Howzit Howard

Aloha to the Chinese

Hainan Airlines, the largest privately-held airline in China, has filed a flight plan to serve Honolulu with scheduled flights from Beijing. Chinese regulators have already approved it and U.S. regulators are expected to. Service could start in the fall. This is the culmination of a quarter century of efforts to link China and Hawaii by air, and the threshold of a new day for Hawaii tourism, since China is the most populous nation on Earth and a fast-growing source of outbound travelers. A few years ago Beijing and Washington signed a treaty allowing a finite number of slots for flights connecting the two countries, to be equally divided between U.S. and Chinese carriers. Hawaiian Airlines applied for one of the scarce slots, intending to serve Shanghai, but that slot went to American Airlines, which used it for Shanghai flights to Chicago. Because Hainan is a Chinese carrier, competition from U.S. carriers doesn't figure into it, so the Chinese regulatory approval that has already been given is the more important bureaucratic hurdle. Hainan, which already flies Beijing-Seattle - it celebrated the one year anniversary of that service last month - plans one flight a week at first, expanding to three weekly roundtrips later. It will use an Airbus jet that seats almost 300 including eight lie-back first class seats. Hawaii got only about 900 visitors from China last month, so Hainan's plans can easily triple Chinese arrivals even if the airline flies far less than full. The potential for Chinese tourism has been exaggerated in many circles. The vast majority of outbound Chinese travelers visit, not merely countries adjacent to China, but countries adjacent to their own home provinces. So any estimate of market size based purely on China's huge population is misleading. But it is reasonable to assume that China can grow into a market worth several thousand visitors a year to Hawaii, and eventually thousands a month, because Hawaii is well-known to the Chinese and is regarded as the most Chinese part of America. China even has an island province that has a reputation with the mainland Chinese that is similar to Hawaii's reputation with mainland Americans. Ironically that island is Hainan, where Hainan Airlines was born.

Fuel prices affect everything

Japan Airlines Flight 73 from Honolulu to Tokyo Thursday will fly right into the history books - as the last commercial flight on JAL of a Boeing 747, the classic jumbo jet with the stretched upper deck. Like the Northwest side of Delta Air Lines and several other airlines, JAL is retiring its 747s because jet fuel has become too expensive not replace older jets with newer models that are less thirsty. Young Brothers, which not long ago won the right to assess fuel surcharges, has nonetheless sought and won substantial rate increases (though not as substantial as requested) kicking in this weekend. This is indirectly tied to fuel bills, too. YB might have saved on its fuel bill by doing fewer sailings in this recession (traffic is down about a fifth from two years ago) but its customers don't have the storage space, so it has continued to do the same number of sailings. It means less revenue on each barge, something the fuel surcharge does not cover. But the weirdest development in the arena of fuel costs is that rising oil prices have caused an oil company to post a deficit. Tesoro Corp., owner of one of Hawaii's two refineries (Chevron owns the other one), lost $45 million in the second quarter because its refinery profit margins were squeezed. Unlike the real huge oil companies like Exxon and Shell, Tesoro has no oil wells. It buys crude from others, and pays more when the price of crude soars. But something else that happens when the price of crude soars is that, once the increase has been passed through to the retail end, consumption falls. So Tesoro pays more for crude, then sells less gasoline and jet fuel. In the second quarter its Kapolei refinery production was down 7%.

A non-racial way of looking at the professor ' s arrest

If you haven't heard about the case of an African-American man arrested under suspicion of burglary in what turned out to be his own home, I congratulate you on your total retreat from society and would like to see your hermitage. Before offering some thoughts on this episode, which was scheduled to culminate Thursday in a meeting at the White House of the arresting officer, the victim, and the victim's friend President Obama, let's go over the facts. Lucia Whalen of Cambridge, Mass., saw two men breaking into a home and did her civic duty, phoning 911 to report it. She did not mention race until a police dispatcher pressed her, then said one of the men might be Hispanic. "The one person who didn't overreact," her lawyer said later. What she and the dispatcher did not know that was Henry Louis Gates Jr., a Harvard professor who is African-American, had just returned from a trip and his door was stuck, as if someone had tried to jimmy it while he was away filming a PBS documentary. His cab driver graciously agreed to help him open the door. This is what Whalen saw. Cambridge Police Sergeant Jim Crowley responded quickly to the call, which under other circumstances would have been a relief to Professor Gates as a resident of the neighborhood, particularly considering that someone apparently tried to break into his house while he was away. But when it became evident Crowley had been sent to investigate a possible burglary, Gates, who is 58 years old and has encountered racism from time to time, bristled. In the resulting exchange of pleasantries, each man became convinced that the other was disrespecting him. As near as I can tell, both were right. Crowley, a cop with a good record whose friends have assured the world that he is a good man, didn't take kindly to a citizen blasting him verbally. Gates didn't take kindly to being treating as a burglar in his own home. Crowley repeatedly tried to get Gates to step outside to continue the conversation. If he thought Gates was a burglar, he might have felt safer outside. Gates, for his part, indicated later that he felt Crowley was trying to move their argument outdoors where the matter could arguably be considered a public nuisance. Two points of fact prevent me from siding with Crowley. The first and most important is that Gates had identification which showed him to be the resident of that address. This trumps everything else. The fact that Cromley arrested Gates despite this undermines any assertion that his behavior and judgment were beyond reproach. The other fact is that Gates is not a physically imposing or dangerous-looking person. He is gray and he walks with a cane. But while this fact undermines any assertion that Crowley should have felt threatened by Gates' anger, it also undermines an assertion that Crowley was profiling. I think Crowley was just irked as not being treated with respect by a citizen, and decided to show Gates who was boss. Do you think I'm rushing to judgment of Crowley? Good. That's exactly the point I wanted to make. It is human nature to jump to judgment, and police do it more than most people because their job often requires them to make snap judgments, but it is also a practice - call it an instinct if you like - which often leads people to do the wrong thing. To focus on racial profiling suggests that an end to racism will be an end to the problem, but it is a fact that police officers the world over have been known to dial their response to a situation up or down depending on how much deference they are shown by citizens. It is also true that many of the worst mistakes law enforcement officers make, stem from having jumped to incorrect conclusions from which they were unwilling to veer. Crime dramas in television and the movies invariably feature a variety of suspects, and the one that police "like" for the crime in the first twenty minutes never turns out to be the one who did it. In real life, police will tell you that they nearly always figure out who did the crime quite rapidly and then it's a question of obtaining evidence. Since so many crimes go unsolved, I would prefer to put it another way: most crimes that are solved are committed by the person whom police suspect from the start. Reluctance to abandon one's first impression may cause an innocent suspect to behave in a guilty manner, or, as was the case here, to become angry, and when the officer is touchy enough, this provides an expedient for arrest. Most police officers I know are innocent of racism beyond the background noise that most of us spend our lives working to transcend. But like the rest of us, they are prone to jumping to conclusions, and to being overfond of first judgments. It just happens to be more of an occupational hazard in police work than in some other disciplines. I don't especially care whether Gates and Crowley apologize to each other but it would make me very happy if, after chatting at the White House, they can at least concede that they each understand why the other behaved as he did. Postscript: Responses to this post, both here and on Facebook, have included a few from people who have the sense that Crowley could have prevented this by being, as one writer said, more humble. Even taking the charitable view that this does not mean "less uppity," I wonder how many people could take this view who have been unfairly suspected of criminal activity themselves. I recall a colleague at a radio network in Washington, D.C., an African-American with more education than I have, pulled over for no reason because a crime had been committed nearby by a black man. This happened in a community that is 80% black so my friend's race was hardly what one could call a distinguishing characteristic. Once, when I was a teenager, a police officer came to the door and wanted to talk to me about a yellow mark on my car. A woman in a yellow car had been sideswiped and she thought I had done it. I explained, in some embarrassment, that I had sideswiped the yellow pole that the speakers hang from at the Super 170 Drive-In movie theater. In my naivete I assumed they could check the paint and confirm it was the same kind, and suggested it, telling him he could take a sample if he liked. He came back two more times to talk to me about it. On the third occasion, I said, "I don't understand why you keep coming back. I told you what happened. Didn't you check the paint?" And he said, "I don't understand why you're taking an attitude about it." I'll never forget the way my statement triggered this accusation that I was displaying attitude. It was like he was waiting for the faintest sign of attitude so he could jump on it.

From SARS-struck to flu-flattened

It was the worst June for Hawaii tourism since 2003, the summer of SARS, and for a similar reason, as Japanese visitor numbers plunged by more than a third on swine flu fears, the state Department of Business, Economic Development & Tourism confirmed Tuesday. The Japanese are usually the visitors who spend the largest amount of money per day, but they also take the shortest vacations. Japanese arrivals have rebounded this month and won't be down anywhere near so much. But don't expect July to be a lot better than June. Total visitor arrivals for June fell 5% from last year but spending fell 16%, to the point where the $5 billion annual spending milestone that we usually reach in May or June did not arrive until sometime this month. Spending fell three times as much as the actual visitor count because hotels are still discounting their room rates from 10% to 20%, roughly speaking, and other hospitality vendors are doing the same thing. A return of the Japanese won't change it that much. We'd have to get 20% more visitors than last year to make up for these low room rates. As a practical matter, it would never happen that way, because resurgent visitor numbers would cause hotels to boost rates, but it is still true that it would take a significant rebound to embolden hoteliers to try that. About the only good news is that the cheap rates are bringing some first-time visitors who simply could not afford Hawaii before. The reason this is good news is that first-timers always come back. A first-time visitor is a future repeat visitor, even if it costs a lot more the second time.

Star Market, Times Supermarkets, and Longs Drugs

Hundreds of employees of Star Market expect to win employment with Times Supermarkets when the latter chain acquires the former in a few weeks. But two Star locations will close as Times flips them to Longs Drugs. The Ewa Beach and Moiliili locations of Star will close, which surprised me because I shop at the Moiliili location and thought it was a great supermarket. It also has a great location, and Longs has its own store just a couple blocks away on King St. Nonetheless, Star has issued the mandatory layoff notices to all the employees, and the ones at these two locations have received no indication from Longs that their services will be required. This reminds me of a time in my own past when the radio station for which I worked, an all-news radio outlet in Washington, D.C., was sold to new owners who dropped the news format and laid off the air staff. The incoming owner said he did not plan to make any immediate changes, which some of us naively thought to mean he might keep the news format. So the station changed hands and we all kept our jobs... for a few weeks. When the format changed - it signed off one night as a news station and signed back on the next morning playing contemporary music - the former owner said our severance would be paid by the new owner, and the new owner said our severance would be paid by the old owner. No one ever paid any severance. Perhaps they thought this was funny. For me, with no savings after working for about $200 a week (this was 1977) and driving a car that was held together by its bumper stickers, it fell slightly short of being hilarious, but maybe my sense of humor is insufficiently developed.

The OTHER Big Island

We all tend to think of the Big Island as a two-part county. There is the Hilo side and there is the Kona side. But a relaxing weekend in Waimea-Kamuela persuaded me that the northwestern end of Hawaii County is very much its own third place. The Hawaii Performing Arts Festival is a diverse collection of concerts all over the left side of the Big Island every summer, and I flew over Saturday to host a semi-staged performance of a new opera (the premiere was in 2007) on "The Grapes of Wrath." Charlie and Barbara Campbell put Bernadette and me up in one of their cottages, the first time I've overnighted in what other-islanders call the Kamuela area. This Waimea is cool, windy and showery with very fine rain drops that are quite invigorating and pleasant. Some of us around the state hear Waimea-Kamuela and think "Parker Ranch," but it's also home to Merriman's, the most remote shrine to Hawaiian regional cuisine, and to hundreds of employees of Keck Observatory. This is a town full of intellectuals and a town that appreciates culture, yet it also retains a sense of Old Hawaii just like Hilo does. Lance Hamasaki and his wife spotted Bernadette and me at the end of the Hawi road at Pololu Valley and we talked for most of an hour like old friends. Good business advice from the owner of Bamboo Restaurant in Hawi - no matter what it takes, own your building and your land. Better for weathering a downturn. On Monday on the way to Kona airport, we had time for a side trip on Kailua-Kona old high road. It is so beautiful up there!

Hawaiian Airlines ' dilemma over profits and pilots

Hawaiian Airlines is maintaining service through a recession, investing in new jets that can fly to more distant cities, and it has posted a second quarter profit of $28 million. At the same time, it's balking at raises for pilots unless the pilots agree to operational efficiencies that will save enough money to pay for the raises. Is Hawaiian right to do this? This tricky issue can be viewed from many points of view - the pilots, the management, the other employees who already won raises by agreeing to operational efficiencies, and the former Aloha Airlines employees, some of whom are now out of the airline industry altogether (translation: bringing in lower wages) because there was not enough airline work in Hawaii. And there is us, the customers. I thought about this while flying on Mokulele Airlines from Kona to Honolulu on Monday. I used to divide my business between Hawaiian and Aloha, and after Aloha died and Mokulele launched jet service using mostly ex-Aloha personnel, I began to book some flights on Mokulele as well as Hawaiian. Mokulele is still struggling to fill its planes, even though they have more leg room and more overhead space per passenger than Hawaiian does. The people who fly for Mokulele know how fragile employment in the airline industry can be. For Hawaiian pilots, it's partly a fairness thing. They made wage concessions during Hawaiian's unnecessarily protracted bankruptcy years, and are still waiting to get all of that back. From their perspective, what Hawaiian is saying now is that it needs operational concessions before it can undo the wage concessions. The Air Line Pilots Association, whenever it renews its call for a contract, as it did Monday after the newest profit announcement, reminds us that Hawaiian's profitability can at least partially be laid at the feet of the employees. Because this is rhetoric, I want to point out that it is not mere rhetoric. Hawaiian pilots responded to soaring jet fuel prices last year by experimenting to find the optimal trajectory of ascent and descent to minimize wasted kerosene. They even figured out places where they can slightly cut a corner, literally, on a taxiway. Jet fuel is so amazingly costly that saving just a few yards taxi travel after landing can, when multiplied times every landing times every day for a year, add up to substantial savings. If management were to defend its own insistence on further operational efficiencies, it would also cite jet fuel prices. Hawaiian revenue actually declined in the second quarter, falling below the $300 million level, and the only reason the airline was able to eke out a profit (of roughly 10%) was that jet fuel prices, though they rose from the first to second quarters, remained substantially below the second quarter of 2008. Hawaiian CEO Mark Dunkerley, when things are going well, keeps reminding everyone who will listen that a lot can go wrong in a hurry. The pilots are surely tired of hearing it. On the other hand, it is the truth. (I wonder if either side has ever considered bonus compensation that would kick in whenever and only whenever the price of jet fuel falls below a certain level. Just a stray thought.) One of the biggest threats to Hawaiian has always been, and remains, that when its routes begin to return strong profits someone else jumps in to the same corridor to take some market share. Hawaiian made a great success of service to Hawaii from Seattle and Portland and now shares both corridors with Northwest (now Delta) and Alaska. Alaska Airlines is adding other service, notably from Oakland, for which Hawaiian is the only competition. Even Mokulele could be competition for transpacific service to secondary markets in a prolonged economic recovery. In the meantime, Hawaiian Airlines has a dilemma. The better a job it does at weathering the recession, the more it fires up its pilots to recover their wage concessions of years past. That's some of the background to the Hawaiian pilot talks. Let's all of us on the outside of the negotiations wish labor and management well and hope they can find an agreement that will be good for all - including all of us on the outside!

The tourism recovery that isn ' t

For Hawaii's tourism industry, there is light at the end of the tunnel, but we're still in the tunnel. Arrivals by air are actually UP from last summer now. Honolulu this month has gotten 5,000 visitors from the mainland, offsetting 5,000 fewer Japanese visitors. Japanese arrivals, down 27% in June, are down only 5% so far this month. Domestic arrivals are up substantially to neighbor islands compared to last year. We've bottomed out. Sort of. We've bottomed out statistically, but not financially. Put it this way: we'd be in recovery already if hotel room rates were the same as last year. They're not. They're down 10% to 20% in rough figures, depending on the island and the industry tier. Overall, we'd need an extra visitor for every six we're getting for the hotels to see improvement at these rates. The gap isn't really that bad, because as hotels fill they can get away with discounting less, but the general idea is that we need more than the same number of visitors as last summer before real recovery begins.

Music Post: Opera on the Big Island

Movies are sometimes based on novels, sometimes on stories from real life. Opera is no different. "The Grapes of Wrath," a novel based on real life, made a great movie. Why wouldn't it be suitable for opera as well? Rick Ian Gordon, 53, a New York composer of songs, musicals and operas, wrote the music for "The Grapes of Wrath" to a libretto by Michael Korie, who also wrote the words to the opera "Harvey Milk." A scaled-down version of it will be presented Saturday evening, for free, at the Gates Performing Arts Center at Hawaii Preparatory Academy in Waimea/Kamuela as part of the Hawaii Performing Arts Festival, which brings diverse concerts to the Big Island every summer. It will be my pleasure to introduce the evening.

The Vegas vacation vs. the Hawaii staycation

A gentleman emailed me with price comparisons for flying to Vegas versus staying at a resort on Maui. He wonders why anyone would do a staycation when Vegas remains cheaper. If all you want on vacation is lots and lots of food for low prices, then Las Vegas is the "island" for you. Even with Hawaii hotels slashing rates 10% to 20%, Las Vegas will always be cheaper, because Las Vegas is cutting rates, too. The appeal of a staycation is the scenery, since every island is different, local cuisine, local people, and avoiding the hassle of a transpacific flight. Las Vegas can't match the scenery but to some extent you can stay local on food and people if you work it right. So if you take the scenery for granted, you may conclude that a trip to another island from the one you live on is still too expensive. But if you live on Oahu, you should experience the beauty of Molokai. And Molokai could really use the cash infusion of neighbor islanders who will leave the island the way they found it. Live on Maui? Experience Hilo. Kona? Check out Kauai. All of our islands have breathtaking scenery, including a lot of places that don't appear in the guidebooks. As a local resident you have the opportunity to experience it in a deeper way than a visitor from elsewhere may be able to.