Posted on: Wednesday, May 15, 2002

EDITORIAL
State must monitor growth of airlines

Few things are more essential to the health of this state than the airline links between our Islands. With that in mind, we urged the Cayetano administration to ensure that everything about the proposed merger between Hawaiian and Aloha airlines would serve our best interests — even if it required some form of regulation.

Now that the two airlines have decided to go their separate ways, we urge the state to monitor their plans no less carefully.

One feature of the Neighbor Island airline business became crystal-clear during the merger period: There is little opportunity for growth or great profitability in serving the interisland market. The plan for the merged entity was to expand Mainland and Asia-Pacific routes, where it expected the money to be found.

In the weeks since the merger fell apart, it's clear that Hawaiian and Aloha intend to pursue much the same strategy. Thus we see Aloha adding flights to Maui and Honolulu from Burbank and Vancouver, and to Maui from Phoenix via Orange County.

Hawaiian, meanwhile, is adding a Seattle-to-Maui nonstop and nonstop routes to Honolulu from Sacramento and Ontario, Calif., and Phoenix. It will also offer daily nonstops from San Francisco and Los Angeles to Maui.

If the business thinking behind these new routes is sound, we can expect that the two airlines will generate sufficient profits to allow them comfortably to maintain the interisland service we expect and need.

But the state must be mindful that Aloha and Hawaiian are for-profit companies, not public services, and as such can be expected to turn their resources to maximize stockholder or owner benefit.

Indeed, in adding more direct Mainland-to-Maui and other Neighbor Island flights, Aloha and Hawaiian directly erode interisland traffic.

Greg Brenneman, the airline executive tapped to head the merged airlines, said frankly that he'd welcome state regulation of interisland routes, if that would mean they'd be run in the manner of utilities, with a fair return on investment guaranteed.

Certainly that would be a last-resort option for the state, but one that must be considered if signs appear that Aloha and Hawaiian are diverting their energies from interisland service to flying out of state.

We're in no way suggesting that the airlines shouldn't be profitable on their new routes. Indeed, we're already grateful for the greater and more reliable lift capacity into and out of the state.

But maintenance of reliable and affordable interisland passenger and freight service is crucial.