Hawaiian Air a major player in state economy, report shows

Hawaiian Airlines in 2022 wasn’t even back to pre-COVID-19 performance levels and still was associated directly and indirectly with more than $10 billion worth of economic activity in Hawaii — 11% of the state’s gross domestic product, according to an independent report by ICF, a global consulting services company commissioned by the airline to assess its economic impact in Hawaii.

According to the report, titled “No Kakou a Pau,” which means interconnectedness, Hawaiian Airlines directly employs about 7,158 workers, some 90% residents of Hawaii. The analysis by ICF concluded that there also were secondary impacts of Hawaiian Airlines’ activities that include a significant effect on jobs in other industries.

“Hawaiian Airlines’ activity annually supports the employment of an additional 46,342 people throughout Hawaii, for a total of 53,500 jobs statewide, and more than $10 billion of industry activity or 11% of Hawaii’s total GDP,” the report said. “This translates to more than $607 million of realized tax revenue to the state each year.”

The report said, “Following several years of uncertainty because of the COVID-19 pandemic, this is also a story of resilience. Hawaiian Airlines led through the uncertainty of COVID-19, keeping its people employed, continuing to support local industry and business, providing local jobs and training, and transporting cargo and supplies.”

Hawaiian Airlines spokesperson Kris Tanahara said the last time that Hawaiian studied its economic impact was in 2019 when it celebrated its 90th anniversary.

“According to that independent analysis: In 2018, Hawaiian generated $9.3 billion in economic activity for the state and supported more than 60,000 jobs,” she said.

Tanahara said Hawaiian commissioned the latest report because “as Hawaii’s largest and longest serving airline, it’s important for us to understand, from a quantitative standpoint, how our business impacts the state’s economy, residents and communities.”

The latest report analyzed full-year data from October 2021 through September and used the 2012 State Input Output Model, which depicts the inter-industry relationships in Hawaii’s economy, to determine Hawaiian’s total statewide economic impact.

“ICF looked at myriad sectors of our business — capital expenditures, operational expenditures, cargo operations, etc. — and how they affected other industries across Hawaii,” Tanahara said. “The study underscored the ways Hawaiian is connected to the economy of our state.”

The report quotes several economic and business experts, including Tom Yama­chika, president of the Tax Foundation of Hawaii, who said, “With the COVID-19 pandemic, our tourism industry took a huge hit as evidenced by a more than 90% decrease in Transient Accommodations Tax (TAT) revenue. By avoiding large numbers of layoffs, Hawaiian Airlines acted as a buffer against major economic shock, which was remarkable for our local economy.”

According to the report, Hawaiian Airlines in 2022 supported nearly one-third of the state’s 128,000 tourism jobs and 9% of the 612,070 jobs across the state, creating trickle-down economic benefits.

Renee Awana, managing director of product development at Hawaiian Airlines, said in the report, “When we buy from Hawaii businesses, we’re doing more than supporting a local shop, restaurant, or service provider. We’re investing in a community of hardworking entrepreneurs who are passionate about sharing all that makes Hawaii special through their unique island-made products.”

Paul Brewbaker, principal of TZ Economics, said in the report, “In a world dominated by network carriers, Hawaiian Airlines is an extraordinary example of a destination carrier — all planes arrive in the Hawaiian Islands. Hawaiian Airlines remains a crucial and complementary part of the network that connects Hawaii’s economy with the rest of the world — transcending Hawaii’s geographic isolation and remoteness.”

According to the report, Hawaiian Airlines flights carried 9.4 million passengers on flights to, from and within the Hawaiian Islands, which equated to 43% of total passengers in Hawaii in 2022. It also said that Hawaiian Airlines in 2022 exported 630 tons of cargo weekly and imported 820 tons of cargo weekly.

Brewbaker added in the report, “Hawaiian Airlines’ contribution comes from its long-standing participation, and leadership in Hawaii’s interisland and transpacific commercial and cargo carriage environment.”

While Brewbaker was quoted in the report and doesn’t dispute Hawaiian Airlines’ importance to Hawaii’s economy, he said Monday that he was concerned that some of the language of the report “seems to be portraying something that conflates the importance of the industry with the importance of their company.”

Brewbaker said dividing the total direct and indirect impact by value added or GDP has a tendency toward generosity. After all, more than $10 billion in direct and indirect spending is a big number when tourism nominal expenditures reached $19.25 billion in 2022, he said.

“GDP is the sum of values added by industry, and we are talking about a firm in an industry, so you just have to be careful,” Brewbaker said. “The numerator and the denominator don’t really facilitate the kind of attribution that it seems as an outsider that the carrier wishes to claim.”

In comparison, he said that the value-added calculation for state and local government is about $9 billion, and it’s about $5.6 billion for the federal military sector and $4.6 billion for transportation and warehousing.

Still, Brewbaker said Hawaiian does “have the right to claim two-thirds of all the air transportation jobs in the islands —there’s a bragging right there. That’s a fact, Jack. I get more than 67%, which no doubt has a large economic impact.”

The economic report, which was published in February and distributed nationwide Monday in an Airlines for America Smart Brief, comes as Hawaiian is midway through the last month in this year’s first quarter.

In its Jan. 31 earnings report, Hawaiian Holdings Inc. reported a fourth-quarter loss of $50.2 million. For all of 2022 it had a loss of $240.1 million.

Hawaiian said in the earnings report that it expects to add 14% to 17% more available seat miles during the first quarter. For 2023 the carrier expects to increase its available seat mile capacity by as much as 9.5% to 12.5%.

Tanahara said as reported at the end of January, Hawaiian “saw continued strong demand in our domestic markets and recovery in our international markets illustrating that Hawaii is a top destination and that Hawaiian remains the carrier of choice.”

She said Hawaiian operated at 91% of its 2019 capacity, composed of 115%, 79% and 44% capacity on its North America, neighbor island and international routes, respectively.

“The resilience of the leisure market was most evident in our domestic travel demand. U.S. Mainland to Hawaii total passenger revenue was up 29% on 9% more capacity compared to the fourth quarter in 2019, with load factors remaining in the high 80s,” she said.

Tanahara said 2022 also was a strong year for Hawaiian’s international markets outside of Japan.

“In July, we resumed serv­ice to Auckland, and pent-up demand to and from New Zealand drove strong (revenue per available seat mile) gains,” she said. “On the back half of the year, Korea (passenger revenue per seat mile) returned to pre-pandemic performance levels, and we continue to experience very strong demand from Sydney.”

Unlike other international markets, Tanahara said Japan’s ramp-up has been slower than Hawaiian anticipated.

“Japanese travelers have a strong affinity for Hawaii and it’s still a cherished and aspirational destination, more so than other international destinations,” she said. “This drives our belief that the weakness in demand is transitory, and that we will be well positioned to fully serve the Japan-to-Hawaii market when demand returns.”