The Hawaiian Superferry has been a dominant topic for the past few months in The Garden Island news articles and in letters written to the Forum. Supporters of the ferry have praised its innovative features while opponents have raised concerns
The Hawaiian Superferry has been a dominant topic for the past few months in The Garden Island news articles and in letters written to the Forum. Supporters of the ferry have praised its innovative features while opponents have raised concerns about its environmental impacts. The discussions of its merits and its deficiencies has been comprehensive but inconclusive. Supporters have stated that 95 percent of the people of Kauai favor the ferry, but a petition with over 6,000 Kauai resident signatures opposed it. The attention that the issues involved have generated is illustrated by the fact that a Google search discloses that there are about 180,000 articles that have been written regarding the ferry.
Since the initiation of the current project about five years ago over $300 million has been invested principally in the completed ferry boat the Alakai and its sister boat now under construction . Hawaii Superferry, Inc., the owner of the venture, has sought governmental assistance for its proposed service and has received a guarantee of $140 million for its borrowings from the Federal Maritime Commission. The business has also obtained a $40 million commitment from the State for work in the harbors to be used. An environmental assessment was requested in 2004. The State Department of Transportation ruled in 2005, however, that an environmental assessment was not necessary for the harbor improvements. In August the Hawaii Supreme Court ruled that an environmental assessment is required incident to the service. Last week the Circuit Court on Maui ruled that the ferry could not operate during the assessment. It is virtually certain that the ruling will be appealed. Our governor is pressing for a special legislative session on the matter.
Many of us have been disturbed by both the unlawful nature of the protest in the Nawiliwili harbor and the arrogant attitude of the ferry management in seeking to commence service without regard to the Supreme Court decision. Governmental officials have tried to influence the results. Although the state administration has been strongly supportive of the ferry being exempt from environmental studies, the County Councils in Kaua‘i, Maui and the Big Island passed resolutions seeking Environmental Impact Statements. One commentator observed “At the end of the day there are very few entities in this whole sorry mess that end up looking good”.
It may be better to leave the sound and the fury about the current controversies and consider the long range economic factors that are involved.
The market that the ferry proposes to enter is the transportation of people inter island in Hawaii. That market is presently substantially entirely served by three airlines. It is basically an inelastic market. The airlines are at present not operating in the market profitably. The Superferry will be seeking to enter it with fares that substantially exceed those of its competitors and its travel time will much more than that of the airlines. The countervailing feature that the ferry will be offering is its ability to also provide transportation for passenger vehicles. The economic advantage to its customers of this feature is debatable. For short term stays an airline passenger could rent a car at his or her destination and the trip would be less costly than the fares proposed to date by the ferry. For longer duration trips, although they are less frequent, the total costs would be more evened and the convenience factor of having your own vehicle could tip the balance.
The current profitability reality for surface passenger transportation providers is bleak. Interstate bus carriers have essentially disappeared. Longer distance train travel by passengers is limited to the service offered by Amtrak. Interurban train service such as the BART system in the San Francisco area or the New York subways are governmentally operated and are money losers. Local bus service is largely run by governmental entities and is unprofitable. The limited service provided by the Kauai Bus loses about a million dollars each year. Ferries are operated elsewhere mostly by governmental authorities and usually at a loss. The Superferry owners have said that they are losing $650,000 per week while service is suspended – they do not say how much they would be losing if the ferry operated.
It certainly appears that if the business plan of the Superferry contemplates attractive profitability for its investors it is unduly optimistic. If the operations of the ferry are ultimately approved, the long term viability of the program will depend on the unlikely prospect that it will make a significant penetration in its market. The corpses of defunct similar ventures do not bode well.
If in the final analysis the ferry will succumb to the economic facts governing it, is it societally beneficial to protract its demise?
• Walter Lewis is a resident of Princeville and writes a bi-weekly column for The Garden Island.
