Hawaii’s aviation industry needs mending

THE ISSUE Legislators are considering several measures to prevent further damage to what is left of the state's aviation industry.

Legislation that would provide loan guarantees to airlines is too late to save Aloha Airlines from ending passenger service but lawmakers should take this and other action to prevent recurrence of such a debacle. Further regulation is needed to block what Aloha called predatory pricing practices.

House members heard testimony this week that Aloha was not the only Hawaii airline to incur damage from the fare war. Charles Willis IV, owner of Island Air's parent company, said he was forced to reduce its workforce by 40 percent -- laying off 150 employees -- because of a reduction in revenues by 30 percent, while closing freight service to and from Lihue, Kauai, Kona and Hilo on the Big Island, and Maui.

The Legislature should recognize the wide effect of the fare war and fuel price increases by including more than 120 certified air carriers in the loan guarantee program. Willis said his company could take advantage of a loan of up to $10 million.

Ironically, Mesa Air Group's go! airline, which Aloha accused of predatory practices, would be eligible for such a loan guarantee.

Sen. Roz Baker, chairwoman of the Senate Ways and Means Committee, envisions a loan fund of $50 million. Gov. Linda Lingle supports the bill.

Meanwhile, the Senate approved a House-passed bill that would relieve local airlines from the state excise tax on the purchase of aviation fuel. Planes that fly out of state already are exempt from the tax.

Scrutiny also should be given to the proposed sale of Aloha's cargo operation to Saltchuck Resources Inc., the Seattle-based parent to Young Bros. Ltd., which dominates Hawaii's interisland cargo by sea. Aloha has accounted for about 85 percent of air cargo between islands. While different goods go by sea and air, one company domination of both types of freight could result in an overall anticompetitive plight.

A 15-year-old proposal by Rep. Joe Souki that Congress approve federal regulation of intra-island air travel is badly needed. Alaska already is subject to such regulation because the Federal Aviation Administration treats the 49th state as a region, while Hawaii is considered part of the FAA's Western Pacific region, which encompasses California and Nevada.

"Our highways are the air and water," said Souki, chairman of the House Transportation Committee. Senate President Colleen Hanabusa agreed, but the state's congressional delegation should lead the way to achieve the needed legislation to redraw the FAA's regional lines.