Merged airline proposes cap on interisland fare
By Susan Hooper
Advertiser Staff Writer
Interisland one-way coach fares would be capped at $78 for two years on the new carrier created from the merger of Hawaiian and Aloha airlines, with residents qualifying for some interisland fares of $55 or less, according to a proposal made yesterday by the company overseeing the merger.
TurnWorks, which is engineering the merger, also said the new airline plans to continue flying to all of the interisland markets now served by Aloha Airlines, Aloha Island Air and Hawaiian Airlines, and to honor all existing cargo contracts.
The details come three weeks after the carriers announced plans to combine, creating the nation's 10th-largest airline. Since the announcement, the proposed merger has drawn criticism and concern from residents and analysts who fear it will create a monopoly that will inevitably lead to higher ticket prices and poorer service in the interisland market.
Last week, the 26,000-member American Society of Travel Agents came out against the planned merger, calling it "anti-competitive and harmful to consumers," and noting that among other potential drawbacks the merger might harm the state's tourism industry if interisland ticket prices rise.
The proposal — which does not offer details on exact fare prices, how they might be applied, or how many flights would be offered in each market — was presented to the state attorney general's office yesterday morning.
"We appreciate them giving us their fare proposal, but we have a series of other issues to take a look at with respect to the propriety of the merger," said Rodney Kimura, a deputy attorney general involved in the state's antitrust review of the merger. "We have not signed off on this merger. ... We have a process we need to go through."
Among the proposals, the merged airline would guarantee kama'aina 10 percent of its inter-island seats at $55 or less, and an additional 20 percent at $60 or less, TurnWorks said.
Annual increases would be limited to the inflation rate, and the fares would be guaranteed for five years after the effective date of the merger, TurnWorks said.
Current one-way interisland coupons cost about $62, with some restrictions. Unrestricted fares are in the $70 range.
Under TurnWorks' proposal, the maximum one-way interisland coach fare for residents and visitors would not exceed $78 for the first two years after the merger, with increases no greater than the rate of inflation for the next three years, TurnWorks said.
The proposal notes, however, that the fares are subject to certain surcharges, taxes and increases — such as security costs imposed by federal or state charges and large increases in "uncontrollable" costs such as insurance or fuel.
TurnWorks also said its offer would not apply if a major airline came in to compete in the inter-island market.
"Fares on our new airline will be cheaper than you would find on similar routes on the Mainland," said Greg Brenneman, the former Continental Airlines executive who is leading the merger effort. "Hawai'i residents will find special deals well below $55 when traveling interisland, especially during off-peak hours."
Also under the new plan, all existing cargo contracts would be honored, with any increase in contract prices limited to changes in the inflation rate for the next five years.
In addition to plans for fares and service, work on the merger began moving ahead on several other fronts this week. Brenneman has met with employees of both airlines at the airports in Hilo and Kona on the Big Island, Lihu'e on Kaua'i, and Kahului on Maui, a spokeswoman said.
He met yesterday with Honolulu Mayor Jeremy Harris, and has met with Maui County Mayor James "Kimo" Apana, Hawai'i County Mayor Harry Kim and Kaua'i Mayor Maryanne Kusaka, their spokeswomen said.
The Monday meeting at Kahului Airport on Maui was closed to reporters, but one employee characterized it as "upbeat" and said there was a good exchange of ideas.
Aloha spokesman Stu Glauberman said Brenneman would hold more meetings with employees in Honolulu this week.
Unions for employees such as pilots, flight attendants and machinists are beginning the difficult task of merging the groups of Aloha and Hawaiian workers, a delicate process that has held up past airline mergers because it involves issues such as seniority, and in this case furloughs or layoffs.
Brenneman has said that fewer than 600 of the approximately 6,000 employees of both airlines likely would lose jobs in the merger.
Pilots for both carriers are represented by the Air Line Pilots Association; this week leaders of the union chapters of each carrier have been meeting to discuss how to merge the pilots' lists.
"We're hoping by the end of this week they'll have a decision on how they want to proceed with the seniority integration," said Stacy Platone, a spokeswoman with the pilots association's national office in Herndon, Va.
The Associated Press contributed to this story. Reach Susan Hooper at shooper@honoluluadvertiser.com or 525-8064.
