The closure of Island Air is a bad deal all around.
It’s bad, obviously, for the company.
It’s bad for competition.
It’s bad for Hawaii’s economy.
It’s bad for those who used the airline to fly to other islands.
Most of all, it’s bad for the more than 400 employees who worked for Island Air. They will be impacted by this more than anyone. For some, this is heartbreaking. For others, it’s disappointing. It leaves them facing an uncertain future. It leaves even more with present worries about how to pay their bills.
The shutdown, despite the airline’s well-known financial struggles, was sudden, and it was a surprise. Yes, Island Air recently filed for Chapter 11 bankruptcy protection and yes, it had been losing millions.
But not many predicted that Island Air would end 37 years of service when it announced on Nov. 9 its closure the following night.
The airline business is without doubt challenging. When some questioned Hawaiian Airlines CEO Mark Dunkerly about its prices, he pointed out their prices were really as low as they could go. He added if it was easy to operate an airline between the Hawaiian islands, and turn a profit, more companies would do it. History bears this out.
Consider that Aloha Airlines closed in 2008, not long after filing for bankruptcy protection. It had been in operation six decades.
And Go! airlines closed in 2014, to the dismay of many who liked the airline’s airfares and how they pushed prices down.
Mahalo Air, Pacific Wings and Discovery Airways came and went.
So, if history here tells us anything, it’s that operating an airline is expensive, and we appreciate Island Air’s efforts to turn things around. Certainly, they wanted, hoped and tried to succeed. No one is saying Island Air didn’t give it 100 percent.
We do, however, hope Island Air does right by its employees and makes sure they receive their final paychecks. Turns out, they might not, which isn’t fair and isn’t right, even if it is legal.
Island Air ceased operations Nov. 10. The employees have not been paid for the work they did this month.
Judge Robert Faris on Wednesday approved a motion to convert the bankruptcy case to a Chapter 7 liquidation from a Chapter 11 reorganization. A trustee and others have been hired for that process, and Faris said they will be paid before the employees.
Unfortunately, those who worked with Island Air to the very end will likely not be rewarded for their loyalty.
“The sad but the true news is that nobody knows right now whether or when those last wages are going to get paid,” Faris said. “The trustee will have to get his or her arms around the case, try to gather as much money as possible. How much money the trustee will be able to gather will be anybody’s guess and the trustee would then distribute that money.”
Here’s how it works, according to the Associated Press:
After the trustee and others are paid, the next priority is to people who are owed money for goods or services provided after Oct. 16 when Island Air filed for Chapter 11 bankruptcy protection. That group would include the employees.
After all assets are sold off for cash, if there is still not enough money to pay creditors, including employees, the creditors may get only a portion of what they are owed, or nothing.
Considering Island Air’s situation, it’s doubtful former employees will get the money they earned.
Island Air, though, should do what it can to take care of its former employees. The idea of bankruptcy and closing is to get out of debt and stop it from increasing, but not paying workers, who certainly were counting on their paychecks, is wrong.
On Wednesday, CEO David Uchiyama was present at the hearing and when asked if he had anything to say, he responded, “I don’t have any comment.”
We hoped for better.
The employees who used to work for Island Air, and their families, deserve better, too.
