Airlines cutbacks shouldn't hurt state
By Kelly Yamanouchi
Advertiser Staff Writer
The turmoil and cost-cutting sweeping through major carriers in the airline industry is unlikely to dramatically cut into Hawai'i's lifeline of flights from the Mainland, which now bears the burden of sustaining the state's troubled tourism industry.
United Airlines, the largest carrier to the Islands, yesterday became the latest airline to say that the continued sluggish travel industry is forcing it to undertake dramatic cost-cutting, including the possibility of filing for bankruptcy protection in the fall and cutting flights from its schedule.
The news comes the same week in which US Airways filed for bankruptcy protection, and Delta and American airlines announced they were making dramatic cost cuts to streamline business in an effort to survive the slump. Continental Airlines also has said it is reviewing operations to contain costs.
The moves all come at a crucial time for Hawai'i's No. 1 industry, which continues to suffer from heavy discounts cutting into hotel revenue and lackluster arrivals from Japan. The future health of the nation's airline industry — and the number of visitors they can bring to the Islands — remains a key factor for the rest of the tourism industry and brings yet another challenge to those who have been searching for solutions to lure tourists' spending back to Hawai'i.
However, some Hawai'i experts and economists said yesterday that the cutbacks the airlines may be making will likely not hit Hawai'i flights as hard as others because of the state's role as a leisure destination. And for now, the major airlines said yesterday, it is too early to determine whether any cuts in flights or staff will be made in Hawai'i.
Tom Renville, managing director for United in Hawai'i, said that the leisure-travel market has come back quicker than anything else, especially business.
Renville said that United's Hawai'i flight schedule is "pretty much set through the end of the year." But, he said, next year, "it depends."
For now, United has restored its Hawai'i service to pre-Sept. 11 levels, as well as added flights including a seasonal Saturday Kona-Denver flight that "shows our confidence in this market for one, but also our support of this market," Renville said.
United has about 20 flights a day out of Hawai'i, and employs about 1,569 in the state.
On Tuesday, American Airlines said it would reduce its fleet of airplanes, cutting capacity and eliminating about 7,000 jobs by next March. Yesterday, an official with the airline had no comment on how Hawai'i operations might be affected.
"We really haven't finished the schedule for the fall, so it's very difficult at this point to do any projections," said Mary Frances Fagan, a spokeswoman for American.
The airline has nine daily flights to Honolulu and five daily flights to Maui, with two additional flights to Honolulu and one additional flight to Maui on Saturdays. It employs about 206 people in Honolulu.
Continental Airlines spokeswoman Ruth Ann Becker said yesterday that the airline is not considering reducing its Hawai'i flights. Continental has four daily flights from the Mainland to Hawai'i and one from Guam to Hawai'i, and more than 250 employees here.
The pressures facing national carriers also are affecting local carriers.
"We certainly are under a lot of the same pressures as a lot of the major carriers are in terms of the economics of our business, and capacity is one of the major issues being scrutinized throughout our industry right now," Hawaiian Airlines spokesman Keoni Wagner said yesterday.
Wagner said the airline is "looking very carefully at how we match capacity to demand and in particular with an eye toward the fall," when there is a possibility of service cuts.
Hawaiian has 14 daily flights from the Mainland to Hawai'i. He said it is typical for Hawaiian to adjust capacity with changes in seasonal demand and it remains to be seen whether adjustments this year will be more severe, "but there is a concern because demand hasn't completely bounced back from 9/11."
A spokesman for Aloha Airlines, which has filed a joint application to the federal Department of Transportation to cooperate on interisland service for a limited time with Hawaiian, said he didn't not foresee any changes in Aloha's Hawai'i-Mainland flights.
Eugene Tian, tourism research branch manager for the state Department of Business, Economic Development & Tourism, said data show that it's more likely that airlines will cut international flights rather than domestic flights to Hawai'i.
"We were thinking that the Japanese visitor (data) may increase or may recover during the summer months, but so far that data for the summer doesn't look like it's going to recover," he said. "The data show that we have an increase in visitors from the U.S."
Tian said even after cuts are made, it's unlikely that there will be a lack of capacity for passengers who want to come to Hawai'i.
"The cuts usually come after a decrease in demand," he said. "I don't really see a major impact, because it's mainly demand-driven." However, "if you cut the flights it's likely to increase the airfare," which could lessen passengers' willingness to travel and impact visitor arrivals.
Many in the state's tourism and hotel industries are closely watching the latest developments in the airline industry.
Keith Vieira, Starwood Hotels & Resorts Worldwide Inc.'s director of operations for Hawai'i and French Polynesia, said he is concerned about sustaining flight capacity into Hawai'i.
"We won't be successful unless we have enough air seats," Vieira said. "Nothing has a bigger impact."
Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.
