Airlines may get break from airport landing fees
By Kelly Yamanouchi
Advertiser Staff Writer
The state Legislature is weighing bills that would give airlines relief from landing fees to keep the economy's critical air transportation industry stable and increase flights to Neighbor Islands. But the potential loss of much-needed state revenue, and uncertainty over what Hawai'i would gain from waivers or tax credits, are leading to a close review of the measures.
Airline officials say they need a break from landing fees because slower demand for travel and the country's economic malaise has hurt the industry. They say the airlines face even greater risk from a possible war with Iraq that could severely curtail air travel.
According to the Airlines Committee of Hawai'i, the carriers pay the state about $3 million in landing fees each month, and desperately need a waiver similar to one approved by former Gov. Ben Cayetano after the Sept. 11 terrorist attacks.
The waiver lasted through Feb. 28 last year, saving the airlines $15.8 million.
The airlines' push for relief comes at a time when the state is struggling to balance its own budget.
Gov. Linda Lingle's administration has taken an arms'-length approach. According to the governor's spokesman Russell Pang, Lingle does not have a position on the fee waivers.
Lawmakers, however, have been sympathetic, and have drafted measures to grant fee waivers or tax benefits that aim to help local carriers Hawaiian Airlines and Aloha Airlines or encourage more flights to the Neighbor Islands. These flights have been curtailed in the economic downturn, with the Big Island particularly hurt by the reduction.
One bill that passed a second reading in the House Friday and was sent to the Finance Committee would allow the state transportation director to waive landing fees until June 30, 2005, for airlines that add Neighbor Island flights. It is not clear what chances the measure, introduced by House Transportation Committee Chairman Joe Souki, D-8th (Wailuku, Walehu), has of passage.
"At least the issue's out there. It's an idea," said Brian Yamane, Souki's committee clerk. "We're trying to encourage (the airlines) to keep up and improve their service to Hawai'i."
Yamane acknowledged that the cost of the measure — estimates of which were unavailable — might give lawmakers pause.
"We can't afford to give them the money, and with a tight budget, I really don't know how far these credits will go," he said.
State Transportation Director Rod Haraga said he needed to determine the effects of the lost landing fee revenue on his department's budget, but he did not preclude the idea of helping the local carriers.
"It will have an impact, but it will also help the airlines in these difficult times," Haraga said. "So we have to look at the overall impact it would have on our budget ... The administration's call would determine where we're going to go on that."
Also unclear is whether any waiver of landing fees would encourage airlines to add flights.
"It all depends," said Hawaiian spokesman Keoni Wagner. "It depends on the nature of the conflict (with Iraq), how long it lasts and what other sorts of issues it may precipitate."
But Wagner said the airlines are looking for any relief.
"Given the current financial crisis in our industry, anything that improves our bottom line will help us go a long way to protect air service," Wagner said.
Aloha Airlines would not comment on the legislation Friday.
Any fee relief would need to pass muster with the Federal Aviation Administration, because some might be consistent with federal laws, and fee waivers must be temporary.
Another measure scheduled for hearings before House and Senate committees tomorrow would provide a tax credit for landing fees for airlines with Honolulu-based fleets — namely, Hawaiian and Aloha. The bill, introduced by Rep. Jerry Chang, D-2nd (Hilo), and Sen. Donna Mercado Kim, D-14th (Halawa, Moanalua, Kamehameha Heights), aims to help the local carriers survive in Hawai'i and encourage other airlines to start Honolulu-based fleets to help the state economy.
"We want to be sure to have incentives there to increase air lift, which is so vital, especially if there is a pending war," Kim said. "We want to help them out economically so that they cut other places and not cut us."
But Kim said any reduction or waiver of landing fees would require an examination of the governor's financial plan.
The airlines contend that must include reviewing the impact of legislation giving economic relief to airport concessionaires. Operations and capital improvements to the state's airport system depend on fees paid by both the airlines and the concessionaires. A decline in concession fees could thus reduce money available for the airports.
That issue aside, some tourism industry leaders are backing landing fee waivers as a means to increase interisland flights.
David Carey, chief executive of Outrigger Enterprises Inc., said the waivers could be applied to flights under 100 miles, limiting the relief to Hawaiian and Aloha.
Others believe a waiver should apply to all airlines, including United Airlines, a major carrier to Hawai'i now under bankruptcy protection.
"Looking at it from a tourism perspective, it's obviously in our best interest that all carriers receive the same level of relief," said Kelvin Bloom, president of Aston Hotels & Resorts.
"I think the primary motivation is to continue, and if possible enhance, the number of flights that are arriving in the Islands and between the Islands.... At the same time, one certainly can appreciate the financial duress that both Hawaiian and Aloha are experiencing, and hopefully there's some happy medium that can be struck."
Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.
