The Molokai Times
Tuesday, April 8, 2008
By Kate Gardiner
HONOLULU - A bill that was originally intended to save the now-defunct Aloha Airlines may be used to save other interisland carriers in Hawaii.
Charles Willis IV, owner of Island Air, submitted testimony to the Senate committee on Ways and Means April 1 in favor of House Bill 509 HD2/SD2. The bill would create a bailout fund for airlines in Hawaii via a state guarantee of up to 90 percent of loans made by private companies.
Willis asked the committee to pass the bill to "afford Island Air the ability to grow and better serve Hawaii's communities."
He said that since the interisland fare war began with the introduction of go! Airlines in 2006. Since then, his airline has been forced to cut much of its service and reduce its total scheduled flights by 38 percent. [graphic]
The bill was scheduled for a vote April 8. If passed and immediately signed into law by Gov. Linda Lingle, carriers such as Island Air will be able to secure additional financing immediately.
Island Air's request that the bill be directed towards its type of carrier may mean that the company intends to take advantage of the legislation.
The current draft of the bill, modified by five neighbor island senators including J. Kalani English, requires those who use the loan guarantee to commit to hiring displaced Aloha Airlines employees for positions created by the loan.
State-backed financing for airlines is not unusual in the United States. The state of Minnesota, for example, frequently bailed out carrier Northwest Airlines. In return, the company guaranteed more than 1,000 new jobs in the state and a new plant, as well as keeping its headquarters in Minneapolis, where the airline was based for 75 years.
However, the airline is currently in takeover talks with Delta Airlines. If Delta were to purchase Northwest, headquarters for both companies would be in Atlanta, not Minneapolis. Jobs created by the state money granted in the 1992 act would then move to Georgia and the state would lose those tax revenues.
Hawaii's situation is slightly different, as the bailout is geared towards carriers based in Hawaii, and towards a market wholly within the state.
Original article URL: http://www.molokaitimes.com/articles/84720134.asp