Current Thoughts (Mostly Hawaii)
In this blogger’s continued analysis of the buyout of Hawaiian Airlines by Alaska Airlines, announced in December 2023, questions of “what if” came to mind when it came to what Hawaiian Airlines could have been.
More specifically, could Hawaiian Airlines have grown to something bigger than itself if it took the growth model of Alaska Airlines, over a long period? The reason for this question is in the documents to buy out Hawaiian, with the local airline being much smaller than Alaska Airlines, making the transaction more of a buyout than a merger.
It is an intriguing “what if” question because it provides a look at the decisions Hawaiian Airlines made vis a vie those of Alaska, and how they played out at the end. Since there are many parts to what Alaska did to expand in the continent, this will be the first of a couple of blog posts that examine the “what if” scenarios.
For this post let’s start with the headquarters choice, and if Hawaiian were to pull up stakes as just “Hawaii’s airline” and make its primary operational hub on the continent.
IN 1953, Alaska Airlines moved its headquarters from Anchorage, Alaska to Seattle, Washington. They moved the headquarters only 2 years after they received permission to fly routes connecting Anchorage and Fairbanks to Seattle, Washington, and Portland, Oregon. Among the reasons for this move included lowering operational costs (cheaper to run offices in Seattle than Anchorage), proximity to talent (easier to pick up talent that wants to stay in Washington or the Northeast than move to Alaska), and general access to investor money (investors like to be in bigger cities it seems).
Its expansion from Seattle was episodic and over a long period. Deregulation of the airline industry by the Carter Administration assisted in helping that expansion (as it did for many airlines at the time). Of course, because it was over a long period, with them doing it step by step, the overall investment of money to change headquarters was absorbed over time.
Now if Hawaiian were to make that move, it would require them to put in a lot more money, quickly and establish a large presence somewhere, again in a short period. In the past, say when they started regular mainland operations in 1985, the choices of places to go would have been more limited than in 1953, when the whole West Coast was good for the taking.
Back in the 80s as it is now, the choices would be limited to port cities that are not named Seattle, or Portland. The two that Hawaiian potentially could have expanded to are Las Vegas and San Diego. Las Vegas would have probably been the better market to expand from as its airport – Harry Reid International Airport – was small but had a lot of promise for expansion, as it did. Hawaiian could have grown with it, if not helped lead it. San Diego is harder as it is land-limited, but it’s a potential anyway due to its intercontinental length runway and operations.
One could say Los Angeles would have been a good choice, but even back in the 80s (way more now), the Los Angeles market is highly fragmented with no one airline dominating the market. And to boot, much larger airlines have tried to dominate the market and spent billions of dollars to try, only for it to not pan out as they hoped (look at Delta’s revamp of operations from about 2017-2022 and how much they put into it)
Either way, the cost of this plan would not be cheap. Estimates of how much an organic expansion into the mainland would cost Hawaiian range from a half-billion to $1 billion. And that money does not guarantee dominance in the port city in the end, let alone get access to future financing to continue expansion after the “beachhead” is established.
As for whether Hawaiian could expand like this, with financing, the answer is “yes, but it will be challenging”. While the airline does have a money-making brand, it would need to come up with an airtight plan that presents a compelling expansion plan that mitigates risks, demonstrates clear profitability potential, and attracts investors and lenders confident in its long-term vision.
If someone knows of financing at this level that Hawaiian could tap into, contact them, they might still need it.
Since Hawaiian has not done this hypothetical expansion, either those who could finance such an endeavor, or Hawaiian getting ambitions to try, it remains more a hypothetical “what if” rather than a potential “plan B” should the Alaska Air buyout not happen.
In the next issue of Politics Hawaii with Stan Fichtman, we’ll explore the possibilities Hawaiian would have to purchase an airline on the continent, who that airline could be, and how much Hawaiian would need to finance it. Similar to what Alaska Airlines did in the 80s in their continent expansion.
As the Hawaii State Legislature has convened in late January to conduct business, it will also be hearing from candidates for offices appointed by the Governor. As many who read this blog know, that is in a wide, expansive list of offices that include various certification boards, all the way to those who serves on the Hawaii Tourism Authority.
One of the boards that Governor Green can appoint is the University of Hawaii Board of Regents. Most times those appointments may make a short story on the 6:00 evening news, or a few inches of newsprint in your daily newspaper. Most of the time these appointments are of people who are better known in specific industries (banking, tourism, education, etc.).
This time around, though, it could be interesting to see how those appointments fair, especially the one that is attached to Governor Message No. 596, “to submit herewith for your consideration and confirmation the following nomination: Neil Abercrombie Board of Regents of the University of Hawaii, Expiration Date: June 30, 2028.”
Formal approval by the State Senate of this Regent candidate would mark a new era in the role of former state and county executives, and what activities they get into after their time in executive service (Mayor, Governor). It would also show that, unlike in the past, former Mayors and Governors who may be looking to perform in an “act 2” of their career, it may be possible now.
BEFORE GOVERNOR GREEN appointed former state and county executives in state roles, there were no real examples of state executives taking on newly appointed roles after service.
In Hawaii, once the executives who served the state complete their terms, they usually return to their normal lives and blend back into society. For example, those who were lawyers before taking office, like Governor Waihee, typically go back to practicing law in high-level firms in Hawaii and on the mainland.
Some who were more academically inclined, taught. Former Honolulu Mayor Jeremy Harris went back to education, at least for a while (but has kept quiet over the years, so who knows).
And then some just “did other things” that turned out to be interesting endeavors. Former Honolulu Mayor Frank Fasi tried to get his old job back years after he left to run for Governor in 1994. Former Governor Benjamin Cayetano did the same thing.
Other former governors like Linda Lingle went on to run for United States Senate and lost. While the most recent former governor, David Ige, has been keeping a low profile with periodic appearances at events.
But now you have former Governor Abercrombie, along with former Honolulu Mayor Mufi Hannemann and former State Senator and Congresswoman Colleen Hanabusa being appointed to high-level, high-profile positions in both the state and the city, respectively, and asked to use their mana’o once again to move ideas and projects forward.
SO, IF HAWAII is going down the road of having former elected executives appointed to offices after service, are we going down a new road, or are other states doing the same thing with their former executives?
Turns out, a bunch of states have former governors appointed, among other offices, Regents to their state universities,
- Georgia: Joe Frank Harris, former Governor (1983-1991), currently chairs the Board of Regents for the University System of Georgia.
- Michigan: John Engler, former Governor (1991-2003), serves as a trustee for Michigan State University.
- New Mexico: Gary Johnson, former Governor (1995-2003), sits on the New Mexico State University Board of Regents.
- West Virginia: Jim Justice, former coal magnate, and current Governor (2017-present), serves as president of the West Virginia University Board of Governors.
When it comes to appointing former elected officials to positions like the Board of Regents, the benefits depend on the goals of each party involved.
For example, if we are discussing a former Governor who departed with a low level of public support, a role like this could effectively restore their reputation, possibly leading to future campaigns for elected office or seeking greater influence within the state.
Having a high-profile person like a former Governor on board can be beneficial for the organization. Even the least popular former elected officials these days have supporters, which in turn, helps increase the organization’s profile in society. This advantage lets the former elected official bring two things to the table – a Rolodex full of phone numbers of influential people and the ability to call and ask for resources (money, assistance) to move the entity (university, tourism authority) forward.
In a world where it’s becoming increasingly difficult to obtain resources, having the ability to quickly acquire them using the influence of a former executive’s personality is seen as an advantage. In Hawaii, this earned asset, developed over years of service, may allow more individuals to engage in an “act 2” of their public service career now and into the future.
On Monday, January 22nd, about a half-week after the start of the Legislative Session for the State of Hawaii, Governor Josh Green gave his second State of the State address.
Before the speech, Governor Green had already identified two key issues to emphasize – Housing and recovery from the wildfires in Lahaina.
These are the two most pressing issues for the people of Hawaii currently. As it stands, the issue of housing Lahaina wildfire victims and addressing the long-term needs of housing in Hawaii dovetail quite nicely and leverage each other for potential policy changes.
We will see.
However, the speech covered more than just the headlines or the main items highlighted by the media. And this is where it’s important for a politically savvy person to read the entire speech, all the way to the bottom.
In the section entitled “opportunities”, which is the second-to-last section in the script, Governor Green went and did an overall “covering the kitchen sink” list of subjects that he didn’t touch upon in the main speech. It is one of those items that piqued the interest of this humble blogger.
It had to do with this partial sentence in the last paragraph, “we opened high-level discussions with Japan to create an open travel corridor”. (It was his predecessor Governor Ige that started those talks…but we’ll say more about that later on).
“Hunh?” one may say, and ignore it because there is no context, but for the savvy, this idea entails a whole lot, with very key individual companies and entities in Hawaii getting plenty of benefits, should it come to pass.
AN OPEN TRAVEL CORRIDOR between Japan and Hawaii is exactly that. If enacted it would be an agreement that would streamline travel between the two regions, aiming to ease current restrictions. Those restrictions include the traditional arrival procedures (immigration, customs, etc.) when entering Hawaii, which would be reciprocated in Japan.
So, in practicality, an open travel corridor would allow a traveler, who has all the proper paperwork to enter the United States, to get “Pre-Checked” in Japan by United States Customs and Immigration before they even board the plane.
The benefits become apparent when the plane lands in Honolulu (or other islands) where the passengers exit the plane as if they just flew a domestic (inside the United States) flight. They would not be subject to immigration or customs as it was already done at the departure point – Japan. This would allow the traveler, theoretically, to easily transit through Hawaii to a mainland destination, or exit the airport quickly after getting their baggage.
And this would not just be for American travelers returning, it would also be for Japanese nationals or anyone who had the proper paperwork in Japan going through Pre-Check. Vis a Vie, certain areas at Honolulu or Kona could potentially have an area where passengers would get Pre-Checked by Japanese immigration and customs before boarding the plane for Japan – again arriving as a domestic flight (theoretically) and not being delayed by immigration or customs control.
And those delays can be significant if you have been an international traveler coming to the United States, or a returning resident. For US Citizens, it takes about an hour to get through the process, with non-US citizens facing a potential 2 hours going through the process.
Take away that delay when arriving and one who knows can instantly see the benefits of doing all the process before in Japan, before getting on the plane.
And trust this blogger, if you can see it, both the Hawaii tourism industry and the State of Hawaii, who lives off the taxes from these trips, see the benefits of this too. Thus, the idea mentioned in the Governor’s speech.
BUT WHO COULD IT ALSO BENEFIT? If one pays attention to the developments in Hawaii’s tourism and travel industries, an agreed-upon travel corridor could bring significant benefits.
The first one that could see a benefit is the airlines. More specifically our own Hawaiian Airlines is its entity. If the merger of Hawaiian with Alaska Airlines goes through, the benefits of having a streamlined arrival process for international flights become even more apparent. Not only would it eliminate delays for passengers, but it would also revive Honolulu’s potential as a transfer point after years of dormancy.
Before 9/11, Honolulu was used by some Asian airlines as a stopover point for their flights to and from the US Continent. At that time, international passengers whose destination was Los Angeles or San Francisco (for instance) who didn’t get off the plane or wanted to leave the airport, could easily continue to their next destination. Provided it was on the same flight, it still was a less burdensome way to travel.
After the 9/11 attacks, Homeland Security implemented new rules, which changed the benefit of being processed at your destination. Now if a plane lands in any airport from an international destination, all the passengers must exit the plane and go through customs and immigration. So for the passenger looking for less hassle, the idea of taking a flight that stopped in Hawaii didn’t make too much sense anymore unless they were coming to Hawaii itself.
And let’s face it, travelers sometimes want to see Hollywood or the Golden Gate Bridge more than Diamond Head and beaches.
Taking away that burden from travelers now could, theoretically allow a passenger who boarded a Hawaiian Airlines flight in, say, Tokyo bound for Honolulu, to get pre-checked in Tokyo and land in Honolulu at the Central Concourse. From there the traveler exits the Hawaiian flight and goes right over to the gate next door where an Alaska Air flight to, say, Bremerton, WA, is parked ready to board. The passenger gets on that flight and goes to Bremerton as if you or I were going.
Or they get off, spend three days in Waikiki, and then board the Bremerton, or any flight going to the Continent, and continue their United States trip. It could be that Alaska, in its matrix of reasons to buy Hawaiian, factored this in, but can only dream about it happening but can’t say it wants this in its SEC 8K filing.
But trust this blogger, they’ve been thinking about it.
BUT IT DOESN’T COME WITHOUT CHALLENGES. As with any good idea, implementation of something like this is not without its challenges, both legally and logistically. First off, a new Pre-Clearance agreement would need to be made between the United States and the Japanese Government. Japan has already identified, on its side, Hawaii as a place which it would be partial to creating a travel corridor, having named it as the only American destination for Japanese citizens to visit during the height of the COVID-19 saga.
The discussion about Hawaii being a safe place to travel during COVID-19 was initiated by Governor Green’s predecessor, David Ige. Green mentioned in his speech that this discussion has opened the door to high-level talks.
What Green has done, instead, is keeping the conversation going. The heavy lifting of advocating for Hawaii to be categorized as a safe place to travel was done by former Governor Ige. And if it wasn’t for COVID, the full roll-out of the travel corridor as described above most likely would have been implemented by now.
Now we got the record straight, let’s move on.
Then comes the practical questions of who pays for all of this, and whether the return on investment is worth the expense on both sides to implement. There probably is some modeling of this with the other nations that have Pre-Check facilities in their countries.
Then comes the Visa requirements of travelers using this system. Theoretically, an American Visa is an American Visa, but with the way our national administration in Washington, depending on who is the current resident of the White House, sees the world. travelers from different regions were seen differently than those from others. That is where voters come in on their choice on the matter.
When someone asks in Hawaiian Pidgin, “Can, no can?” the answer is a resounding “Can!” as long as the item remains a top priority for the Green and future administrations.
Read past entries of Stan Fichtman and PoliticsHawaii.com!
Who am I reading/getting news from
I am very choosy as to where I get my news from, here are some dependable sources I refer to when reading up on topics
Here are my current thoughts of things going on.