The Associated Press
Tuesday, April 1, 2008
By MARK NIESSE
HONOLULU (AP) — Hawaii's leaders tried to keep Aloha Airlines from shutting down, but a bankruptcy judge said Aloha didn't need his approval to stop passenger operations because that's a business decision.
State attorneys had asked Judge Lloyd King on Monday not to let Aloha stop flying.
State senators crafted measures to provide $50 million worth of loan guarantees in addition to tax breaks for Aloha.
"It isn't over yet," said state Sen. Kalani English, chairman for the Senate Transportation Committee.
But any effort to save the money-losing airline could be futile unless it can make Aloha profitable.
Aloha has been caught in a three-way pricing war with one-way fares as low as $1 since go! airlines, an inter-island carrier started by Phoenix-based Mesa Air Group Inc., launched in June 2006.
Island air fares are expected to rise now that only two major inter-island carriers remain — Hawaiian Airlines and go!
Smaller airlines like Island Air and Mokulele Airlines have limited inter-island schedules.
The suddenness of Aloha's collapse — it filed for Chapter 11 bankruptcy protection March 20 — caused Republican Gov. Linda Lingle to question whether its finances were as dire as it said.
"Nobody can tell at this point if it's too late," Lingle said.
State attorneys asked the court not to approve any shutdown of the airline until it shows it has exhausted all possibilities of finding financing or a buyer for its flight operations, established that it lacks resources to continue operations, considered the views of other creditors, complied with a law requiring employees receive 60 days' notice before closure and filed its bankruptcy in good faith.
Legislative proposals included exemptions for inter-island carriers from the general excise and use taxes on fuel — and state loan guarantees to give private lenders confidence to invest in Aloha's assets.
About 1,900 employees may be affected by the shutdown, Lingle said. A government labor team will evaluate their job skills and determine what type of job placement assistance they need.
"I don't want to hold out any false hope, but to make certain everyone's aware we'll do everything we can to help these employees and their families," Lingle said.
Few air service disruptions are anticipated.
"We want to make sure that people know that even though one of our airlines is going through this turmoil, when they travel here they won't be stranded," said Rep. Ryan Yamane, chairman of Hawaii's House's Tourism Committee.
Passengers holding Aloha tickets for inter-island flights will get free seats on standby on Hawaiian Airlines through April 3. Passengers on longer flights will be able to fly standby on Hawaiian at no charge, and United Airlines is offering reduced rates.
"Although they may not get a seat at the time they want, they should be accommodated," state tourism liaison Marsh Wienert said of ticketed Aloha passengers. "We do believe there are adequate seats in our marketplace now that will absorb those seats we will lose by our Aloha Airlines trans-Pacific flights."
A Hawaii vacation may become pricier if airfares rise, but lawmakers hope they stay reasonable, English said.
"The days of super-low fares are behind us," he said. "Unsustainable tickets and fares aren't going to be able to continue."
On the Net:
Aloha Airlines: http://www.alohaairlines.com
Hawaiian Airlines: http://www.hawaiianair.com
Copyright © 2008 The Associated Press. All rights reserved.
Original article URL: http://ap.google.com/article/ALeqM5ga9YVbP2rNFvWcpNL8lXKQ_frrpQD8VORBIO0