Hawai'i Superferry? Hawai'i Economic Association Panel Says, "No"

Oct 18, 2017

Hawai'i Superferry, 2007-2009.
Credit Hawaii Superferry

It’s been nearly a decade since the Superferry made its inaugural voyage to Kahului, Maui.   And, the feasibility of another interisland ferry came up during the Hawai’i Economic Association annual conference last week. HPR’s Wayne Yoshioka reports.

Hawai'i Economic Association panelists: Fred Spencer, FiveStar Transportation; George Ka'anana, Hawaiian Airlines Cargo; Glenn Hong, Young Brothers; Paul Brewbaker, TZ Economics.
Credit Wayne Yoshioka

Ninety-eight percent of goods shipped to Hawai’i arrive in containers at Honolulu Harbor.   Containers are off-loaded and shipped to the neighbor islands on barges.   Economist Paul Brewbaker says Hawai’i’s interisland barge system was structured for Young Brothers Limited.

“It’s really important for people to understand that there’s one ocean carrier interisland.  And that was the state’s idea.  They set it up as a public utility, natural monopoly, one carrier.  Everybody pays the same rate and the carrier has to serve Moloka’i.  That’s the deal.  Just like Ben Franklin set up the Post Office.  Everybody pays the same price for a stamp whether the letter goes across the country or goes across town.”

Young Brothers Limited operates 7 barges with a combined capacity of 60-thousand tons.   The Hawai’i Superferry, which began limited service to Maui in 2007, could carry cargo or 280 subcompact cars plus 860 passengers.  But, Young Brothers President and CEO, Glenn Hong, says the Superferry was not a viable alternative.

“One of the things about the interisland ferry, at that speed they wanted to travel, 35 knots, consumed significant amounts of fuel.  Gotta remember.  You’re taking a hull through water at huge speeds.  Clearly, the Superferry was not getting the revenues.  They were competing against the airlines with $5 and $10 fares.  Not sustainable from an economic standpoint.”

Hong says the Superferry reduced its speed to 25 knots but on a cost per passenger basis could not compete with the airlines.   The winter months also brought rough seas to the islands which meant an uncomfortable ride for passengers prone to motion sickness.  Hong says, if the interisland ferry system was allowed to continue, the operating costs would fall on state taxpayers.

“You might get the ridership in the summertime.  And if you’re gonna go 25 knots, you’re now talking about a 4-and-a-half hour transit, plus you’ve got the loading on this end and loading on the other end.  Mama’s gonna say, ‘Papa, you take the car next time.  I’m flying.  I’ll meet you at the other end.”  And that’s what happened so the question is, how much would the state be willing to subsidize that service.   It’s gonna be another rail, it’s gonna be another bus.  But you’re not gonna have the ridership compared to the bus.  You’re talking about tens if not hundreds of millions of dollars in subsidies.”

But, Superferry operations were suspended in 2009, the company went bankrupt, and the two ships were sold for 20 percent of cost.  Taxpayers owe 32 million dollars for that failed system.  But that didn’t stop the state legislature from mandating another interisland ferry system feasibility study last session.  Economist Brewbaker says Hawai’i’s current air and maritime cargo systems have been perfected.

“Strikes were always the thing you worried about.  United Airlines pilots went out, ILWU went out, the machinists went out.  Those are the things that disrupted the movement of passengers and goods.  If you were around in 1970 when we ran out of toilet paper and rice (laugh) that’s a problem.  But we don’t seem to live in that world and nobody even thinks about strikes and work stoppages as being of any major concern.”

For HPR News, I’m Wayne Yoshioka.