Posted on: Thursday, March 7, 2002

ISLAND VOICES
Airline merger bad for state

By John Carroll

The proposed merger of Aloha and Hawaiian airlines is touted to be a great "new" idea — great for everyone in the state of Hawai'i. In 1970, the conventional wisdom was the same.

The Star-Bulletin led the campaign in the late '60s and early '70s to convince the people of Hawai'i that a merger of the two carriers was in "everyone's best interest." The major difference is that in 1970, both carriers were losing money, both were relying on federal subsidies and both were limited by the Civil Aeronautics Bureau to flying interisland. Both carriers were prohibited from flying beyond Hawai'i. These conditions do not exist today.

Aloha is staffed with about 3,000 loyal employees who have served it diligently over the years. Aloha managers' failure to refit their aircraft to meet stage-three standards, their late entry into the West Coast market and their choice of destinations, among other things, have caused Aloha to be, it is rumored, in shaky financial condition.

Hawaiian faced a similar dilemma in the late '80s and early '90s. Hawaiian employees made major concessions in pay, pension, work rules and benefits to bail Hawaiian out of its financial mess. I'm certain most of Aloha's employees would rather emulate Hawaiian and save their jobs.

A merger would cause major job losses in both companies.

Today, Hawaiian is not losing money, is not relying on subsidies and is flying or has flown scheduled and nonscheduled flights worldwide.

Greg Brenneman and Sen. Daniel Inouye declare that a significant number of Hawai'i employees would be laid off at both carriers for an indefinite period. All the senior managers and the politicians involved in the merger application agree that both carriers are shaky and that both carriers are roughly equal. These statements reflect either a clear misunderstanding of the facts or an attempt to deceive the public and employees of both carriers.

Brenneman's proposal, seemingly accepted by political leaders such as the governor, sounds great for majority shareholders of both carriers. What about the minority shareholders who are not getting bonuses, perquisites of early retirement and so forth? What about the employees who have given up so much over the years to make both carriers competitive?

Unfortunately, thousands of lives connected to both carriers will be radically affected if the merger is allowed. As was amply demonstrated in exhibits submitted by the hotel and tour operators, and other industry leaders whose businesses would have been affected by the merger in 1970, all the evils that may arise will arise when monopolistic control over vital functions is allowed to occur.

The promise to maintain fares at the present levels augurs ill for the coming years. The reference to the "core" carrier makes it abundantly clear that there will be slashing of jobs, reductions in service, limitations on flights and so forth. A merged carrier would have to fight to hold its own against other U.S. carriers seeking to drain away the lucrative markets Hawaiian Air has developed over the past 20 years and which Aloha now seeks to enter, many years too late for comfort.

The current president of Aloha says Aloha is in better shape financially than Hawaiian. Published facts argue to the contrary.

Aloha must emulate Hawaiian's cost-cutting efforts. For the sake of Hawai'i's interisland transportation system, Aloha must remain a viable competitor.

By the use of code sharing and cooperation between Hawaiian and Aloha, as is common in Europe (Swiss Air, Air France, Scandinavian Air System and Lufthansa), both carriers can co-exist.

The long-term impact on Hawai'i's economy and on persons living or working on the Neighbor Islands must be seriously considered by federal and state regulators before the proposed merger is approved.

John Carroll, a lawyer and pilot, is a Republican candidate for governor.