HOUSE OF REPRESENTATIVES

H.C.R. NO.

38

TWENTY-FIRST LEGISLATURE, 2002

 

STATE OF HAWAII

 
   


HOUSE CONCURRENT

RESOLUTION

 

opposing the proposed merger between Hawaiian Airlines, Inc. and Aloha Airlines, Inc.

 

 

WHEREAS, state residents and visitors depend almost exclusively upon air travel to meet their interisland transportation needs; and

WHEREAS, in addition, the availability of frequent, reliable, and economical interisland air cargo transportation is critical to the State's economy; and

WHEREAS, the Legislature therefore finds it essential to maintain a safe, reliable, stable, and cost-effective interisland air transportation system for Hawaii; and

WHEREAS, accordingly, it is vital that Hawaii's interisland air transportation system continue to operate in a competitive environment to protect consumers from price gouging, a reduction in available flights, and unacceptable service; and

WHEREAS, although several other airlines compete with Hawaiian Airlines, Inc. and Aloha Airlines, Inc. for business between the mainland and Hawaii, there is little competition in the interisland market, where Hawaiian and Aloha together have nearly one hundred per cent of the interisland routes; and

WHEREAS, the Legislature finds that the proposed merger between Hawaiian Airlines, Inc. and Aloha Airlines, Inc. would create a new Hawaiian Airlines, owned by holding company Aloha Holdings, which would constitute the 10th-largest U.S. carrier and generate about $1,000,000,000 in annual revenue; and

WHEREAS, proponents of the merger project it will generate savings of approximately $90,000,000 as a result of: consolidation of operations; elimination of excess aircraft; and coordination of flight schedules, ticket distribution, and other functions; and

WHEREAS, there is, however, concern that the merger will result in an increase in air passenger ticket prices and cargo fares and a reduction in the frequency or availability of less profitable routes; and

WHEREAS, furthermore, the consolidation of the airlines' operations and work force and the streamlining measures that inevitably will accompany the merger, such as expanding e-ticketing and increasing direct marketing over the Internet, will substantially increase unemployment in the State and the attendant costs to society of dealing with a large unemployed population; and

WHEREAS, there also is particular concern that the merger will adversely affect the struggling economies of the neighbor islands, by reducing visitor travel, as a result of increased fares and reduced flights, and by increasing the cost of goods air shipped to neighbor island consumers; and

WHEREAS, accordingly, the Legislature believes the loss of competition due to the merger will have a severely negative impact on residents of and visitors to Hawaii and therefore is not in the best interest of the public's safety and welfare; and

WHEREAS, the Legislature finds that the proposed airline merger must first pass antitrust scrutiny by the state Attorney General and the United States Department of Justice; and

WHEREAS, many antitrust experts predict that the United States Department of Justice will defer to the decision of the state Attorney General whether to prosecute the case, given that the initial response from state officials was favorable and the anticompetitive impact of the merger is limited to consumers in Hawaii; and

WHEREAS, antitrust experts have also indicated that expressions of local support for or opposition to the proposed merger and its effect upon the State will have a significant impact upon the decision of the United States Department of Justice; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-first Legislature of the State of Hawaii, Regular Session of 2002, the Senate concurring, that the Legislature finds that the proposed merger between Hawaiian Airlines, Inc. and Aloha Airlines, Inc. will have an anti-competitive impact on Hawaii's residents and its visitors and therefore is not in the best interest of the public; and

BE IT FURTHER RESOLVED that the Legislature hereby states that it formally opposes the merger between Hawaiian Airlines, Inc. and Aloha Airlines, Inc.; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the members of Hawaii's congressional delegation, the United States Attorney General, the United States Secretary of Transportation, the Chairperson of the Federal Trade Commission, the Governor of Hawaii, the state Attorney General, and the Presidents of Hawaiian Airlines, Inc., and Aloha Airlines, Inc.

 

 

 

OFFERED BY:

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Report Title:

Proposed Merger Between Hawaiian Airlines and Aloha Airlines