Inouye to let airlines' antitrust exemption end

By Kelly Yamanouchi
Advertiser Staff Writer

U.S. Sen. Dan Inouye does not plan to seek an extension or expansion of the federal antitrust exemption that allows Hawaiian and Aloha airlines to coordinate interisland flight capacity.

After the Sept. 11 attacks and the dramatic downturn in the airline industry, Hawaiian and Aloha received federal approval of the unprecedented antitrust exemption.

The yearlong agreement, which expires Oct. 1, allows the carriers to coordinate on interisland capacity so they can cut duplication, essentially ensuring that airplanes are not running half empty to the same destinations. Both carriers say the interisland business has not been profitable.

Since the cuts took effect in December, Hawai'i residents and some tour companies have said a shortage of flights disrupts business and personal travel. Both airlines also have raised their ticket prices and stopped selling flight coupons.

In an attempt at a solution, a resolution passed out of the Senate Transportation Committee on Wednesday asks Hawai'i's congressional delegation to look into an extension and expansion of the antitrust exemption so both carriers can coordinate flight schedules, not just seat capacity.

But Inouye will not participate, his office said yesterday.

"Barring any unforeseen circumstance, it is our intention to let the provision sunset in October," said Jennifer Goto Sabas, his chief of staff in Hawai'i. "When the senator secured the provision, it was right after 9/11, and the primary goal was to ensure that the carriers continue to fly. ...

"We feel that, come October, the markets should resume control of the situation. It was really a stop-gap measure. Unless the war comes and disaster strikes again ... I think it's time for the markets to resume."

State Sen. Cal Kawamoto, a Democrat and chairman of the Transportation Committee, said he plans to pass the resolution out of the committee with amendments from the attorney general, who wants to limit the scope of an expansion.

"Basically, we want to go along and see if the governor wishes to ask for the exemption," Kawamoto said. "Sen.

Inouye's office may have more information than we do, but the airlines are telling us that they need it."

Gov. Linda Lingle has not said whether she will support an extension of the agreement.

Aloha chief executive Glenn Zander said in testimony Wednesday that he had doubts about whether an expansion of the agreement would be approved.

"We are very appreciative of what Senator Inouye and Hawai'i's congressional delegation did in securing the waiver," said Aloha spokesman Stu Glauberman. "We believe it is working, and we fully understand that it ends in October."

Hawaiian Airlines spokesman Keoni Wagner said the carrier supports an extension of the agreement, but is open to all ideas.

"We think that the exemption has been helpful in bringing some stability to the market, but we will continue our efforts to try to make our interisland operations viable, with or without an extension," Wagner said.

Kawamoto said he did not think the effort would succeed without Inouye's support, but it was important to pass the resolution.

"All we're trying to do is help the airlines," Kawamoto said. "At the hearing Wednesday, my last question to them is, 'Is this resolution going to help you?' And they said yes.

"And if the answer is yes, then we're going to go for it."

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