Posted on: Sunday, March 23, 2003

EDITORIAL
All of us are feeling Hawaiian Air's pain

In the current climate for the airline industry, no one should be surprised by the announcement of another airline filing for bankruptcy protection.

Some eyebrows may be raised, however, that the latest casualty is Hawaiian Airlines, rather than, say, Hawaiian's island competitor, Aloha Airlines, which in some respects had appeared the financially weaker of the two.

One advantage that Hawaiian appeared to hold over Aloha was its newer aircraft; now it turns out that failure to negotiate cheaper leases for these planes is what helped drive Hawaiian into bankruptcy.

It's comforting to hear Hawaiian's chairman say that "It will be business as usual for the airline" as it completes its financial restructuring.

Indeed, it's not Hawaiian's first trip to bankruptcy court. Most observers believe it emerged a lot stronger from its previous experience, in 1993-94. That must be our hope this time, but state and federal officials must not assume that all will be well.

While this may seem a private matter between a private business and its creditors, it's natural for public officials to show serious concern. Interisland air transport is this state's lifeline, and the flagging economy, slipping tourism and, of course, the Iraq war have subjected this part of the business of Aloha and Hawaiian to great pressure.

Increases in direct flights from both the Mainland and Japan to Neighbor Islands have also diminished interisland traffic.

Both airlines say interisland traffic is a money-losing proposition. They have attempted to subsidize this part of their business with more profitable Mainland routes.

They also had taken advantage of a limited antitrust exemption offered by Congress in the wake of 9/11, which allowed the two airlines to coordinate their flight schedules.

U.S. Sen. Dan Inouye said earlier this month that the exemption would "sunset" Oct. 1, at the end of its first year. Presumably that's a factor adding to the financial discomfort of both companies.

It's possible that by its own efforts at restructuring, Hawaiian will get itself back on course, stronger and better. It's also possible that the business climate will get even worse and public officials will have to worry a lot more about Hawai'i's lifeline.

The two airlines had earlier proposed to create a single, more financially secure entity through merger. That deal fell apart in great acrimony just one year ago.

Whatever happens next between the two airlines, it's vital that state government ensure the viability of interisland air links — whether they're profitable or not. If that means subsidizing an interisland operator, or making interisland transport a state-regulated utility, then it's not too soon to start thinking about such a radical proposition.

Hawaiian and Aloha have told us that the day of showing up at the gate 10 minutes before a flight and plunking down a cheap coupon are over. That may be so. But the need for reliable and convenient interisland airlift will always be with us.