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The Honolulu Advertiser
Posted on: Tuesday, February 12, 2002

Airline merger worries Abercrombie

By Frank Cho
Advertiser Staff Writer

Aloha and Hawaiian airlines would consolidate their fleets under a proposed $200 million merger. The plan has met with opposition from consumer groups, many airline employees and some lawmakers.

Advertiser library photo • December 2001

U.S. Rep. Neil Abercrombie is raising questions about the proposed $200 million merger of Hawaiian and Aloha airlines in letters sent to U.S. Attorney General John Ashcroft and Transportation Secretary Norman Mineta.

Abercrombie said in a statement yesterday that in the letters he says he is concerned about the impact the merger could have on interisland passenger traffic and routes and increased costs to consumers.

"This merger could have a detrimental impact on our island state because it would consolidate the only two air carriers that fly passengers and cargo from island to island," wrote Abercrombie, who could not be reached for comment yesterday.

Abercrombie's letters come amid growing opposition to the proposed merger by consumers and some state legislators.

Yesterday, Citizens for Competitive Air Travel, a group started by Hawaiian Airlines' employees, presented a petition to Gov. Ben Cayetano's chief of staff that they said contained the signatures of more than 20,000 people opposed to the merger.

"The citizens of Hawai'i don't want a monopoly and they don't want the consequences of a monopoly," said Richard Port, former state Democratic Party chairman and spokesman for the group opposing the merger.

Port said consumers are concerned about the possibility of an increase in passenger fares, and costs to small businesses that ship cargo between the islands. Port also said there is concern that a merged company would cut 600 to 1,800 jobs.

"What we have is a situation where a Mainland entrepreneur is coming in to Hawai'i to create a monopoly. We would like to see him purchase an airline, but not both airlines," Port said.

State Sen. Ron Menor, D-18th (Mililani, Waipahu, Crestview), said the Senate will conduct hearings on resolutions opposing the merger.

"We have not been presented with any additional data which would demonstrate the need for the merger, so I continue to have strong concerns, and I continue to oppose it," Menor said. "I think many of my colleagues feel that way, so I think there is still strong sentiment with respect to the merger."

Menor said the final decision to approve the merger rests with the attorney general and federal regulators.

"But I think that by taking a strong stand and making a strong statement on this issue, the federal authorities and hopefully the state attorney general's office will at least be more sensitive to consumer concerns before making a final decision as to whether or not to approve the merger."

A spokeswoman for TurnWorks, the Texas company that first proposed the merger in December, declined to comment on the petition, but said a lot of questions will be answered when the airlines file their merger documents with the Securities and Exchange Commission in the next several weeks.

In spite of the heated opposition, the fate of the merger rests largely with the antitrust review being conducted by the state attorney general's office and the U.S. Department of Justice. Unless Aloha or Hawaiian decides to back out, the antitrust lawyers have the only real power to stop the deal, analysts said.

TurnWorks' chief executive, Greg Brenneman, had pledged to freeze unrestricted airfares for two years and even said some tickets would be priced below current levels in response to community concerns.

But in Abercrombie's letters, the congressman raised concern about the merged airline cutting service to sparsely populated islands such as Lana'i and Moloka'i, where fewer than 10,000 people live, if the merged airline deems those routes to be unprofitable.

"This would have severe consequences for residents and on the local island economies which rely heavily on tourism," Abercrombie said. "As the sole carrier, the new company would be able to hold residents hostage by charging any price it chooses."

Advertiser capitol bureau chief Kevin Dayton contributed to this report.

Reach Frank Cho at 525-8088, or at fcho@honoluluadvertiser.com.

Correction: State Sen. Ron Menor represents Mililani, Waipahu and Crestview. A previous version of this story was incorrect.