Tourism industry awaiting revised flight schedules

By Kelly Yamanouchi
Advertiser Staff Writer

As airlines reduce flights to the Islands in response to a slowdown in visitors, companies that depend on tourism traffic are left to wonder how long it will take before flight schedules are restored.

Local carriers have increased flights in the past two years, but that hasn't made up for the overall loss of airline seats. Advertiser library photo

An ending of the war with Iraq may lead to some relief, but what is more worrisome for some in the $10 billion tourism industry is the deteriorating condition of the nation's airlines. The carriers' restructuring may result in permanent flight reductions that could prove even more devastating in the long run than the world events that are now deterring travelers.

The number of available seats to the Islands has been falling since earlier this year.

In February, scheduled air seats into Hawai'i totaled 675,053. That is 15 percent higher than a year ago, representing a recovery from flight cuts following the 2001 terrorist attacks. But it is still 6 percent below the count of domestic and international seats in February 2001. International airline seats in particular decreased 16 percent to 234,753 in 2003, from 280,006 in 2001.

Preliminary figures from the Hawai'i Visitors & Convention Bureau show a similar decline in March compared with two years ago. The total number of scheduled seats in March was 751,358, up 11.7 percent from 2002 but down about 5.5 percent from 2001. International seats numbered 255,351, up 13.2 percent from 2002 but down about 16.8 percent from 2001.

"It's pretty simple," said Paul Kosasa, ABC Stores president. "The visitor industry is affected by the number of seats that are flying to Hawai'i. Whether you're a hotel, restaurant or retailer, we're all affected."

Kosasa said ABC's business has increased and decreased in concert with the rise and fall of airline seat capacity. Lately, he said, "It's been soft."

"I think it's going to be a challenge for a while," Kosasa said. "It'll improve, no question. It just takes some time as the economies go through their cycles ... I guess the question is when. I don't think anybody knows the answer to that."

Industry officials expect April figures to show an even greater decline than March because of flight cuts prompted by the start of the war in Iraq and a sharp drop in travel to and from Asian countries since the deadly outbreak of severe acute respiratory syndrome.

Last week, Japan Airlines announced a third round of flight cuts, including a reduction to seven Tokyo-Honolulu flights a week starting May 7, from 14 per week, a number that was already reduced from 21 flights.

Hawai'i Tourism Authority executive director Rex Johnson said the decrease in Asia flights is understandable — and temporary.

"They are not going to fly their airplanes over here empty," Johnson said. "Once the war is completed and SARS is better identified, we would hope that flight cuts will be restored."

Until that day comes, the tourism industry is working harder to compete for the smaller number of customers flying in, while making adjustments for declining traffic.

Tour operator Roberts Hawai'i is "being adversely impacted like everyone else," said spokeswoman Sam Shenkus. Roberts is offering only one Magic of Polynesia cocktail show a night at the Waikiki Beachcomber Hotel instead of two.

While state marketing efforts focus on frequent travelers and repeat visitors who are the most willing to travel now, Roberts depends on first-time tourists for much of its business. First-timers, however, tend to be less willing to travel during uncertain times.

Ronald Williams, chief executive of Atlantis Adventures, said he didn't notice a decline in business in February or March. But this month is a different story.

"I'm starting to see our numbers dropping," he said. While the decline is slight, "the problem is you don't know how long it's going to go till and, you know, you get a little worried."

International visitors make up about 40 percent to 50 percent of Atlantis Adventures business, including Atlantis Submarines and Navatek dinner cruises, and it is the segment that has seen the sharpest declines.

"I just think it's going to get a little tougher before it gets better," Williams said.

Financial problems in the airline industry also pose another, possibly greater, threat to Hawai'i's tourism industry. United Airlines and local carrier Hawaiian Airlines have both filed for Chapter 11 bankruptcy protection and other carriers are on the brink. All are undergoing changes that could affect the number of seats to the Islands.

"Whenever you have a fragile industry, we should be concerned," Johnson said. "And I think under the best of times, the best of days, I think you're going to have to classify the airline business in general as a very, very fragile business."

That is unsettling given another point emphasized by Johnson: "The airline industry, if you looked at the total of tourism, is probably the most important component of the total picture."

The good news for the tourism industry is that Mainland flights have not been reduced as much as international routes. "Given the difficulties that the domestic airlines have had and the reductions that they've had across the country on the domestic routes, it's a very positive thing," said Murray Towill, president of the Hawai'i Hotel Association.

Another bit of good news is that Hawai'i's two local carriers have in fact increased flights to the Islands in the past two years, although not at a rate that makes up for the loss of airline seats overall. Both focus on domestic flights and do not fly to Asia.

Hawaiian is adding a San Diego-Maui flight in June and will be increasing flights to Ontario, Calif., and Las Vegas. That will increase Hawaiian's seat capacity by 30 percent as of this July compared to July 2001, said spokesman Keoni Wagner. He said he knows of no plans to reduce flights.

Aloha Airlines has also increased its seat capacity, from 7,688 seats in March 2001 to 31,620 last month, and does not have plans to cut flights, said spokesman Stu Glauberman.

"We've been growing rapidly," Glauberman said. "Our business plan calls for adding some more airplanes and adding some more routes."

Mike Navares, general manager of operations for United Airlines in Honolulu, said the carrier has more flights now than it had in the same period in the past two years, although he could not immediately provide numbers.

"We have confidence in the market," Navares said. "Hawai'i has always been a good market for United Airlines."

He said some of the reductions in airline seat capacity are because of the use of smaller planes to respond to the decline in travel. A 767 aircraft holds about 240 passengers while a 747 aircraft carries 350, for example.

"Our international loads are low along with everyone else's," Navares said.

United has not cut flights to Hawai'i since the start of the war, he said, but "like all the airlines, we have to look at market demand and if it goes down we have to adjust accordingly.

"The Japan economy is not doing so well, like us, and the SARS thing is scaring a lot of passengers," Navares said. "So we're all in the same boat together."

Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.

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