Aloha, Hawaiian defend route-sharing proposal
By Frank Cho
Advertiser Staff Writer
Hawaiian and Aloha airlines fired back at critics for the first time yesterday in a filing with the U.S. Department of Transportation, saying those opposed to their request for a limited antitrust exemption that would allow them to collaborate on some routes do not understand Hawai'i's airline industry.
The Department of Justice and Kahului, Maui-based Pacific Wings airline are opposing a request by Aloha and Hawaiian airlines for an exemption from antitrust laws, while American Airlines has raised concerns about the two carriers reducing airline seat capacity on interisland flights.
In a joint rebuttal yesterday, attorneys for Aloha and Hawaiian said Pacific Wings' and the Justice Department's statistical and legal arguments are "flawed."
"DOJ's opposition is clearly rooted in its longstanding institutional antipathy to grants of antitrust immunity," attorneys for both carriers said in their filing. "The history of these markets makes it all too clear that even with the catastrophic events of Sept. 11, the pattern of two airlines flying wingtip-to-wingtip in order to avoid loss of market share is simply too deeply ingrained."
Department of Transportation officials, however, said the period for the airlines to comment on the application was over, and it was not clear yesterday if transportation officials would accept the comments by the airlines.
Spokesmen for Aloha and Hawaiian airlines both declined to comment about yesterday's filing.
On July 31, Aloha and Hawaiian applied for a one-year exemption from antitrust laws to coordinate passenger-seat levels between five Hawai'i airports under the recently enacted Transportation Security Act, which was passed by Congress after the Sept. 11 attacks to help financially struggling air carriers reduce their costs.
So far, Aloha and Hawaiian are the only carriers in the nation that have applied for the exemption.
Justice officials, who in a filing earlier this month opposed the application, said that both airlines have rebounded financially since Sept. 11 and do not need the exemption. The department also said that such an agreement will likely result in reduced service and higher fares for consumers.
In their response yesterday, the airlines said significant increases in fares are not possible because of the discretionary nature of interisland travel and the possibility that Gov. Ben Cayetano could rescind his declaration supporting the carriers' position if fares rise too high or too fast, ending the antitrust exemption.
The airlines also accused Justice Department officials of using incorrect figures to calculate Hawaiian Airlines' load factors, or the percentage of passengers on a plane.
Justice officials used Boeing 717 aircraft configured with 106 seats instead of the actually capacity of 123 seats. That means Hawaiian, which reported a loss of about $31 million in the second quarter, had load factors about 14 percent lower than Justice Department officials estimated, according to the airline.
Airline officials said the load factors would have to be above 80 percent for the airlines to earn a profit, but load factors are still below 70 percent on average.
The carriers also said the Transportation Department should not preserve the interisland system for American Airlines' benefit.
"While the marketplace will surely deal with the concerns American raises, the joint applicants cannot have it both ways," Aloha and Hawaiian said in their filing yesterday.
Pacific Wings said it intends to file its own rebuttal with the Transportation Department later today.
"The people at Aloha and Hawaiian airlines believe that the people at the Justice Department are awfully stupid," said Greg Kahlstorf, a partner and president of Pacific Wings airlines. "They are still ignoring the fundamental question of why they can't cut capacity without government intervention."
The Transportation Department is expected to rule on Aloha and Hawaiian's application for an exemption by the end of this month.
