewhere in the state budget so Cayetano gave it back.

The airlines did respond, however, and that effort -- along with a boom in the mainland economy -- resulted in a substantial increase in tourism.

Tourist arrivals from the mainland are running more than 5 percent ahead of where they were last year.