Monday, July 16, 2001

Federal subsidies to
two Hawaii airports
in danger of being cut

Air service to Kamuela
and Hana is under review

By Mark Libbon
Newhouse News Service

Federal money that supports air service to Kamuela on the Big Island and Hana on Maui is under congressional scrutiny, as part of a review of the $58 million Essential Air Service program the backs service to 115 communities nationwide.

The program is a candidate for elimination in a review by the Congressional Budget Office, though it seems likely Congress will maintain service for at least the time being.

In Hawaii, air services are subsidized to three neighbor island communities -- Kamuela on the Big Island, Hana on Maui and Kalaupapa on Molokai -- through the EAS program. But two of those communities, Kamuela and Hana, would be affected if the EAS subsidy is withdrawn.

Pacific Wings Airlines Ltd. receives the federal money to provide air service to all three locations, which are too small for frequent connections.

Company President Greg Kahlstorf said it would be difficult to maintain service without the subsidy.

Kahlstorf said air services are arranged around people's schedules, such as getting to the doctor for an appointment or to work.

"They can call us in the morning and be on a flight by the afternoon if they need to. That's one of the nice things about the subsidy. It allows us to maintain a community focus," he said.

Without the subsidy, it would be necessary to schedule flights that would better fit in with mainland arrivals and departure in order to stay in business, he said. "Right now (the flight schedule) represents the culture, commerce and lifestyles of the communities we serve as opposed to having flight schedules dictated by when mainland flights arrive and depart," he said.

Kahlstorf said members of the small communities are already concerned what will happen if the subsidies are removed. He recently addressed a community meeting in Hana about the impact of a subsidy withdrawal.

"It's a very big issue of concern," he said. "I gave a presentation to about 50 members of the Hana Business Council on the impact of the proposed cuts. It's going to have a huge impact on them."

Kahlstorf has also prepared a report for the state's Legislative Reference Bureau on the impact on the communities if the subsidies are lost.

The Congressional Budget Office noted that the states or communities that benefit from air service could provide the subsidies, which were originally meant to be a transitional benefit when Congress deregulated the industry in 1978. To protect markets that could be abandoned through deregulation, Congress said no airline could pull service if it was the only carrier serving that market.

Federal rules say EAS cannot help a community that is within 70 miles of a medium or large hub of airline service, such as Newark, N.J., or Pittsburgh. In his proposed budget, President Bush wanted to "ensure the most bang for the buck" by eliminating subsidies to cities within 70 miles of even smaller hubs. Others airports that faced losing their subsidy were Muscle Shoals, Ala.; Hot Springs, Ark.; Jonesboro, Ark.; Pueblo, Colo.; Topeka, Kan.; Owensboro, Ky.; Alamogordo, N.M.; Watertown, N.Y.; Enid, Okla.; Oil City/Franklin, Pa.; Ponce, Puerto Rico; Brooking, S.D.; Jackson, Tenn.; Oshkosh, Wis.; Laramie, Wyo.; and Oneida, N.Y.

The subsidies are becoming more expensive as fuel costs increase and regional airlines use larger aircraft. For each of the Continental Connections flights between Utica-Rome and New York City, for example, taxpayers put up $935.93, according to U.S. Transportation Department records. That's the equivalent of eight phantom passengers.

But members of Congress defend them as vital to the communities they serve.

Among the critics of the Essential Air Service program is Citizens Against Government Waste, a private watchdog group. "This has been on our radar, no pun intended, for a long while," spokesman David Williams said.

Star-Bulletin reporter Lyn Danninger
contributed to this report.

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