Merged Hawaii airlines would cap interisland fares

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HONOLULU -- The company attempting to merge Hawaiian and Aloha airlines is promising it will cap interisland fares at $78 each way for two years, with future increases pegged to the Consumer Price Index (CPI) for three years.

Turnworks, headed by former Continental Airlines president Greg Brenneman, revealed the fare cap in a proposal to the state attorney general's office.

The attorney general and the Department of Justice will look at the merger plans to see if it creates an illegal monopoly.

Turnworks' proposal also said the new airline would guarantee Hawaii residents 10% of one-way interisland seats at $55 or less and 20% of the one-way seats at $60 or less with yearly increases pegged to the CPI.

However, the proposal carries a loophole -- the carrier could raise fares due to costs such as insurance, fuel and security.

Brenneman said the new airline likely will use 717 aircraft for interisland flights and either 767 or 757 aircraft for flights from the mainland U.S. to Hawaii.

Frequent-flyer accounts would be protected as well as tickets bought before the merger for travel after the merger.

Hawaii deputy attorney general Michael Meany said although Turnworks' fare proposal "may be interesting," the attorney general's office is "no where near being in a position to think about fares."

At the time of this report, the office had not received documentation from Turnworks needed to start an antitrust review, said Meany.

"[Turnworks] has not sent the actual proposal on how the companies will join, internal documents, financial records and things like that," he said.

Meany said some of the issues the attorney general's office will look at are whether the merger will discourage the entry into the market of other potential competitors, whether one of the two airlines would fail without the merger and whether the merged airline would create or enhance market power.

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