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The Honolulu Advertiser
Posted on: Friday, July 19, 2002

EDITORIAL
Caution is needed on airline exemption

The signs are that Gov. Ben Cayetano is approaching a new proposal from Hawaiian and Aloha airlines for a limited antitrust exemption with a fair degree of caution.

And that's appropriate. While we all want the two airlines to survive and prosper, we have to be crystal-clear on the purposes and impact of any exemption.

Under legislation passed after Sept. 11, the airlines have the right to apply to the U.S. Transportation Department for permission to cooperate in ways that are illegal under existing antitrust law. But before the application can go forward, it must be reviewed and approved by the governor.

The primary consideration in granting any exemption must be maintenance of interisland service. That is, there is little to gain if the exemption simply creates capital for the expansion of service to the Mainland and beyond.

While the aggressive move into Mainland service by both airlines is welcome, that is not the public policy issue that should concern the governor.

What is paramount to our long-term economic health is continuation of regular, comprehensive air service for goods and passengers among our Islands.

A second consideration is whether the exemption will indeed help ensure the long-term viability of two competing interisland airlines. That is how it was sold to us in the beginning.

The exemption expires on Oct. 1, 2002, although it could be extended a year. A convincing case must be made that this will be enough time for the two carriers to get themselves firmly on their feet.

The airlines have explained how they find themselves in almost ruinous competition where half-empty planes are taking off "wingtip to wingtip" and smaller destinations are being served more times a day than demand would require.

If some of this costly and unnecessary duplication can be eliminated through a level of cooperation that can't happen under antitrust law, then an exemption might be warranted.

But it must be based not primarily on the needs of the airlines, but on the very basic need to keep up a stable and comprehensive interisland air service system for this state.