Another major piece of the long-delayed Honolulu Airport modernization program is stuck on a snag, this time involving a pair of smaller airlines that need to move but as yet have no place to go.

The state urgently needs to tear down the old low-rise commuter airline terminal next to the interisland terminal to clear the site for a planned new concourse. That new concourse will provide badly needed new gates at the crowded airport.

But that hasn’t happened. Construction of that new concourse has been stalled for the past year while the Department of Transportation figures out what to do with Mokulele Airlines and Island Air, which still operate from the old commuter terminal.

No final decision has been made yet on where to put those two airlines, and changes and delays in the airport modernization project have once again been costly for the department.

A summary of state spending on airport construction provided by the department shows the department spent more than $8.3 million on design and other work for a planned new commuter terminal before state Transportation Director Ford Fuchigami finally scrapped the project more than a year ago.

Without the new commuter terminal, the state has been unable to relocate the airlines that operate from the old commuter facility. And until that is done, the state cannot move forward on what is to be the Honolulu airport’s new “Mauka Concourse,” a $220 million project that will eventually be built where the old commuter terminal stands.

Major snags

That Mauka Concourse is a major component of a $750 million Honolulu airport modernization program that was conceived during former Gov. Linda Lingle’s administration. The airport modernization program was then promoted by former Gov. Neil Abercrombie as one piece of his administration’s “New Day” initiative.

But some of the largest components of the modernization effort have been delayed for years or canceled. For example, construction on a $75 million maintenance hangar and cargo facility for Hawaiian Airlines was halted in 2015 when the state declared that the general contractor was in default.

That project was supposed to have been finished more than two years ago but is mired in lawsuits between the contractor, the state and subcontractors who worked on the job. Hawaiian Airlines now plans to complete the hangar, but the delays and other problems have added tens of millions of dollars to the original cost of the project.

Airport modernization was also supposed to include the new $40 million commuter terminal for the smaller airlines, but that project was scrapped in 2015 by Fuchigami. That decision, in turn, has indefinitely delayed plans for the Mauka Concourse.

Last year the state awarded a $197.7 million contract to Hensel Phelps Construction Co. to build the new Mauka Concourse, but transportation officials can’t give the contractor permission to begin work at the old commuter terminal until Mokulele and Island Air airlines are moved out.

“We can’t move forward with the project until we do that,” Fuchigami said. The Mauka Concourse is already years behind schedule.

Three years ago, airports officials predicted that construction on the Mauka Concourse would begin in early 2016 and be complete by next January. Now, Fuchigami said he realistically won’t be able to close the old commuter terminal and clear the way for construction to begin on the Mauka Concourse site until the end of this year.

Fuchigami said last week he has given the Airlines Committee of Hawaii until the end of April to recommend a plan for finally moving Mokulele and Island Air out of the old commuter terminal.

Blaine Miyasato, co-chairman of the airlines committee, said in a written statement that the group is “working collaboratively” with the state to develop a recommendation that will allow the Mauka Concourse project to move forward. Most of the airlines that operate in the state including Hawaiian and Island Air have a seat on the 20-member committee.

Many changes

Construction on the canceled commuter terminal project was supposed to begin in 2014, but events in the turbulent airline industry forced the state to change the plan — repeatedly.

When planning and design work started for that new terminal years ago, there were four viable airlines that used the old commuter facility, including go!, Pacific Wings, Island Air and Mokulele, Fuchigami said.

The state in 2014 planned to build a new 35,000-square-foot commuter terminal at an area near Gate 6 of the Diamond Head concourse to serve the smaller airlines. The project was supposed to be finished in early 2016, and Fuchigami estimated it would have cost $40 million to $50 million.

That plan was modified after Island Air was sold to Larry Ellison, Fuchigami said. When the state presented the department’s plans for the new commuter terminal to Ellison’s staff, the Island Air group asked for changes.

Most of the terminal was to be occupied by Island Air anyway, and “they wanted to design it their own way, they came back, they gave us the money to go ahead and redesign it, and we did all of that,” Fuchigami said. He added that “because Mr. Ellison was paying for everything, we figured it’s not a problem.”

“We were moving along, and then all of a sudden that changed,” Fuchigami said. Pacific Wings ended Hawaii service in 2013, go! ended service in Hawaii in 2014, and in early 2016 Ellison announced he was selling Island Air.

That presented a new problem. The Airlines Committee of Hawaii had agreed to subsidize the new commuter facility in the early years, Fuchigami said, but fees and rents charged to the airlines are supposed to cover the costs of their facilities.

The department calculated that Mokulele and Island Air alone could not afford the original commuter terminal plan, and Fuchigami announced in 2015 he was scrapping plans for the project.

Still, Mokulele and Island Air have to move to make way for the Mauka Concourse. Fuchigami said he is open to moving the airlines to the interisland terminal or into the Ewa, Central or Diamond Head concourses, but they must move.

Crowding at the airport at peak hours is already a huge problem, which has made the issue more difficult to resolve, Fuchigami said. Relocating Mokulele and Island Air to any of those locations will affect other airlines, so Fuchigami said he asked the Airlines Committee of Hawaii to pick a preferred solution.

Rob McKinney, president of Mokulele, said his airline offered to pay for a bare-bones, temporary commuter terminal near the Diamond Head concourse, but that project somehow morphed into a far more expensive $10 million “behemoth” that was unaffordable for the airline. The state finally abandoned that proposal last fall, McKinney said.

The possibility of moving Mokulele away from the main airport to operate alongside the smaller planes at the general aviation area has also been discussed, but McKinney said that is unworkable because it would make it too difficult for Mokulele passengers to connect to flights on other airlines.

McKinney said Mokulele is willing to accept almost any solution except one that moves the airline to the general aviation area of the airport. However, in a meeting with airports officials on Friday, McKinney said he was told that all proposals that would keep Mokulele with the other airlines were “discontinued from consideration.”

“We just expect to be treated fairly in this situation, that somehow there’s going to be some accommodation” he said. “We can’t be 3 miles away from the rest of the airlines. That’s what doesn’t work. There’s just no way to transfer people and bags like that.”

McKinney said the state is not allowed to discriminate among classes of airlines, which means Mokulele cannot be excluded from the area of the airport where the other airlines operate.

Interisland terminal

Another plan would involve using the makai portion of the interisland terminal including gates 49 through 51 and possibly gates 52 and 53 for the smaller airlines, said David Uchiyama, president and CEO of Island Air.

“We’ve gone through several different proposals of what could be done, and that seems to be the most cost-effective for the state and for us at this point,” Uchiyama said. He said airport utilization studies by the Airlines Committee of Hawaii support that approach, but Hawaiian Airlines has resisted that solution.

Ann Botticelli, senior vice president for corporate communications and public affairs for Hawaiian Airlines, said in a written statement that the state is already “shoehorning” half of all of Honolulu Airport’s daily operations through two lobbies at the interisland terminal.

The interisland parking structure “is similarly overflowing and the traffic congestion in front of the check-in and baggage claim areas is quite severe,” Botticelli said. “It’s not clear how adding to the congestion at (the interisland) Terminal 2 will serve anyone’s guests well.”

Hawaiian Airlines conducts check-in, baggage handling and screening, security processing and baggage claim functions for all of its routes out of the interisland terminal, which involves 202 flights a day, she said.

The delays and missteps in the airport modernization have also been frustrating to Hawaiian. Mark Dunkerley, CEO of Hawaiian, said in a recent interview that the need for the Mauka Concourse and the new gates it is supposed to provide was foreseen in 2004, when the airport modernization was first endorsed by the airlines.

“We have been taking delays for the last couple of years — predictably — because of the lack of gates at Honolulu International Airport,” Dunkerley said.

He said there is “no question” that the delays and problems with the airport modernization effort in Honolulu has inhibited the growth of Hawaiian Airlines, and “the fact that Honolulu is not a world-class connecting hub is a problem.”

The airport “is our showcase, it’s the first place that people see on arrival, and it doesn’t do justice to this terrific community the way it is,” Dunkerley said.