Interisland travel dwindling
By Dan Nakaso
Advertiser Staff Writer
Kyle Kennedy, all 6 feet 2 of him, unfolded himself from a propeller-driven Piper Chieftain on the tarmac of the Honolulu airport after a 20-minute flight from his home on Moloka'i.
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Kennedy and his mother, Kathy, have lots of options to make their monthly trip to Honolulu for shopping, errands or to see the doctor. But they prefer the $50 ticket price of George's Aviation and the relative convenience of traveling on an unscheduled, charter airline where they're sometimes the only passengers on board.
George Hanzawa of George's Aviation uses two 10-passenger Piper Chieftains to fly customers between islands. Hawai'i's transportation industry is set to expand although demand may be shrinking.
Even when the flights are full, Kyle prefers George's Aviation's two, 10-passenger Piper Chieftains. "They have way better legroom," he said.
The Kennedys and other interisland customers could find themselves with even more travel choices if a planned Hawai'i Superferry and a third, turbo-prop airline, FlyHawaii, become reality.
If the companies pass financial and regulatory hurdles, they would add competition to Hawai'i's transportation industry.
While that could benefit consumers, it may be tough on an industry that has seen its two major airlines, Hawaiian and Aloha, file for bankruptcy while the overall number of inter-island passengers continues to fall.
From 2001 to 2003, the number of interisland passengers dropped from 8.7 million to 7.6 million, a 12 percent decline, according to the U.S. Department of Transportation.
"The people that are traveling between the islands of our state have been declining steadily over the last few years," said Mark Dunkerley, Hawaiian's president and chief operating officer. "With the size of the pie shrinking over time, the people that want to compete for a slice of that pie are seeing competition intensify each and every year. That fundamental math isn't going to change whether we have a superferry and regardless if we have a new airline enter the market."
FlyHawaii Airlines this month announced plans to begin flying 68-passenger ATR-72 turboprops from Honolulu to Kahului, Maui, early next year, to be followed by service to other Neighbor Islands.
Hawaii Superferry plans to have two catamarans motoring between the islands beginning in 2007. Each will be capable of carrying 900 passengers and 250 vehicles.
Customers are likely to see an immediate benefit in the form of a temporary price war. But within six months to a year, Hawai'i's jet, turboprop and charter airlines would feel considerable economic stress, economists and travel experts say.
"Everybody will try to outprice each other until somebody goes under," said Wendy Goodenow, owner and president of HNL Travel and president of the Hawai'i chapter of the American Society of Travel Agentsr.
While the number of inter-island carriers could begin growing next year, the size of the traveling public won't, said Leroy Laney, a Hawai'i Pacific University professor of economics and finance.
There could be some short-term increase in the form of Hawai'i families wanting to take their cars on the Superferry for a long, Neighbor Island weekend or a family vacation, Laney said. But the novelty is likely to wear off, he said.
"I'm a big fan of the super-ferry," Laney said. "And I've always thought that competition is a good thing for consumers and consumer choice. But it's correct to say that they're not going to be able to create more passengers over the long haul."
Part of the drop in interisland business can be traced to the increase of Mainland and foreign carriers flying direct routes to the Neighbor Islands, Dunkerley said.
The less known reason, Dunkerley said, is the growing sophistication of Neighbor Island medical care, as well as the growth of big-box retailers, which combine to reduce the need for trips to Honolulu.
"We're all going to have to compete vigorously," Dunkerley said. "It's very difficult to say who is going to feel the pain the most. It mostly has to do with who is in the best financial shape and who is in the best operating position."
The Superferry would likely appeal mostly to vacationing Hawai'i families and to tourists who have the time to spend several hours on the ocean, Laney said.
Regular interisland commuters and business people will continue to choose their preferred airline, he said, whether it's Hawaiian or Aloha, turboprop competitors Pacific Wings and Island Air or the handful of smaller, charter airlines.
The Superferry won't have any effect on Aloha Airlines' "success and our future," said David Banmiller, Aloha's president and chief executive.
He said he doubts that FlyHawaii will be able to meet the U.S. Department of Transportation's financial fitness requirements to begin operations. But if it does, Banmiller, said, most passengers will continue to choose the speed and convenience of jets.
"If somebody wants to compete," Banmiller said, "God bless them."
George Hanzawa, the owner and founder of George's Aviation, already has plenty of competition.
Hanzawa stood on the edge of Honolulu Airport's Runway 4 Right and watched his Piper Panther Chieftain touch down from a flight to Maui. Just down the road on Lagoon Drive, two other businesses are fighting for the same interisland customers.
Hanzawa isn't sure who will survive in a shrinking market. It's a thought that he tries not to consider too much.
"If I worried about what my competitors are doing," Hanzawa said, "I wouldn't get too much sleep."
Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or at 525-8085.
