Pasha Given Shipping Go-Ahead

Young Brothers warns of consequences.

The Hawaii state Public Utilities Commission (PUC) gave Pasha Hawaii Transportation Lines the all-clear on Dec. 2 to begin their interisland shipping – denying Young Brothers their appeal to keep Pasha out of the interisland cargo market.

The PUC stated that allowing Pasha to operate on an interim basis will “foster fair competition in the intrastate shipping industry,” according to the PUC’s interim order. They also stated that having more cargo carriers is positive for customers, so service could continue if “existing services are disrupted.”

However, Young Brothers maintains that Pasha is “cherry-picking” profitable routes and that the PUC is not maintaining its own regulatory standards.

Young Brothers is required to serve all ports in Hawaii, and uses its larger ports to subsidize smaller, less profitable routes such as Molokai and Lanai. Pasha currently sends cargo from the mainland to Honolulu, Kahului and Hilo, and requested to operate between Oahu, Maui, Hawaii Island and Kauai in March 2009.

Roy Catalani, Young Brothers vice president of strategic planning and government affairs, said they will be filing an appeal with the Intermediate Court of Appeals. In addition, he said they plan to file a “motion for stay” – asking the court to stop the effectiveness of the PUC decision until the court makes its decision.

“That’s particularly important to us,” Catalani said of the motion for stay. “The regulatory uncertainty we’re facing right now is a serious problem.”

Pasha General Manager Reggie Maldonado was unavailable for comment.

Crunching the Numbers
Catalani said the company is already experiencing financial hardship, which has been exacerbated by Pasha’s entry onto the scene.

Catalani said they’ve had a 30 percent decrease in load volume in the past three years, but because they are required to maintain a certain level of service, the loss of volume leads to decreased revenues. He added Young Brothers would have increased their rates in 2011, with or without Pasha, but the rates would increase “substantially more” with pressure from Pasha.

“The real issue is we may not be able to maintain the capital we need to maintain operations,” he said.

Catalani said Young Brothers wants to address the business community more directly, and held a meeting on Molokai earlier this week to discuss their appeal and rate increases.

Voices Not Heard
The PUC’s decision also came the day before a hearing on the issue held by the Senate Committee on Commerce and Consumer Protection. Sen. Rosalyn Baker of Maui, chair of the committee, said the hearing was to help the lawmakers understand why the PUC made their decision – an “unusual action” on the part of the PUC, according to Baker.

Baker and those that testified expressed their frustration that the PUC issued their decision without taking any direct testimony from the business or legislative communites – all testimony was received in the form of letters. Among the testifiers  were neighbor island consumers that would be affected, such as Molokai Chamber of Commerce’s president Rob Stephenson.

PUC Chariman Carl Caliboso told the Dispatch that no public meetings were held on the neighbor islands because the PUC is not required to. However, when grilled at the senatorial hearing a few weeks ago, Caliboso said the PUC understands the concerns of those who would have liked to testify, but because they received the written testimony, holding a meeting was not necessary.

“[A public hearing is] really not necessary at this point because we understand everything they would have told us anyway; we’ve heard it today, we’ve heard it before,” Caliboso said at the senatorial hearing.

However, many testifiers did not feel they were heard.

Sonia Yuen, manager of Kualapu`u Market, wrote a letter to the PUC opposing Pasha’s application in 2009.

“What we’re afraid of is Young Brothers raising rates,” she said. “That affects the consumers, and we can only absorb so much; some of it we pass off on our customers.”

Barbara Haliniak was president of the Molokai Chamber of Commerce when Pasha first applied for interisland cargo service, and she also wrote a letter last year opposing their request.

“[Pasha] cited in their application, it was good for all the people of Hawaii, but it’s not good for all the people because we are the people,” she said. Haliniak, now president of the Molokai Chamber Foundation, said Molokai will see major economic ramifications.

“Needless to say, if [Young Brothers] increased the rates, every community member will see that increase at the grocery store,” she said.

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