HA CEO rejects gov’s current request to lower airfare
A meeting between Mark Dunkerley, Hawaiian Airlines President and Chief Executive Officer and Gov. Lolo M. Moliga to discuss issues of mutual benefit to Hawaiian Airlines and the people of American Samoa ended with the CEO rejecting the governor’s request to immediately lower the fare between Honolulu and Pago Pago, while also announcing that Hawaiian is acquiring smaller capacity planes to serve the needs of American Samoa that will mean lower airfares — in 2017.
In a press release received yesterday morning from Honolulu, details of the meeting were highlighted by the Governor’s Office.
According to the press release, during the meeting, Dunkerley noted that the importance of American Samoa to HA cannot be underscored and it has worked diligently to improve air services to American Samoa. Assurances were extended to Lolo that the airline would work collaboratively to find solutions to the challenges contributing to the high air fares and frequency of flights to the territory.
The HA CEO acknowledged the disparity in fare structure relative to the Hawai’i West Coast route and the Hawaii Pago Pago leg, and said the factors contributing to this fare difference are operating requirements, fuel price differential, occupancy rate, and high cost of government services.
For example, Dunkerley pointed to the fact that flights to American Samoa require the doubling up of personnel because it is too expensive to defray the cost of accommodating the crew in between flights. This factor materially inflates flight costs to American Samoa versus a flight to the West Coast.
Lolo indicated to Dunkerley that he understands the profit motive which drives Hawaiian Airlines and acknowledges the need for the airline to remain profitable. The Governor intimated that both Hawaiian and the government have a common interest — to serve the people of American Samoa in the best way possible, reflective of the financial constraints.
Lolo asked the HAL CEO what the American Samoa Government can do to help Hawaiian remain profitable, while providing cheaper air fares for the people and to stimulate and support American Samoa’s tourism development program.
The gesture of collaboration expressed by Lolo was accepted with gratitude, however, Dunkerley responded to the Governor’s plea for reduced air fares by stating that it would be a very difficult proposition given the average occupancy rate of 50% per flight for full fare passengers; the rest is made up of discount travelers using K-fares and employee passes.
“At the urging that more Samoans, given their cultural dictates will travel to and from American Samoa if the air fares were cheaper, Dunkerley replied that this was done before, but the ratio of increased occupation to air fare reduction was not proportional, thus no further interest was directed at studying this issue,” the statement said.
“While this didn’t make much sense given our knowledge of the cultural habits of our people, it appeared that Hawaiian was not interested in pursuing this course of action" according to the press release.
Dunkerley pointed to Hawaiian’s commitment to serving LBJ Tropical Medical Center with regard to medical evacuation, with this service being very meaningful to the airline given its impact on those residents who are less fortunate, the media release continues.
The HA CEO also indicated to Lolo that Hawaiian would support working with local hotels to develop tourist packages.
Governor Lolo also raised with Dunkerley the efforts of Hawaiian relative to accessing the financial benefits embedded in the Essential Air Service as an avenue to reduce airfares to American Samoa, according to the media release.
Dunkerley opined that it would not be morally right for Hawaiian to receive this federal benefit while American Samoa needs this incentive to address its many challenges.
In response, Lolo stated that there is no mechanism contained in the EAS legislation compelling the federal government to provide financial benefits directly to the American Samoa Government.
In other words, if Hawaiian doesn’t access this federal incentive to assist depressed and underserved areas like American Samoa, the territory will not benefit.
“It appears obvious that Hawaiian will not consider using the EAS benefits to reduce air fares to American Samoa. This was disappointing to the Governor,” the media release stated.
“The litany of actions adopted by the American Samoa Government to demonstrate its commitment to collaborating with Hawaiian in serving the people was enumerated by the Governor. One of which is the reduction of overtime payments to the government on services provided by Customs, Immigration, and agricultural officers. Dunkerley harbored the opinion that the American Samoa Government should not reduce revenues accruing to it.
“This sentiment, while appreciated, makes little sense and questions the commitment by Hawaiian to reduce the financial burden placed on American Samoan travelers due to high air fares.”
Dunkerley, during the meeting, also announced that Hawaiian is acquiring smaller capacity planes that will more economically serve the needs of American Samoa. These new airplanes, according to Dunkerley, will be received in 2017, and will mean lower airfares for the traveling public.
In the interim, the HAL CEO impressed upon the Governor the necessity of expanding American Samoa’s economic capacity by investing in building its tourist infrastructure to entice tourist travel.
Dunkerley committed to Governor Lolo that he would advocate for this need before the Department of Interior and other federal agencies having influence on building American Samoa’s economic capacity.
The Governor further told Dunkerley that some of our people were complaining over the abusive manner with which they were treated by Hawaiian personnel. Dunkerley assured Governor Lolo that Hawaiian Airlines does not condone such behavior from its employees and he will not hesitate to deal with anyone reported to have perpetrated this type of behavior.
He asked Lolo to please call him directly anytime a report of this type of behavior is inflicted on Samoan travelers, adding that one of the airline’s employees, with 43 years of service, was terminated for exhibiting this type of rude behavior towards a Hawaiian Airline customer.
In conclusion, the governor again extended his appreciation to Dunkerley for availing time from his busy schedule to meet with him. He assured Dunkerley that he will do everything possible to ensure that Hawaiian remains profitable, and again petitioned Dunkerley to please revisit Hawaiian’s airfare structure to provide a break for our people.
“The Governor is convinced that if airfares are lowered the number of travelers will increase and tourist travel will rise as well, thus beginning the process of building economic need for American Samoa,” the media release stated.