Wednesday, October 29, 2008

HSF Postpones Introducing Hull A616 to Hawaii

Three good articles on this are at:
Second Superferry ship postponed; Inter-island service to Kaua‘i still on hold
By Michael Levine The Garden Island Oct 29, 2008

Superferry holds off on Big Island service; Tuesday sailings to Maui also cut because of economic concerns
By Christie Wilson Honolulu Advertiser Oct 29, 2008

Superferry delays Big Isle service; Economic slump sidelines ferry to Big Isle
By Kristen Consillio Honolulu Star-Bulletin Oct 29, 2008

A video report on this is at:
Superferry Delays Second Ship Due to Economy (KGMB9 News/Local News)
The delivery of the second Superferry to Hawaii is being delayed more than a year. Originally scheduled to enter service this February, its new launch date is now set for the Summer of 2010. October 28, 2008

Thanks to Mina, Ian, Greg, and Camera for making sure I didn't miss it.

Here is the original press release forwarded to me on it:

Sent: Tuesday, October 28, 2008 12:45 PM
To: Lori Abe
Subject: Hawaii Superferry Postpones Introduction of Second Ship News Release

For Immediate Release
October 28, 2008
Contact: Lori Abe

Hawaii Superferry Postpones Introduction of Second Ship

Uncertain economic climate delays second ship

HONOLULU --­ Hawaii Superferry today announced that it is postponing the introduction of its second ship and the start of service to the Big Island for approximately one year when the company anticipates the financial and economic climate will be more conducive to starting the new route. The company will continue its current schedule of service between the islands of Oahu and Maui with its first ship, the Alakai.

Hawaii Superferry remains committed to serving the people and businesses of Hawai'i. "We're encouraged by the increased ridership we experienced this summer and by the very positive feedback we've been receiving about ourservice," said Hawaii Superferry President and CEO Tom Fargo. "Postponing the introduction of our second ship will defer over $10 million in start-up costs and enable us to maintain our sound financial position. Given today's economic uncertainties, this decision is both prudent and provides us with additional time to develop this market, while continuing to grow our successful Oahu and Maui service."

"We believe that our business plan is solid for the long run. Serving the islands, including the Big Island and Kaua'i, remains our goal and is very important to us. In the meantime, we will continue our focus of providing a reliable and responsible service between Maui and Oahu and preparations for the arrival of our second ship to ensure its successful launch."

Hawaii Superferry is anticipating delivery of the second ship in Mobile, Alabama from shipbuilder Austal USA in late February 2009. The company will look at short-term opportunities for use of the ship prior to its induction into service in the islands.

Hawaii Superferry's first ship, the Alakai, seats up to 800 passengers and carries approximately 200 vehicles...

# # #

After this press release, there was also coverage of it in the Honolulu Advertiser, MarineLog, and and number of blogs. My comments are as follows:

I think there were a number of reasons why this happened in addition to the ones the company gave. In no particular order, they include:

1) JFL's resources has probably been cut by at least a third by the recent market. The amount of money that he had last year to keep throwing at this, he may feel he doesn't have to waste anymore. Austal has spoken recently about other commercial ferry operators running into difficulties recently with financing, an industry trend.

2) The State Supreme Court agreeing recently to take the appeal on Act. 2 is a strong indicator that Act. 2 may be found to be unconstitutional. I would guess they take oral arguments on that after the election and rule on it possibly by the end of the year. This could block the use of HSF2 Hull A616 and A615 for that matter until a real Chapter 343 EIS is done, which could take another year or two, and the company would have to pay for that. Better to plan something else for Hull A616 now, like a government lease.

3) I think this also signaled something about recent infighting and lack of optimism in the McCain campaign. I would say this is also a signal from inside the camp that they know they are not going to win and therefore JFL cannot count on the benefit of connections with McCain.

4) Ridership has probably been low recently and this only further points out the problem of running an even more cost-ineffective 4+ hour route between Oahu and the B.I.

5) Recently the State mentioned at one of the OTF meetings that they are planning on passing off all of the cost of tug services to HSF to deal with the barges. That is a lot of money and makes this even more of a money loser to the company.

6) The Army/Navy have a HSV lease ending and funding for a new lease that could begin soon. Hull A616 needs to be tested before more construction contracts could be responsibly awarded for it's design under JHSV. A military lease would be a relatively fixed amount to at least cover all costs, something HSF has not been able to do with the Alakai. Lastly, there has been a dramatic increase in piracy activity on the East African Coast over the past year. HSV's have been used to deal with that. That is where Hull A616 might be more useful under lease if not between Oahu and Pohakuloa.

Aloha, Brad

P.S. Joan Conrow mentioned today on the KauaiEclectic blog the following that Dick Mayer found and e-mailed out about a week ago: "Dick Mayer of Maui noted that Tuesday travel will no longer be offered after Nov. 4, and that no reservations are being accepted at all after March 15."


MauiBrad said...

Here is a reply with some further points added to mine:

Re: Good news!‏
From: Greg
Sent: Wed 10/29/08 8:40 AM

After thinking about this here is what I think are the 'real reasons' for the delay:

1. Kawaihae will have to go through a full-blown EIS. Army Corp is not going to roll over this time, and State is following their lead. Thus, the harbor will not be ready to 'host' HSF service for some years to come.

2. McCain is not going to get elected and their perfect storm with Lehman as Chief of Staff and able to pull strings within DOT, Military, etc. is remote.

3. Economic realities. HSF is a marginal, seasonal operation at best. It will do ok during beginning/end of school year, summer months and around holidays, but ridership is poor all other times. While the price of fuel has fallen, so too has visitors to HI (down 27% in Sept on Maui alone, 19% statewide). Pair this up with daily layoffs and an unemployment rate headed to 8, 9 10% -- and you have wiped out your local riders, and the need for commercial operators to use the vessel daily --perhaps now only once a week.

-- Greg

MauiBrad said...

Another interesting reply:

Is the company dissolving before our eyes?‏
From: Dick
Sent: Wed 10/29/08

We've learned that Hawaii Superferry continues to make significant changes.

- No longer working for HSF is Duane Kim, the manager of Maui Superferry operations.

- And now we hear that longtime HSF spokesperson Terry O'Halloran is out.

- Future Tuesday voyages are indefinitely cancelled.

- The 2nd superferry will NOT be coming to Hawaii for at least another year.

- The Special Session ACT 2 will soon be taken up by the Hawaii Supreme Court.

- The season of big waves and seasickness are now back in the islands.

- No reservations are being taken after March 15, 2009. (Check it out: )

Is the company dissolving?

-- Dick