Sunday, July 29, 2001

The town of Hana on Maui has two primary links to the
outside world -- the winding Hana highway and its small airport.

Relying on a wing
and a prayer

Even in isolated Hana, budgetary
decisions from Washington, D.C.,
can ripple through the local economy

By Lyn Danninger

For residents of the geographically isolated town of Hana on Maui, distance is both a blessing and a curse.

The district's splendid isolation has allowed it to preserve much of what makes it special -- natural beauty and an unhurried way of life. But conveniences that urban residents take for granted -- ready access to goods and services -- are not always easily available.

It's a balance residents have been happy to accept over the years as the price of maintaining a lifestyle held dear.

But even a small town on a small island in the middle of the Pacific is at the mercy of government mandates from as close as Kahului and as far as Washington, D.C.

Early next year work will begin on the area's main thoroughfare. The serpentine highway winds 33 miles from Haiku to Hana. But more immediately, work will commence first on a second stretch of road that connects Hana town to its even more remote neighbors, Kipahulu and Kaupo.

Some of the highway's 56 one-lane bridges, crumbling from years of wear and tear, now need extensive repair work.

Hana residents rely on the federally subsidized
single-runway airport for services ranging from mail
delivery to dentists who fly in every week.

With an average of 1,200 to 1,400 cars traveling the road every day, residents fear a visit to heavenly Hana and beyond could soon become the road trip from hell.

Dan Simone, newly elected president of the Hana Business Council, wonders what will happen to the visitor-dependent local economy and the ability of some of the area's residents to commute to jobs "outside," as residents refer to the world beyond the Hana district.

"A lot of (the bridges) are in desperate need," Simone said. "Some of them can be bypassed, but not all. There's a possibility the road could be shut down for months at a time."

More worrisome yet for residents, still no word has come down from county officials on how they plan to handle any shutdowns between Hana and Kipahulu.

The state's portion of the road, from Haiku to Hana, though not in as bad a shape as the Hana to Kaupo stretch, where 12 bridges are in dire need of repair, will have to hold up a further three to four years until federal funding is secured for the repairs, said Simone's wife, Sandy, who along with her husband, has been following matters closely.

"They (the county) are anticipating they'll do one bridge per year in the county district from Hana out to Kipahulu. The biggest concern is emergency vehicles and mail and for people getting to work at the hotel," she said.

But if uncertainties about the area's main artery aren't bad enough, say the residents, now the future of Pacific Wings, the small airline that serves remote communities like Hana and its surroundings, is also under threat. Pacific Wings runs two flights day from Oahu to Hana and four flights from Kahului to Hana.

A proposal that would end federal subsidies to some of the nation's small airports would make it difficult for the airline to maintain its current level of service to some of the remote areas it serves, says company President Greg Kahlstorf.

Pacific Wings serves eight cities on every island except Kauai and is the only airline that offers direct service between Maui and Lanai. While the airline competes with Island Air in some markets, its primary focus is on markets subsidized by the federal Essential Air Service Program.

Three of Hawaii's small airports -- the Big Island's Kamuela, Molokai's Kalaupapa and Hana -- receive about $1.2 million in support. The EAS program was created after airline deregulation in 1978 as a temporary way of making sure more isolated areas in the country could count on air service.

In the past, Hawaii's representatives successfully fought to have the state, along with Alaska, exempted from any cuts.

They are prepared to tackle the problem again to preserve Hawaii's position should the need arise, said a representative from Sen. Daniel Inouye's office.

EAS program consultant Kevin Adams said congressional budget cuts have created problems for the service.

Cashier Billie Jo Ige rings up customer Joseph Villiarimo
at the Hasegawa General Store, which relies on Pacific
Wings airline for many of its goods.

"In 1995 when there was a similar budget shortfall they made cuts to our program but at the same time told us not to eliminate any points," he said. "That leaves us with the obligation to find some other way like cutting back on the number of flights."

While EAS has so far withstood threats to eliminate it, the latest rules proposed by the U.S. Department of Transportation would end subsidies for any community within 100 miles of a medium-sized or major airport, within 70 miles of a small hub airport, or within 50 miles of an airport with scheduled jet service. The most likely to lose subsidies would be Kamuela airport.

Pacific Wings' Kahlstorf says a loss of any one airport through a change in the rules would likely affect service to the others. While Molokai's Kalaupapa and Hana may not be direct targets for elimination from the EAS program, the Big Island's Kamuela airport is a likely candidate due to its proximity to Keahole-Kona International Airport.

A loss of one airport would force the airline to move away from its current community-focused flight schedule to one that would better fit with mainland arrivals and departures, Kahlstorf said.

Since deregulation, larger carriers have had no incentive to serve small markets, leaving small carriers like Pacific Wings to establish the niche. Nimble enough to maintain service to remote areas even as subsidies fall short of increased fuel costs, smaller airlines have helped small communities like Hana maintain their way of life and remain economically viable.

Hana residents are incredulous that the federal government could even consider any change to the EAS program, especially with roadwork scheduled.

"What happens if we have medical emergencies or fires?" asked Simone.

Many elderly residents rely on Pacific Wings to take them to doctor's appointments in Kahului and Honolulu. Expectant mothers must also deliver their babies in Kahului. The dentist and a district nurse fly in for weekly visits. Specialized blood test samples and x-rays routinely go outside for review and diagnosis.

Vehicle registration comes to Hana once a month, department of education specialists fly in. Even lost keys to visitor rental cars have been known to arrive via Pacific Wings, says one of the town's more well-known residents, Harry Hasegawa, owner of the famous Hasegawa's General Store.

Hasegawa's is one business that makes good use of the flight service.

"We are the agents for U.P.S. so there are anywhere between 10 and 40 parcels a day coming in," Hasegawa said.

Then there's the town's supply of daily newspapers, lost luggage for the Hotel Hana's guests, small car parts, spare or needed parts for generators and computers, cash for the bank and business customer deposits. Some vendors also send their products directly from Honolulu to Hana.

Even the federal government would be inconvenienced, he says. The post office relies on the airline to deliver some of the town's mail.

Pacific Wings flies about 8,000 passengers a year to Hana, Kahlstorf said. A significant portion of those passengers, especially in summer, are guests of the town's largest employer and primary economic engine, the Hotel Hana.

The hotel's fortunes have gone up and downs in recent years with several ownership changes. A new owner takes over Aug. 15, but residents worry the road work and any threat to the air service would harm the hotel's business.

Hana residents are acutely aware that their fortunes are directly connected to the future success of the hotel. Close to 200 of 1,855 Hana residents are employed there.

The new owner, Peter Heinemann, says he will spend about 12 months to restore and enhance the hotel. But Heinemann's well-heeled guests will expect access to air service. A one-way drive down the scenic Hana highway is part of the overall guest experience, but not everyone will want to take the 617 hairpin bends twice.

The hotel also has a high percentage of repeat guests who don't want to drive every time they visit.

With a Dollar-Rent-A-Car at Hana's airport, guests can leave their cars in Hana and fly out. Air service is also used each week by some of the hotel's staff and others who contract to provide services for the hotel.

Patrick Robinson, owner of the Hana Coast Gallery within the Hotel Hana, has lived in the area for 11 years. He depends on air service to bring in much of the art work the gallery displays. Sales are made to hotel guests and some of the affluent clientele who fly to the hotel for lunch, he said.

They've been good customers over the years and like other Hana businesses, problems with access to the area would have a huge impact on his business.

"We would miss the clientele should anything happen to the air service," he said.

But he's also concerned that any cuts in service would eventually mean higher fares for residents as well. Right now it's $59 for a one-way ticket to Kahului or Honolulu. Not everyone could afford further increases, particularly the elderly, he said.

Long-time resident Jeannie Pechin has lived in Hana for close to 30 years.

While some things have changed, the important things have remained the same, she said. And that includes keeping the air service.

"It's about maintaining the quality of life," she said.

Hotel Hana starting
a new chapter

By Lyn Danninger

When larger-than-life San Francisco entrepreneur Paul Fagan saw the economic dislocation created by the failure of the Hana Sugar Plantation in the 1940s, he decided to do something about it.

In 1944, he bought 14,000 acres of land in and around Hana to raise Hereford cattle. He also set out to create one of the first resorts outside Waikiki when he added 66 acres for the hotel.

Staffed by local residents, it wasn't long before Fagan's hotel, eventually known as the Hotel Hana-Maui, began attracting the rich and famous.

The hotel's newest owner, San Francisco-based Passport Resorts LLC, intends to continue that tradition when it officially takes ownership Aug. 15.

The Hotel Hana will join Passport's two other hotels, the Post Ranch Inn in Big Sur and the Jean-Michel Cousteau Resort in Fiji.

Peter Heinemann, one of Passport's partners, was in Hana last week.

Heinemann said his company looks for properties in unusual and beautiful locations. The Hotel Hana fit well with the company's holdings, he said.

"There's a lot of potential synergies between the three properties," he said.

While Heinemann said the property is in better condition than he had hoped, it will still need some work, said.

"It needs some fine tuning and loving care," he said.

It may also end up a little smaller, around 80 rooms rather than the current 96.

With plenty of local resources to draw on, Heinemann said he also intends to increase hotel activities related to art and culture, outdoor activities such as hiking, improve the hotel's spa facilities and develop a children's activity program.

"We want guests to be able to experience old rural Hawaii, yet still have creature comforts," he said.

A view from the lobby of the Hotel Hana. The hotel
has changed ownership several times in the past few years.

The price range for a stay at the rejuvenated hotel is yet to be determined. But Passport's other hotels range between $450 and $850 a night.

The latest sale, for an undisclosed price, is the hotel's second in less than two years.

The deal includes the hotel, the Hana Ranch Store, Hana Ranch Restaurant and Hana Gas Station.

Passport purchased the properties from Meridian Resources.

Several years ago, Hana's cattle ranch was sold to San Francisco billionaire Gordon Getty and his family before ending up under Meridian's control. During its tenure, Meridian invested around $2 million in improvements to the hotel.

Occupancy has been on the rise since that time, now up to about 50 percent from around 10 percent two years ago.

Local residents are cautiously optimistic about the sale.

While the approximately 200 employees of the hotel and related properties have been told their jobs will be terminated when the sale goes through, the workers are hopeful the new owners will need skilled personnel already familiar with the property.

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