FL MORRIS / FMORRIS@STARBULLETIN.COM Halau Hula Olana members Malia Davis, left, Sha-lei Kamauu and Mariah Limatoc sang songs with Teya Apana, right, as they waited for their flight to Hilo aboard Hawaiian Air yesterday. The halau had been ticketed with Aloha Air before it shut down.

Lawmakers push help for airlines still flying

The bills would let carriers pay no taxes on fuel and would make loan guarantees

With the bankruptcy of 61-year old Aloha Airlines fresh on their minds, legislative leaders think now might be the time to examine the relationship between Hawaii's air carriers and the state.

The Senate Ways and Means Committee pushed forward a bill yesterday to provide loan guarantees to local airlines, including Hawaiian Airlines, go! and Island Air.

The measure, House Bill 509, was first planned to help Aloha out of bankruptcy, but would now be available to the existing air carriers.

Charles Willis, owner of Island Air's parent company, told the Ways and Means committee his company could take advantage of such a loan for between $7 million and $10 million.

The fare war triggered by go! has turned into a crisis with soaring fuel prices, Willis said.

"The interisland fare wars have caused financial instabilities in the marketplace resulting in the reduction of service," Willis said.

Ways and Means Chairwoman Sen. Roz Baker acknowledged that go! also would be able to tap into the loan program.

"If they have gotten into trouble because of their own predatory pricing practices, I think it would be problematic for go!," Baker added.

The loan guarantee amount was left blank in the existing version of the bill, but Baker (D, Honokohau-Makena) said she was calculating a $50 million total loan fund.

On Monday, the Senate passed back to the House a bill to exempt local airlines from the state excise tax on the purchase of aviation fuel. The bill has been under discussion for the past three years.

Gov. Linda Lingle said on Monday her administration would support HB 2860.

Three House committees are expected to examine this morning the air carrier situation with reports from the state Transportation Department, the Hawaii Tourism Authority, the hotel association and the airline pilots union.

Rep. Joe Souki, Transportation Committee chairman, said the briefing will review the impact Aloha's shutdown has on interisland travel, tourism and Aloha employees.

Also on the mind of House and Senate leaders is the unregulated nature of air transportation.

Souki said he had sponsored legislation in 1993 to ask the federal government to regulate air travel within Hawaii, much as it does in Alaska.

"We have had this for so many years, but Congress would need to be brought in for the enabling legislation.

"Our highways are the air and water," said Souki (D, Waihee-Wailuku).

Senate President Colleen Hanabusa agreed, saying that with just five weeks left in this legislative session, there might not be enough time to examine the issue, but that it should be considered.

"This is a discussion we need to have. We should look at it from the consumer's viewpoint and see what we need to do to ensure that there is no interruption in service," said Hanabusa (D, Nanakuli-Makua).

Legislators also want to know how the demise of Aloha fits into the state budget plans and how it will change the state's $2.3 billion transportation modernization plan.

On Monday, Lingle said the construction plan "was prepared in modules" so that portions could be changed or dropped without affecting the entire state airport system.

Lingle, however, said Aloha owes the state about $4.5 million in landing fees and other debts.

About $2 million of that, Lingle said, was money owed from Aloha's 2006 bankruptcy.