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There was an Aloha Airline’s employee rally at the Hawaii State Capital yesterday afternoon. We were all there to let our state law maker’s that Aloha Airlines is worth saving. If we do shut down, the impact on the state will be hugh for awhile. Law makers are also calling for a federal investigation of Go! Airlines predatory pricing for the last two years with the goal of putting Aloha out of bussiness. This Monday is the next Bankruptcy court hearing to determine if Aloha can carry fly on. We are all hoping for the best outcome.


Posted on: Saturday, March 29, 2008
Lawmakers consider bailing out Aloha Air
Loan guarantees, tax exemption will be voted on next week


By Rick Daysog
Advertiser Staff Writer

A state government bailout of Aloha Airlines is gaining momentum as key lawmakers and hundreds of employees voiced their support yesterday.


At a state Capitol rally yesterday, House Speaker Calvin Say and Senate Ways and Means Chairwoman Rosalyn Baker pledged to support the airline, which filed for bankruptcy last week for the second time in about three years.
"We would not be doing our jobs if we didn't make an effort to assist a company that has as much reach and impact in the community," said Baker, D-5th (W. Maui, S. Maui).
At least one leading airline industry analyst said the state could be wasting its money.
"Putting more money into this company is like giving a transfusion without trying to stop the bleeding," said Bob McAdoo, senior research analyst with Nashville, Tenn.-based Avondale Partners LLC.
On Monday, the state Senate will vote on a House measure that will exempt local carriers from paying the general excise tax on the millions of dollars in jet fuel that they use every year. The Senate Ways and Means Committee will hold a hearing on Tuesday on a bill that would provide loan guarantees for Aloha.
Aloha, the state's No. 2 carrier, filed for Chapter 11 reorganization last week after losing more than $120 million in the past two years. Aloha, which is down to about $3.8 million in cash, blamed its bankruptcy on soaring fuel prices and "predatory pricing" by its interisland competitor go!
Lowell Kalapa, executive director of the nonprofit Tax Foundation of Hawaii Inc., said there's precedent for providing financial assistance to the airline industry.
In 1993, the state issued about $14 million worth of loan guarantees to Hawaiian Airlines, which was experiencing financial troubles at the time.
Four years later, the state provided Continental Airlines $2 million in tax incentives, more than $25 million in revenue bonds and a $1.2 million general excise tax break to build a $24 million, state-of-the-art jumbo-jet maintenance hangar at Honolulu International Airport.
Kalapa said he opposed the 1993 loan guarantees for Hawaiian because he thought that government shouldn't guarantee the debt of a private company. But since the state has already granted Hawaiian a loan guarantee, it would only be fair to give its competitor a similar loan guarantee, Kalapa said.
"If they can bail out Hawaiian, the only fair thing to do is to bail these guys out, too," Kalapa said.
Kalapa added that the state provides tax credits and other incentives to high-tech and film industries, so it can provide similar breaks for the airline industry, which plays a more vital role in the state's economy.
problems will linger
Airline industry analyst McAdoo believes that Hawai'i taxpayers may wind up paying for Aloha's loan guarantees should the company wind up closing its doors.
McAdoo said loan guarantees have been used in the airline industry when a company has a temporary problem and has a business plan that will "stop the bleeding."
He noted that the federal loan guarantee program enacted shortly after the Sept. 11 tragedy included a rigorous evaluation process and required the airlines to provide the government with protections against default.
In Aloha's case, the fare war and high fuel prices aren't problems that are going to go away in the short term but are part of the carrier's everyday business environment.
Local aviation industry historian Peter Forman, author of the 2005 book "Wings of Paradise: Hawai'i's Incomparable Airlines," said a big reason for Aloha's cash crisis is the "unfair competition" created by the 2006 entry of go! airline.
Forman said Aloha would be a viable company if you factor out the interisland fare war. Along with rival Hawaiian Airlines, it is one of the top carriers in the industry when it comes to on-time performance and fewest consumer complaints.
The financial toll from the fare war also has made it difficult for Aloha to get newer, more fuel-efficient aircraft, he said.
"Given Aloha's large share of the local market, its disappearance would be a significant hardship on the economy," Forman said.
rivals making plans
Both go! and Hawaiian said they are working on contingency plans should Aloha close its doors. Hawaiian said it is looking at extending its interisland schedules while go! said it is willing to provide additional capacity.
Go! recently brought in two additional 50-seat Bombardier CRJ 200s, increasing its local fleet to seven aircraft. The new jets were supposed to replace older aircraft go! had planned to return to the Mainland.
But Aloha's recent bankruptcy prompted go!'s parent, Phoenix-based Mesa Air Group, to keep all seven aircraft here.
Aloha may have bought itself some time this week. On Thursday, the airline said it received a letter of intent from Saltchuk Resources Inc., the Seattle-based owner of Young Brothers/ Hawaiian Tug & Barge, to acquire its profitable air cargo division.
Although Aloha's main goal is to sell the entire company, a sale of the airline's cargo division could provide operating cash for several weeks or months.
Employees who attended yesterday's rally said they aren't giving up on the company.
Despite Aloha's grim predicament, Tracy Chung said she isn't going to look for another job just yet.
But Chung, a ticket agent at Aloha for 19 years, said the past several days have been "an emotional roller-coaster." She said it's going to be difficult to attract a new investor in today's business climate where oil prices are hovering over $100 a barrel.
"This one is scary. The last one I had more optimism," Chung said.
That sentiment was shared by Emma Ventura-Paulino.
Ventura-Paulino, an Aloha flight attendant for the past eight years, said she's worried about the financial toll on Aloha's 3,500 employees and their families should Aloha not survive.
"The situation today is much more grim. We might not even get an investor," she said.
Many employees at yesterday's rally expressed gratitude for support by state lawmakers and members of the public.
Karen Clark, an Aloha flight attendant for 22 years, said the turnout of hundreds of employees at yesterday's rally shows that "we have a company worth saving."
"It's really too bad with the predatory pricing and the high fuel prices because it's a viable company," Clark said.
"We're not going to give up. We'll keep fighting."

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N. Eberhard

I want to go! Anybody got a free ticket to HNL?

ANA Mohican

I hope it's not an aloha to Aloha .

Planecrazy

I remember When PSA and Air California were INTRAstate airlines, subject to rate regulation by the state government of California. The state approved airfares by these airlines.

I wonder if the State of Hawaii would still possess that power? The operating costs for interisland flights are well known to the State.

Couldn't their version of a Public Utilities Commission take the known operating costs and add a reasonable return on investment to it and set fixed airfares applicable to all interisland air carriers?

In a market with fixed air fares, the only way to attract more passengers is to give superior service. It is a win-win even for those people who carp about how much a ticket costs.