The September 11th attack
Aloha, Hawaiian receive antitrust law exemptions
By Andrew Gomes
Advertiser Staff Writer
Aloha and Hawaiian airlines will get broad exemptions from antitrust laws under the sweeping aviation security bill passed by Congress yesterday, allowing the airlines to work together on service, security, routes and pricing.
The federal legislation, which President Bush is expected to sign Monday, establishes new security measures and procedures nationwide. It also includes four measures designed specifically to assist Hawai'i's air transportation system and local airlines hit hard by the downturn in tourism since the Sept. 11 terrorist attacks.
The most significant of the Hawai'i-specific measures, added to the legislation at the request of U.S. Sen. Daniel Inouye, would allow the local airlines to operate outside federal law that prohibits carriers from communicating with one another on schedules, pricing and other competitive issues.
"The provisions will improve the ability of Hawai'i's transportation system to continue to function in times of crisis," Inouye, a Hawai'i Democrat, said in a statement yesterday.
Any collaborative changes proposed by the airlines will require approval from Transportation Secretary Norman Mineta, said Jennifer Goto Sabas, chief of staff for Inouye. The exemption will end Oct. 1, 2002, but could be extended for a year. Mineta also would have the authority to end the provision earlier.
Allowing interisland carriers to collaborate on scheduling and pricing would allow greater efficiency by eliminating costly duplication and overlaps — a half-empty Aloha jet and a half-empty Hawaiian jet flying from Honolulu to Kahului at roughly the same time, for example.
But some say such an arrangement could force consumers to pay more, have fewer choices of flights and result in the elimination of more jobs in an industry that already has laid off hundreds locally.
"I don't know how it's going to impact the consumer, but when competing companies start talking, it normally does not end up good for the consumer," said Bill Oliver, a vice president at The Boyd Group, an airline consulting firm in Evergreen, Colo.
Yesterday, representatives of Aloha and Hawaiian said they weren't sure how the companies might collaborate and said they were still studying what it could mean for their operations. Until the legislation is signed by Bush, the airlines are prohibited from any joint discussions.
Hawaiian spokesman Keoni Wagner said the major issue is scheduling flights. Both Hawaiian and Aloha have cut dozens of routes and laid off hundreds of workers in the wake of the attacks but still are flying with many empty seats.
Industry observers said they expect the carriers to move quickly to eliminate overlaps. Conceivably, the airlines also could share passengers, revenue, profits or losses, and save on the major expense of flying planes.
That would leave a number of pilots, flight attendants, mechanics and other personnel idle. Labor representatives expressed reservations yesterday about the new law.
"Labor has not been part of the process of construction of the (bill)," said Bill Lech, an Aloha captain and government affairs representative of the Air Line Pilots Association Council 80. "We're not sitting here with our arms crossed, saying, 'We don't want it.' We just haven't seen the case made for it."
Sabas said Inouye weighed labor concerns with the need to keep interisland service stable. "The senator felt very strongly about the need to maintain the integrity of the system," she said. "The goal is to ensure service for local residents."
Added Hawaiian spokesman Wagner: "It'll be very beneficial to Hawai'i. The air transportation system here is a lifeline."
Hyuk Park, an analyst with the San Francisco-based aviation consulting firm Roberts Roach & Associates, said that without competition, airlines are free to cut back such things as personnel, meals, even marketing.
Park said the government in Japan allowed three airlines to coordinate service in Osaka, and the result was predictable. "It was good for the airlines," he said. "It wasn't good for passengers."
Park also said he does not believe interisland carriers would lower ticket prices to boost sales volume. He said airlines have been known to aggressively lower prices to drive start-ups out of business, then raise prices soon after the competition is eliminated.
"In the airline industry, it's all about competition with other carriers," he said.
Other Hawai'i-specific provisions also are in the aviation security bill.
• Flexibility to modify passenger-screening requirements for interisland flights. Under recently implemented screening procedures, people who buy one-way tickets at the last minute with cash are flagged for additional security searches.
Sabas said the way many people use interisland travel in Hawai'i has led to a disproportionate number of residents being subjected to intense searches. Wagner said a significant number of passengers have missed their planes because of delays caused by the new requirements.
How the process is modified is up to federal and state transportation departments, Sabas said.
• Waivers to allow emergency shipment of mail, medical patients, medical supplies and other essential cargo within the Islands and between the Mainland and Hawai'i in the event of a national emergency and a ban on airline flights.
• Permission for the state transportation department to use federal airport improvement money for operational costs, including security.
State transportation spokeswoman Marilyn Kali said the department received $41.8 million of airport improvement money from the Federal Aviation Administration last fiscal year. She was uncertain how much is being contributed this year or whether there was a fund balance from previous years.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
