Operator of Molokai ferry seeks to shut down service

Three decades of transporting workers, tourists and student athletes aboard the Molokai ferry may come to an end in a few weeks as the operator seeks to shut down operations in the face of mounting deficits.

Sea Link of Hawaii Inc., doing business as Lahaina Cruise Co., submitted a request to surrender its certificate of public convenience and necessity to the state Public Utilities Commission on Wednesday. The commission must accept the request in order for the ferry to formally halt service.

“The sooner they make a decision the better,” Sea Link President and Senior Capt. Dave Jung said Friday.

The request comes as no surprise. The company has spent the past few years restructuring and eliminating programs and routes in the hopes of offsetting net operating losses. Sea Link reported a loss of $108,235 in 2013 and $288,068 in 2014.

Changes over the past year included the termination of the Employee Commuter Passengers program, including the discounted fare; switching from seven-day-a-week round trips to operating a minimum of six one-way voyages per week; and altering its cancellation policy to reserve the right to cancel any voyage if it has not received a minimum of 20 passenger reservations for any voyage between Kaunakakai and Lahaina at least 48 hours prior to departure.

Despite the changes and the company’s “best efforts to operate efficiently, purchasing fuel at reduced rates and other cost-cutting,” it continued to lose money due to declining ridership and competition from airlines, according to the PUC filing. (Jung said that total monthly passenger numbers dropped from 1,691 in January to 859 in July.)

He reported losses of about $200,000 for 2015, but noted they were offset by a $105,000 subsidy from the county.

Aside from the one-time subsidy, the ferry has received little financial help in recent years. The ferry began operations in 1987 at the prodding of then-Gov. John Waihee, who helped subsidize commuter fares with a $30,000 monthly stipend. Those subsidies ended in 1995.

“The bottom line is that we’re a regulated carrier with very strict and onerous requirements and with no subsidies or grants,” Jung said. “We’re competing with airlines, who are unregulated and they can change their flight schedules on an hourly basis.”

Jung published a letter Thursday on the company’s website detailing the planned closure. He anticipates it will occur in the next few weeks. On Friday, though, he clarified that he has “no idea” how long the PUC will take with its decision and said that news of the closure will “accentuate losses.”

The company will refund any prepaid tickets, he said.

While news of the closure seemed imminent, its timing caught county and school officials off guard.

Molokai Athletic Director Lee DeRouin said that he recently made reservations for the school’s football team to travel via the ferry to Maui on Oct. 8 for a game against Seabury Hall. He said 40 to 50 people were planning to make the trip, including about 25 players.

“It’s going to be harder to get everybody there,” DeRouin said. “It’ll be a discussion I’ll have to have with the coaching staff and principal and see what we can do.”

Football is the only sport that still uses the ferry, but it remains the best option, DeRouin said. He said that the number of seats available on the 149-passenger ferry, room for equipment and flexibility with tickets help make traveling easier for the large team.

Without the ferry, the team would have to use Hawaiian Airlines’ Ohana by Hawaiian service or commuter airlines Makani Kai or Mokulele Airlines, which would require multiple flights in order to transfer all the players and equipment. Maui schools traveling to the Friendly Isle for games or championships also would need to make special arrangements.

DeRouin added that player injuries, grades and health cause last-minute changes to roster spots, which would not be as easy to accommodate by the airlines.

“There’s only so many planes that leave Molokai and come to Molokai every day,” DeRouin said. “It’ll also be difficult with the way the (Maui Interscholastic League) schedule changes due to weather and other things. Those are all complications.”

Molokai’s athletic department is underfunded by as much as $45,000 a year depending on how many athletes and teams reach the state tournament, DeRouin said. He said that last year’s transportation budget alone was roughly $83,000, but the department took on an extra $15,000 for state championships.

When factoring in other costs such as bus repairs and fuel; equipment and uniforms; and game officials and security, the department’s budget goes well beyond $100,000, DeRouin said.

“We feel like a small university or college,” he said. “But we’re not supported like a university or college with staff and funding. There’s not many high schools across the country that do the travel we do.”

MIL Executive Director Joe Balangitao said that he was blindsided by the news of the ferry’s planned closure.

He said that the announcement “definitely” affects the MIL schedule, but he could not see any immediate changes. He said airlines do not provide any discounts for schools.

DeRouin said that the school has a corporate contract with Mokulele, which allows bags to fly free, but it still pays the regular airfare. He said that the ferry also did not offer school-related subsidies, but has provided financial accommodations over the years.

Stacy Crivello, who holds the Maui County Council’s Molokai residency seat, said that she was somewhat surprised by the announced closure, but “sensed” it might happen based on Jung’s actions after receiving the $105,000 subsidy last year. Crivello had urged Mayor Alan Arakawa to appropriate that money.

“Right after he received the $105,000 from the county, (Jung) no longer provided accommodations for Molokai residents and even for the high school, which was the hope and the purpose of the subsidy,” Crivello said. “It’s too bad, but you know when one door closes we have to look at what other alternatives we have. I’m not sure what’s out there, but the county will continue to see what sort of system we can provide.”

Maui County spokesman Rod Antone said that Arakawa appreciated the council’s efforts to try and keep the ferry afloat and is soliciting ideas to assist Molokai residents with transportation.

“Unfortunately it’s just not panning out,” Antone said of the ferry service. “The mayor is very sorry about Molokai losing another form of transportation, but we’re not sure what we can do about it at this point.”

Jung attributed the company’s decline to primarily to competition from Makani Kai and Mokulele. He pointed to federal subsidies that were awarded to the two airlines over the next four years which combined for about $4.5 million.

Jung said that the subsidies have led to “extremely low airfares,” referencing a one-way Mokulele fare for $36 from Maui to Molokai in August, which he attached to the PUC request. A one-way trip on the ferry costs $62 for an adult.

“We didn’t think they could keep the prices low, until we found out” about the subsidies, he said.

If the PUC accepts his request, Jung plans to gradually shut down the business and is already looking to sell the 105-foot ferry. He said he has about eight employees, all of whom have already been offered other jobs.

Jung said that he had been trying to find someone to take over the operation for years. He said he offered it to the county for free but county officials declined.

“I’ve sunk 30 years of my life into this, and its a real shame,” he said. “Hopefully the public sees the value of interisland transportation not only by aircraft.”

* Chris Sugidono can be reached at csugidono@mauinews.com.