THE SENATE

S.C.R. NO.

88

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 
   


SENATE CONCURRENT

RESOLUTION

 

Requesting a study of interisland air carrier fare price mechanisms.

 

 

WHEREAS, although the waters surrounding Hawaii is one of the State's greatest assets, it causes isolation of communities, an uneven distribution of social services, and the separation of families; and

WHEREAS, since 2001, commercial airlines that offer interisland passenger service have provided a number of explanations for increasing fares while decreasing the quantity of seats; and

WHEREAS, some have observed that the business strategies of these commercial airlines do not seem to be meeting the needs of tourists, business visitors, and outer-island residents; and

WHEREAS, over the years, the Legislature has sought to address these concerns by considering a range of legislation related to airfares of interisland carriers; and

WHEREAS, in 1988, the Senate adopted S.R. No. 151, which requested commercial airlines providing interisland passenger service to offer half-price air fares to children under 12 years of age; and

WHEREAS, in making this request, the Senate reminded commercial airlines of the absence of alternative means of interisland travel and of the importance of encouraging our children to experience the different, unique features of all of the islands, a need that depends on children being able to travel between the islands at affordable rates; and

WHEREAS, in 1990, S.C.R. No. 175 proposed to study the feasibility of establishing a state airline to provide interisland air service to bona fide Hawaii residents at reasonable prices; and

WHEREAS, in 1992, the Legislature adopted S.C.R. No. 7, H.D. 1, which requested commercial airlines as well as other businesses to work with representatives of the Hawaii tourist industry to provide greater discount rates to state residents; and

WHEREAS, in 1995, H.R. No. 205, H.D. 2, requested that air carriers not institute a commission cap plan on Hawaii travel agents since Hawaii residents already pay enough for airfares without having to pay additional processing fees; and

WHEREAS, despite these past actions, it remains unclear what processes and mechanisms are used by commercial airlines to set their passenger airfare prices; and

WHEREAS, without further information, there are concerns that the duopoly enjoyed by commercial airlines on certain interisland routes may promote excessive profit seeking that would be detrimental to Hawaii residents; and

WHEREAS, to alleviate these concerns that have existed for almost two decades, it is appropriate that a study be undertaken to clarify the decisions and actions that affect interisland passenger fare prices; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-second Legislature of the State of Hawaii, Regular Session of 2004, the House of Representatives concurring, that the Legislative Reference Bureau, in cooperation with the Department of Economics of the College of Social Sciences of the University of Hawaii, is requested to study the price-setting mechanisms and strategies of interisland air carriers; and

BE IT FURTHER RESOLVED that this study also include:

(1) The effects on our state economy of declining interisland air passenger capacity; and

(2) Any recommendations for legislation or policy action necessary to develop a fair and equitable pricing mechanism for island residents, as well as visitors;

and

BE IT FURTHER RESOLVED that the findings and recommendations of the study be submitted to the Legislature at least twenty days prior to the convening of the Regular Session of 2005; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Acting Director of the Legislative Reference Bureau and the Director of the Department of Economics of the College of Social Sciences of the University of Hawaii at Manoa.

 

 

 

OFFERED BY:

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Report Title:

Studying inter-island air carrier fare price-setting mechanisms.