Ferry Shutdown Imminent

By Catherine Cluett Pactol

The Molokai ferry, operated by Sea Link of Hawaii, Inc., is on the verge of ending its services.  Claiming falling ridership, loss of revenue and increased operating costs, company President and Captain Dave Jung has filed a request for shutdown with the Public Utilities Commission (PUC). He said if the request is not granted, he will be forced to declare bankruptcy with the help of a bankruptcy attorney.

“Ridership has really gone down in last year,” said Jung, pointing to cheap air flights scooping up their passengers. “Today we’re lucky if we get 20 people a run.”

The 100-foot, three-story boat can hold up to 150 passengers, and Jung previously said in 2013, the service suffered $108,000 in losses and then $288,000 in 2014. The trend has continued, and the company’s PUC filing states there’s been a recent reduction in ridership from 1691 total passengers in January 2016 to 859 passengers in July.

In June of last year, Sea Link filed an application with the PUC seeking to reduce its daily, seven-day a week round-trip operation between Maui and Molokai to operating a minimum of six one-way trip voyages per week. In addition, it requested the right to cancel any voyage without a minimum of 20 passengers at least 48 hours in advance. The PUC granted their request in August, 2015.

With current one-way trip prices at $62, Jung said he cannot compete with flights to Maui as low as $36. He said federal subsidies supporting Mokulele and Makani Kai airlines allow them to keep their fares inexpensive. According to Department of Transportation documents referenced by Jung, the two airlines receive a combined $4.5 million in subsidies over four years to fly to Kalaupapa and Kamuela. Jung said that funding allows them to reduce prices to all their destinations.

“[Airlines] can change their prices and routes on a daily basis, they don’t have to hold public hearings or go through the public advocate. [For the ferry] the expense of maintaining a fixed schedule at fixed price… is huge,” said Jung. “It’s really very simple. How can a heavily regulated carrier without a subsidy compete with an unregulated carrier with a subsidy?”

Ferry services are state-regulated by the PUC, while airlines have more flexibility under federal regulation, according to Jung.

Last year, Sea Link was granted a one-time subsidy of $105,000 from Maui County to assist with continued operations but Jung said it has received no other state or county assistance for years. He said public transportation like the Maui bus is owned by the county and contracted to a private company for operation. He said he has tried to sell the ferry to numerous companies, and offered to give the operation to the county for free, but they refused.

“Nobody wants to absorb close to a million dollars over the last three years in losses,” he said.

Jung said he hopes the ferry will ultimately be taken over by the state or county and provide free transportation for Molokai residents.

“I’m really concerned for Molokai,” he said. “One of the best things the ferry has done over the years is [tying] Molokai into Maui County…. I really worry about Molokai being separated again.”

The ferry service began in 1986 when Gov. John Waihee encouraged the company to run a ferry out of Molokai. At that time, it received a $30,000 monthly state subsidy, allowing the company to provide discounted tickets to daily commuters.

The Molokai ferry has continued to provide a lifeline to Maui, particularly for Molokai High School athletes. However, Athletic Director Lee DeRouin said with the change in schedule last year, football is the only team that continues to rely on the ferry. For Maui games, the football team regularly travels with 45 to 60 people, including players, coaches and fans, as well as a lot of equipment, said DeRouin. If ferry service ended and they had to rely on the regularly scheduled airlines, transportation back and forth for the whole group could take most of the day.

“If we have to take nine-seat planes, some team members would wait for five hours while others arrive,” said DeRouin. “It would also limit parents being able to go over.”

He said ferry shutdown would also affect Maui teams coming to play on Molokai. Jung said he is waiting on a response from the PUC to see if he may be able to continue operating on a private charter basis, which would allow continued use by school athletic departments.

In the meantime, there is no timeline for the PUC decision on the shutdown, but Jung hopes he can end operation within a month.

“If the PUC doesn’t grant our request, we’ll just go bankrupt,” added Jung.

The PUC is requesting written comments on Sea Link’s request, with a deadline of Sept. 27. Written comments can be mailed to the PUC at 465 South King Street, Room 103, Honolulu, Hawaii, 96813, or sent by email to puc.comments@hawaii.gov. All written comments should reference Docket No. 2016-0214, and include the commenter’s name and the entity or organization the commenter represents.