Hawaiian Airlines tries "crowd-sourcing"

The Hawaii Legislature is notorious in the business community for fiddling with local business operations. Every session there are proposals to create expensive new requirements for employers.

One requirement - health insurance for workers - has been great for workers and now seems to be a significant benefit that helps find good employees, and the only employers who wish they didn't have the requirement are those who delude themselves into thinking that without it they would get employees who were just as good for the same wages.

But there are also annual attempts to legislate what unions could not successfully negotiate, like financial incentives for sick or injured workers to stay out longer. These are not serious attempts to improve the lot of workers, most of whom don't abuse leave and resent coworkers who do; rather, they are self-serving attempts to get political contributions from labor unions by doing something that is allegedly on their behalf.

Say this for the unions, though: they have always engaged with lawmakers. Until recently, business owners tended to ignore the Legislature until it passed something, then complain.

Chamber of Commerce President Jim Tollefson tried for years to get his members to join him at the State Capitol, getting to know lawmakers and offering to answer their questions. This year he finally got more than 100 of them to agree to do it. They'll find, I predict, that lawmakers are far more willing to hear their views than they expected, and that most of them truly want to do the right thing, now more than ever with the economy still slumpy.

Hawaiian Airlines, which pays 20% of all its revenue on taxes - more than payroll, though not more than the jet fuel bill - is concerned that lawmakers might pass something that interferes with the airline's rapid expansion. Hawaiian has nearly 4,000 employees based in Hawaii and has been hiring by the hundreds, and the best thing the Legislature can do is stay out of its way. Yet there are rumors of plans to spend taxpayer dollars to lure a competitor to the islands, hoping to bring down interisland fares.

At the moment, Hawaiian has about 85% of the interisland market, thanks to the limited success of Mesa Air Group's go! Mokulele subsidiary. The last time there were three carriers, there was a fare war that drove Aloha Airlines out of business, throwing thousands of people out of work in March 2008 just as the recession was hitting. The last executive team at Aloha tried to get help from state officials but found no interest in helping.

One notable factor in the cost of interisland airline operations is that jet fuel refined by the Tesoro and Chevron refineries in Campbell Industrial Park is considered an export when sold to airlines as fuel for flights going to other countries, but is taxed on interisland flights. The geographical layout of the state creates an uneven playing field, tilted against local airlines.

Every time I read a Web board conversation on the subject of interisland fares, someone has posted a comparison between a high local fare and something cheap to Vegas. The tone of the message usually implies, and sometimes asserts outright, that Hawaiian is ripping you off.

It was not anyone at Hawaiian but Thom McNulty, the last marketing vice president of Aloha Airlines, who explained to me that the lion's share of fuel consumption on any flight is on takeoff, with almost no cost to cruise compared to the usual pedal-to-metal ascent. Accordingly, the shorter a flight is, the more inefficient it is, fuelwise. No flight in America is costlier for fuel bills, mile by mile, than interisland flights where you do not cruise at all, proceeding from takeoff directly to descent.

So with Hawaiian working on close margins, what does it do to ask lawmakers not to raise any more obstacles?

Rather than rely entirely on professional lobbyists behind closed doors, Hawaiian has decided to crowd-source the issue. It sent a note to its thousands of Hawaii employees inviting them to get to know their state lawmakers and explain anything they want to know.

I like the idea. They'll lobby openly, using regular employees. Their arguments will stand or fall on logical and practical grounds, not on glibness. The rest of us can easily find out what they're saying. And it is actually quite possible that the lawmakers will have the wit to stand aside and let this local company continue to expand and hire.

 

 

Comments

[Bernie Salvador]

Thank you for your good forsight on the issues for Hawaiian Air. As an employee for 24 years it bothers me that the legislatures continually look for obstacles to put in our path. We are trying so hard to be profitable and give jobs to the many unemployed people in Hawaii. Mahalo-Bernie