Thursday, December 20, 2001

Hawaiian and Aloha airliners moved on the tarmac yesterday as the deal was publicized.

Businesses fear
hiked fares

Travel agents, hotels and
wholesalers worry about cost
and seat availability

By Tim Ruel


Bullet Get ready for takeoff
Bullet Questions and answers
Bullet Employees, passengers worry
Bullet Political reaction to the deal
Bullet Ripple effects on tourism feared.
Bullet A profile on the new CEO.
Bullet Timeline

A merger of Hawaiian Airlines and Aloha Airlines would create a virtual monopoly in interisland travel, something Hawaii has never dealt with in the jetliner age.

The availability of seats and the likelihood that the new company would raise prices worry some tourism industry observers.

"There's major issues around this," said Wendy Goodenow, president and chief executive of travel agency HNL Travel Associates. "I'm scared to death as to what this might do."

The airlines have promised to keep prices the same for two years after the merger, but that only applies to their "unrestricted" fares, the ones you buy at the ticket counter for a flight at the last minute. Most travelers buy coupons.

"I think it'll just raise everything because they've got a monopoly," Goodenow said.

Panda Travel Inc., the biggest travel wholesaler in Hawaii, relies on competitive deals to sell coupons to travel agents and local customers.

"We were very surprised," said Anna Doell, manager of the firm's Kapahulu office. Panda is waiting to see what rate it will get from a single interisland carrier, she said, noting that the airline sales industry is already going through big changes, such as heading toward electronic ticketing.

There are also other issues to worry about.

Travel agents will have no choice of airline when they negotiate their commissions for interisland travel.

Local tour packaging companies, which typically select one of the airlines as an interisland partner, would all have to work with the same airline. How will they compete on price?

"I don't know. We've never had that situation before," said Helene "Sam" Shenkus, spokeswoman for Roberts Hawaii.

Having enough interisland seats available to tourists is critical for the hotels. "You also hope it's a convenient seat," said Keith Vieira, vice president and director of Hawaii operations for Starwood Hotels & Resorts Worldwide, which manages hotels on all major islands.

When asked if he was sure a single carrier could provide appropriate seating, Vieira said, "I guess we want to take the high road at this point and hope that they do."

Local tourism officials generally support the merger, saying Hawaii would be stuck with a monopoly anyway if one carrier went under. Aloha lost $4.3 million last year, and this year is shaping up to be even further in the red.

"I won't use the word monopoly. That's a negative word," said Richard L. Humphreys, who was recently appointed as interim chief executive officer and executive director of the Hawaii Tourism Authority.

Rates and seat capacity are important issues, but they are secondary to having a viable Hawaii-based airline, Humphreys said.

"We know the ultimate worst thing is that they financially can't survive," Vieira said.

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