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Monday, May 12, 2008

Hawaii Wants Re-Regulation in Inter-Island Market

While the Hawaiian legislature would like to re-regulate the inter-island market in the wake of Aloha’s failure, it is unlikely to pass the federal pre-emption test in Washington regardless of whether the governor signs the bill into law. It is now on his desk. The principle that the federal government is the only entity that can promulgate such regulations has been upheld in a recent ruling against New York State passenger bill of rights and will likely be upheld if California’s attempt to pass such regulation is successful. Even so, Alaska has such rules but it also has a federal waiver.
The Hawaiian legislature passed the Hawaii Interisland Airlines Regulation bill in an attempt to prevent another airline to go under because of price wars as Aloha cited in its Chapter 7 bankruptcy filing.
"By regulating the rates we can ensure that they have a reasonable rate of return and that the people of the state of Hawaii are serviced," Rep Bob Herkes, (D) Puna-Kona, who introduced the bill, told a local television station. But detractors noted that it would likely mean higher fares. The legislation calls for a newly created commission that would certify carriers to offer service in the markets. Hawaiian Airlines testified against the measure saying it is not the time for adding costs to already beleaguered airlines.
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