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Aloha shuts down service

Aloha shuts down service affected; state will seek U.S. Bankruptcy Court aid

March 31, 2008
KAHULUI — Aloha Airlines announced Sunday that it would suspend interisland flights at the end of the business day today.

It began shutting down its transpacific flights at the end of Sunday, canceling four flights from Maui to Sacramento, Oakland, San Diego and Orange County.

Within hours, Hawaiian Airlines said it would add interisland flights with a total of 6,000 seats today.

And Mesa’s go! airlines said that on Tuesday it would increase daily departures from an average of 54 flights per day to 94 flights.

Later on Sunday, Gov. Linda Lingle announced that today the state would ask the U.S. Bankruptcy Court in Honolulu to prevent the shutdown of Aloha Airlines’ interisland and transpacific flights until Aloha has shown it has exhausted all possible avenues for continuing its operations.

The company said it was not planning to shut down its cargo flights.

Aloha management did not meet the public, but its Web site — prefaced with “Mahalo nui loa” and “Aloha oe” — said “unfair competition” had driven it out of business.

David Banmiller, the president, said in the Internet statement, “This is an incredibly dark day for Hawaii. . . . We simply ran out of time to find a qualified buyer or secure continued financing for our passenger business. We had no choice but to take this action.”

At Kahului Airport on Sunday, Aloha Airlines ticket agents served customers in a business-as-usual fashion, showing no signs of a shutdown even after being notified of the company’s decision.

Aloha employees reportedly were notified of the shutdown through a company memo issued at 10 a.m. Sunday. An hour later, none of the Kahului counter employees were talking to reporters.

Workers affected by the airline business, however, were already starting to worry.

“It’s scary. I’m facing the loss of half my income,” said Michael Krueger, a porter with 22 years of experience at Kahului Airport.

Krueger said one of the Aloha employees showed him the airline memo shortly after it was distributed.

Asked to describe the Aloha employee reaction, Krueger shot back: “How does anyone feel about losing their job? How would anyone feel in this kind of situation? . . . Everything they planned for the rest of their life is gone.”

All three of Hawaii’s interisland jet carriers have been losing money since go! started operations and a fare war in summer 2006. Aloha, which had only just emerged from bankruptcy, cracked first, filing for bankruptcy again March 20.

It has about 3,500 employees, and its announcement said the end of passenger operations would affect approximately 1,900 employees in the islands.

The cargo and airline services it provides for other airlines will continue in business. The statement did not say how many workers those segments employ.

Reached in Phoenix, Greg Kahlstorf, president of Pacific Wings, concurred that the failure was the result of predatory pricing.

He suggested that in the showdown, Aloha suffered because its interisland fleet of Boeing 737s is “obsolete and inefficient.”

Hawaiian, which also went through bankruptcy even before Mesa arrived, was able to re-equip with newer planes. Aloha continued to fly old, noisy planes that would have been unusable on the Mainland but stayed in service here because of an exemption.

Aloha, and Hawaiian, had also added newer planes used in transpacific flights (and a few flights between western cities), but Kahlstorf said Aloha’s older interisland fleet worked against it.

It was a reversal of fortunes from the late 1980s, when Aloha’s 737s were new and Hawaiian was struggling with a fleet of older and mismatched planes that gave it endless maintenance headaches.

Like several others, Kahlstorf called the failure “sad.”

He said that although he had competed with and sometimes disagreed with Aloha management, he respected it.

“Aloha had a really good relationship (with the community) for a long time. It was really vested in the community, not fake vesting.”

Mayor Charmaine Tavares also said that Aloha, with more than 500 employees on Maui alone, had had a good relationship with the community and “will undoubtedly be missed.”

“The loss of Aloha Airlines’ passenger service is a blow to our economy, lifestyle and the welfare of all affected,” Tavares said in a written statement issued Sunday.

“Time will tell just how severe the ripple effect will be, particularly for the Neighbor Islands. As residents, businesses, visitors and even government travelers begin to scramble for alternate accommodations, we recognize that the seriousness is far deeper for the employees and their families,” she said. “As they navigate through this difficult time, the reality of the situation and the gravity of its impact will be felt for quite some time.”

Lingle activated a Rapid Response Team to assist the employees who are about to lose their jobs.

It was the second time in a week she had to do that. The decision of Molokai Properties to shut down its operations meant that 120 jobs are disappearing there.

On Friday, the Department of Labor and Industrial Relations had reported that Hawaii had 20,900 unemployed workers (seasonally adjusted) in February, a rate of 3.2 percent. That was 50 percent higher than a year before, and the 2,000-plus jobs being eliminated by Aloha and Molokai Ranch could bump that up by another 10 percent.

Some airline workers will be able to find similar work. “We’re always hiring,” said Kahlstorf, and in a press conference in Honolulu, Hawaiian Airlines President Mark Dunkerley said his company might have to add employees in order to expand its interisland service, although he could not say how many.

Other airlines, including Aloha’s code share partner United

Airlines, stepped forward to try to absorb the shock.

Dunkerley said Hawaiian had been flying about 14,000 seats a day interisland and he believed Aloha was moving about the same.

Not all those seats were full. Thus, he told reporters, adding 6,000 Hawaiian seats should do much to fill the void.

He said Hawaiian would both increase legs by its interisland fleet and add a widebody for interisland use.

Dunkerley said that for the next three days, Hawaiian would accept Aloha reservations “on a space-available basis.”

“For the next seven days, Hawaiian will operate all interisland flights at a low fare of $49,” he said.

Mesa Vice President Paul Skellon said, “Effective immediately, go! will offer all seats at $49 through Monday, April 7. In addition, go! will offer no charge, standby, space available, day of original travel to passengers holding Aloha Airlines paper and electronic tickets through April 3.”

He said go!, whose planes carry about half the number of passengers of Hawaiian’s or Aloha’s, “will provide between 11 and 13 round trips per day from Honolulu to each of the destinations we currently serve — Maui, Lihue, Hilo and Kona.”

Kahlstorf said Pacific Wings “doesn’t really compete” with Hawaiian and Aloha, instead flying to smaller or underserved places. He said he thought the real gainer from the shakeup could be Island Air, which flies 30-seat deHavilland DASH-8s.

Island Air is well situated to grab Aloha business. If he were in that position “I’d have my scheduling department up all night tonight,” he said Sunday.

When Aloha sought bankruptcy protection, state legislators floated ideas to help the company, such as forgiving landing fees at state-owned airports. However, in the 10 days since no measures had been passed.

Maui Rep. Joseph Souki, who is chairman of the House Transportation Committee, said Sunday that there’s a chance that the Legislature could step in to help Aloha with a guaranteed loan like it did for Hawaiian Airlines in 1993.

Souki said he and others will have to see how Aloha’s filing for bankruptcy unfolds today in court.

“Anything we say or do now would be premature,” Souki said.

Aside from the loan option, the Legislature had contemplated as early as last year providing exemptions on gasoline taxes for airlines.

“At this point, we have to wait and see what happens in the bankruptcy court,” said Souki.

Sen. J. Kalani English of Maui, who is chairman of the Senate Transportation and International Relations Committee, could not be reached for comment.

Lingle said in a statement, “We are deeply disappointed that Aloha Airlines has made the decision to cease operations of their interisland and transpacific passenger flights.

“Our main concerns are threefold – first and foremost the 1,900 employees and their families, the need for continued air service for our residents and visitors, and protection of the state’s long-term fiscal and economic interests.”

The Rapid Response Team, led by the Department of Labor and Industrial Relations, will survey workers to evaluate their job skills and determine what type of assistance might be needed.

The team also will discuss available benefits and programs, including unemployment insurance, health insurance coverage, job placement services and training opportunities.

Lingle’s statement did not say anything about workers in businesses that depend in part on Aloha for their incomes.

Kimiko Tamashiro of Travel Plaza Transportation was greeting visitors from Japan at the Kahului Airport on Sunday, going about her job as she has for the last 18 years.

“I don’t know what’s going to happen now,” Tamashiro said. She said most of her customers travel interisland on Aloha. “I worry about my job now, maybe no more.”

Tamashiro said two of the customers she was helping on one of the Sunday afternoon flights had reservations showing a return on the same airline later this week. She said they would be notified about Aloha Airlines’ shutdown during a briefing held outside the airport property.

But many questions remained unanswered Sunday.

What about reservations more distant than next Monday? What about Aloha frequent flyer miles? What about refunds?

On its Web site, Aloha posted information for customers with future reservations including options to seek flights from its “code partner” United Airlines or even Hawaiian Airlines, its longtime competitor. There was no mention of seeking help from any others, such as go!.

“What we’re hoping for is minimal disruption,” said Terryl Vencl of the Maui Visitors Bureau. Like many, Vencl expressed sadness about Aloha’s announcement.

“Obviously it’s a sad day. It’s a sad day for all of us, especially for an airline and its employees who have been a mainstay here for so many years.”

Vencl said her office will work with all stakeholders in the visitor industry including hotels to help them inform and assist visitors directly affected by Aloha’s shutdown.

“If we have airlines step in to make up, we’re hoping the visitor count will still be a good one,” Vencl said.

Marriott Resorts Hawaii issued a statement of sympathy for Aloha employees and an offer for Aloha Airlines ticket holders who may have to extend their stays at the nine Marriott resorts in the islands because they cannot find flights home.

For guests at its properties, Marriott Resorts Hawaii will offer 50 percent discounts for as many as three additional nights beyond the initial checkout date.

Also, Aloha ticket holders already in Hawaii who need emergency accommodations will be offered a kamaaina rate.

Customers with reservations who cannot keep them because of a lack of flights will not be charged a penalty if they rebook within a year.

Visitor Peter Goodings of Toronto flew in on Sunday for his first trip ever to Maui after a week’s stay in Honolulu. He had made reservations to return to Oahu on Aloha after a week here.

“It looks like we’re going to have to stay here on Maui,” Goodings said, showing no signs of worry about getting a new airline seat back to Oahu. “Money sells everything,” he added.

Bryan Funai of Pukalani returned via Aloha on Sunday after a spring break trip with his family to the Mainland. Funai, a former baggage claim and ticket agent for Aloha, had worked for the company for 10 years beginning in 1979.

“It’s sad,” Funai said in reaction to the news. “I know the old-timers, and it’s sad to see they’ll be losing their jobs.”

Funai, who is self-employed now in the construction business, said he worked for Aloha at a time when business thrived and would-be employees sought a chance to work for the company.

“Everybody like Aloha. It was hard to get in at the time and morale was good then,” he said.

• Claudine San Nicolas can be reached at claudine@

• Harry Eagar can be reached at

Article Photos

An Aloha Airlines employee assists customers at the Kahului Airport ticket counter Sunday afternoon.

The Maui News / AMANDA COWAN photo

Fact Box

A number of airlines and other businesses are offering alternate transportation or other assistance to customers of Aloha Airlines who were planning to fly on planes that will be taken out of service after today.
For reservations assistance:
• Hawaiian Airlines:
• United Airlines: or 1 (800) UNITED1
For directions to information about other flights:
• Hawaii Tourism Authority:
For updates about Aloha Airlines:
• Hawaii Tourism Authority: www.hawaiitourism
• Maui Visitors Bureau:
For answers to frequently asked questions from Aloha Airlines:
• Aloha Airlines FAQ:
For answers about code sharing between Aloha and United Airlines:



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