WAILUKU, Maui (The Maui News, Dec. 6) - People watching the machinations involving Hawaiian Airlines must be shaking their heads.

Hawaiian was the first regular interisland airline, flying to Maui's Maalaea mudflats airport in 1930 as Inter-Island Airways. That was when its only competition came from interisland steamships. HAL and its chief competitor, Aloha Air Lines, which formed after World War II, grew fat during the 1970s when the only way tourists could get to the Neighbor Islands was after first flying to Honolulu or, a bit later, to Hilo.

Along came deregulation of the airlines and an increasing number of direct flights from the Mainland to Maui, Kauai and the Big Island. By the 1990s, both Hawaiian and Aloha were burning as much red ink as they were jet fuel, so much so that at one point a merger of the two was contemplated.

The merger failed in the face of public and political opposition but it did result in the end of cut-throat fare competition. Both airlines whittled down their flight schedules and Aloha went on an apparently successful program of fiscal conservancy.

In 1996, Hawaiian was taken over by John Adams and AIP LLC, parent of Hawaiian Holdings Inc., which ended up being the parent of the airline. Adams claims AIP kept the airline in the sky with a six-year, $200 million cash investment. Keep in mind that when investors put money into anything they expect a return. That opportunity apparently came when the U.S. government gave Hawaiian $30 million following Sept. 11 as part of the national airline stabilization effort of 2001. Some $25 million went to shareholders.

Lawsuits ensued from Hawaiian creditors. A trustee was named to oversee bankruptcy proceedings. The trustee is asking for permission to pay himself $840,000-plus a year ($500 an hour), compared with Adams' salary of $600,000 a year as CEO and president of the airline.

The most head-shaking aspect of all this is the increasingly complicated and expensive process of flying via Hawaiian from one island to another. High executive salaries might be excused if the customers were better served or a stronger airline was being built. But that doesn't seem to be the case with Hawaiian Airlines.

December 8, 2003

The Maui News: www.mauinews.com


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