State's airlines anticipate relief aid

By Michele Kayal
Advertiser Staff Writer

Hawai'i's airlines could receive more than $30 million from an emergency federal grant program, according to some preliminary estimates, an amount that will help them weather the losses brought on by the sharp decline in tourism since terrorist attacks struck the United States.

Under a $15 billion package passed by Congress, commercial passenger airlines will receive $4.5 billion in direct aid to stem the losses they have suffered following the Sept. 11 attacks, which used commercial airliners to destroy the World Trade Center and damage the Pentagon.

According to the distribution formula devised by the Air Transport Association, the industry's lobbying group, Hawaiian Airlines could receive more than $24 million and Aloha Airlines more than $6 million. The details are still evolving, however, and preliminary estimates from ATA and from Rep. Neil Abercrombie's office range from $24.3 million to $32.2 million for Hawaiian, and from $6.9 million to $9.5 million for Aloha.

Aloha Airlines chief executive officer Glenn Zander said he expects his company to receive between $8 million and $10 million, which would help salve the mounting losses.

"If we receive $10 million that's a number that will certainly be within the estimate of losses that we're incurring," Zander said.

Hawaiian Airlines chief executive officer Paul Casey declined to comment on the amount he expects to receive, but said the figures are "in the ballpark."

Hawaiian received its first installment on Thursday, Casey said. Aloha expects to receive its money Monday, Zander said. The U.S. Department of Transportation began distributing half of the money to airlines this week.

ATA based its formula on a carrier's size, as determined by the number of seats it has and the number of miles it flies. An airline cannot receive more than it lost, however, regardless of its entitlement under the formula, said representatives of the ATA and the Department of Transportation.

The attacks plunged the nation's airlines into crisis, bankrupting some and forcing more than 100,000 layoffs industry-wide. Zander estimates that traffic on Aloha's interisland routes is down 30 percent, though Mainland business appears to be holding steady.

Hawaiian's traffic is down about 25 percent on its trans-Pacific flights, spokesman Keoni Wagner said, though the figures swing dramatically from day to day. Hawaiian's interisland flights are down somewhat less, he said.

Both local airlines were quick to announce flight reductions, and Aloha was the first to cut workers, reducing its employees by 250, or 8 percent, almost two weeks ago. Hawaiian followed yesterday, cutting 430 employees from its payroll, or approximately 12 percent of its work force.

Hawaiian Airlines received more bad news earlier this week, as Renaissance Cruises filed for bankruptcy, stranding 2,000 passengers wherever they were. Hawaiian supplies charter flights for the cruise line, and has two DC10-30 aircraft that were specially configured with more than 300 seats for that business. Casey said he is looking for new business to keep those planes in the air.

"We're actively pursuing charter opportunities," Casey said. "These long-range DC10-30s are perfect for military charters or companies, groups. So we're chasing charter business, which we're fairly successful at in general."

The federal dollars are only the most direct manifestation of aid to the airlines since the crisis. Hawaiian and Aloha continue to hope for an exemption from antitrust laws that will allow them to coordinate schedules and the number of flights they offer, Casey and Zander said. Other measures, such as a waiver on fuel taxes, have also been mentioned. The federal aid package would also allow airlines to apply for government guaranteed loans.

Early on, Gov. Ben Cayetano waived state landing fees, which could save each airline $6 million a year.

But to survive and thrive, airline industry executives say the carriers likely will need more than has already been given.

"The $5 billion cash infusion, plus a $10 billion loan guarantee program falls a bit short of what we feel the actual losses are likely to be," said David Swierenga, the ATA's chief economist. "So carriers will certainly be tightening their belts and seeing if they can make it on this."

Michele Kayal can be reached at mkayal@honoluluadvertiser.com