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Community Viewpoint: Why is Island Hopping so Expensive?

Have you ever wondered why island hopping is so expensive? About $15.28 of every airline ticket goes to taxes and fees for security and administration, and this can add up for island residents who travel often to visit family. But part of the cost of every ticket goes to the monopoly pricing we pay for the lack of competition in our interisland airline market.

This lack of competition could partly stem from certain restrictions set on airline companies. A federal aviation law restricts international airlines from flying between airports within the United States. The law, known as aviation cabotage (49 U.S.C. §41703(c)), prevents aircraft registered outside of the U.S. from carrying cargo or passengers between U.S. airports.

This has nothing to do with safety. After all, foreign carriers already fly to Hawaii all the time, and are highly regulated by the Federal Aviation Administration. International airlines must adhere to strict U.S. standards and inspections before being allowed to service U.S. airports. In Hawaii, we welcome many international airlines travelling to and from our islands ­­just not between them.

Instead, the law has more to do with keeping monopoly prices high, as the lack of interisland competition likely results in higher airline ticket prices for Maui residents.

A similar law called the “Jones Act” applies to the shipping industry, which prevents international ships from carrying cargo between American ports. In a similar way, this has resulted in a higher cost of living for islanders.

In Hawaii there’s really only one major airline, Hawaiian Airlines, with smaller carriers like Island Air providing around 13% of the interisland market share. Back when Hawaiian Airlines had stiff competition from Aloha Airlines, flights from Honolulu to Maui could be bought for less than $20 adjusted for inflation. Now, flights range between $68 and $182 one way.

Reforming or exempting aviation cabotage in Hawaii could mean that the interisland market would be opened up for more international competition, and this could mean lower fares. This could potentially bring more business to Maui as visitors and kama’aina found it affordable to island hop.

For example, if aviation cabotage laws were reformed, it may be possible for Japan airlines to carry passengers from Japan to Honolulu, then to Maui, and then on to San Francisco. This would be illegal today because of aviation cabotage laws. Reforming the laws may be very beneficial for our local economy, as more tourists from overseas and the mainland fly into Maui.

Getting an exemption is not so far fetched, considering that in 2003, Alaska was granted a limited exemption from the airline cabotage law. Before the exemption, Alaska was losing jobs to competition from Canada and Asia. After the exemption, Alaska was finally allowed to compete as an international cargo hub.

A similar exemption for Hawaii from the airline cabotage law could bring more jobs to Maui’s economy, as more tourism and cargo traffic would be allowed to compete. More competition could result in lower prices for island hopping customers. So, let’s stop being sabotaged and let’s get rid of aviation cabotage here in the islands.

Joselyn Olinares

Joselyn Olinares is a researcher at the Grassroot Institute of Hawaii, and independent non-profit research organization.

Joe Kent

Joe Kent is Vice President for Research and Development at the Grassroot Institute of Hawaii, and independent non-profit research organization.

The MAUIWatch Community Network invites readers to express their views in the Community Viewpoint. Community Viewpoint columns should be on or around 800 words. Community Viewpoint submissions are subject to editing. We do not print letters announcing events to come, extensive quotations from other material, open letters or form letters. Send to contact (at) mauiwatch (dot) com

 

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