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Can American Samoa Break Hawaiian Airlines Monopoly?
By Michael Hansen @ 4:29 PM :: 2550 Views :: Jones Act, Tourism

The unique application of U.S. cabotage to American Samoa

by Michael Hansen, Hawaii Shippers Council, July 14, 2017

Radio New Zealand (RNZ) published on July 13, 2017, a news article, “American Samoa seeks federal cabotage waiver,” reporting the Territory’s continuing efforts to obtain statutory exemptions from federal aviation cabotage in respect of intrastate and interstate air transportation. The unique set of cabotage issues make American Samoa an interesting case study.

The unique set of cabotage issues and the Territory's response to them make American Samoa an interesting case study, and a possible policy example for the other noncontiguous jurisdictions of the U.S. facing cabotage restrictions..

The Territory of American Samoa (2,614 miles south of Honolulu) is unorganized and unincorporated, meaning that no federal organic act has been enacted to politically organize the territory and it has not been fully incorporated into the U.S. constitutional and statutory regime.

Around the year 1800, the term “cabotage” came into use in French meaning domestic waterborne transportation and the legal right to engage in that activity. Since then, the concept of cabotage has spread worldwide and been applied to the regulation of other modes of transportation including aviation, railroads and road trucking (motor carriers).

American Samoa was made exempt from maritime cabotage by the Tripartite Convention of 1899 between the U.S., German Empire and United Kingdom, which inter alia divided the Samoan Islands between the U.S. and German Empire and gave the U.K. dominion over the Islands of Tonga.

However, the Convention didn’t address and in fact was silent on aviation cabotage. That was because there was no aviation industry at the time. The Wright Brothers wouldn’t make the first sustained flight of a powered heavier-than-air aircraft until four years later in 1903 at Kitty Hawk, North Carolina. Subsequently, it was determined that the U.S. aviation cabotage laws apply to American Samoa, as there was no existing treaty or statutory exemption.

The American Samoa Government is pursuing two separate aviation cabotage issues: one involving intrastate aviation for interisland air transportation; and, the other, interstate air transportation between American Samoa and other U.S. domestic places.

The intrastate aviation cabotage issue involves air transportation between the main American Samoan island of Tutuila (upon which Pago Pago is located) and a group of three smaller inhabited high islands collectively known as the Manu’a Islands (Ta’u, Ofu & Olosenga). They are 68 miles east of Tutuila and have a permanent population of approximately 1,400. In the past, interisland air transportation was provided by U.S. air carriers, most notably from 1973 through 1987 by George Wray’s South Pacific Island Airways (SPIA), which no longer exists.

As the Samoa News reported on January 21, 2017, “Samoa government owned Polynesian Airlines has been operating Manu’a flights for about two years under 30-day cabotage waivers, granted by the US Transportation Department (USDOT) due to the lack of a US carrier to operate the territory’s domestic route.”

The reference to “Samoa government owned“ is to the Independent State of Samoa formerly known as Western Samoa (which was originally a German colony and after World War I the League of Nations mandate territory of British Samoa). This ownership makes Polynesian Airlines a foreign air carrier in terms of U.S. aviation cabotage.

The online American Samoan news site Talanei (News Now) reported on January 2017, “Congresswoman Aumua Amata Radewagen reintroduced her stand-alone cabotage bill this Congress, with bipartisan support . . . . House committees with jurisdiction did not seek to reconsider Amata’s bill, since it was identical to her measure last year, so it sped directly to the House floor. The Senate is also expected to use streamlined procedures and approve the bill under so-called unanimous consent rules. Foreign carriers under Radewagen’s bill, would not have to renew their US waivers within American Samoa for 180 days, versus every 30-days, now.”

Cong. Radewagen (R-AS-At Large) is the delegate to congress from American Samoa, and the daughter of the late Peter Tali Coleman, the first elected governor of American Samoa. Her previous intrastate aviation cabotage bill introduced in 2016 was attached to a other legislation which the U.S. Senate passed but was not taken up by the U.S. House of Representatives. Consideration of that legislation permanently ended with final adjournment of the 114th Congress at the end of 2016.

Cong. Radewagen introduced her current standalone legislation -- H.R. 276, "To amend title 49, United States code, to ensure reliable air service in American Samoa -- in the 115th Congress on January 4, 2017, and it was agreed to by the U.S. House of Representatives on January 31, 2017. The measure was received by the U.S. Senate on February 1, 2017, and referred to the Senate Committee on Commerce, Science and Transportation, where it currently sits.

Even if Cong. Radewagen's current legislation is enacted, it would only amend the existing U.S. aviation cabotage regulations requiring a foreign air carrier operating intrastate in American Samoa to apply with the U.S. Department of Transportation (USDOT) for "emergency cabotage authority" from every 30 days to every 180 days, providing no U.S. carrier is available.

As the USDOT stated in a notice issued on February 24, 2011, "Cabotage definition and standards for emergency exemption," regarding American Samoa:

One instance where the Department has granted emergency cabotage authority in the wake of a service disruption was in 2003/2004, when we authorized Polynesian Airlines to conduct small-aircraft inter-island passenger operations with in American Samoa in markets where the incumbent U.S. passenger carrier had suspended service. As soon as U.S. passenger carrier services were once again available in the market, the statutory criteria for permitting cabotage ended and we ceased awarding cabotage authority.

The interstate aviation cabotage issue involves air transportation between American Samoa and other U.S. places most importantly Hawaii, the primary point from which air transportation is provided with other U.S. places. The U.S. aviation cabotage laws require that interstate air transportation be provided by U.S. air carriers and U.S. registered aircraft.

Unlike the U.S. maritime cabotage laws – commonly and collectively known as the “Jones Act” – that require U.S. domestically built ships, U.S. aviation cabotage laws allow the employment of foreign manufactured U.S. registered aircraft on fully domestic routes. This provision allows, e.g., Hawaiian Airlines Inc. to operate domestically foreign manufactured Airbus aircraft built in France.

U.S. flag Hawaiian Airlines Inc. is the sole air carrier between Honolulu and Pago Pago currently charging round trip fares that are around $1,200.00 per person. In comparison, between Honolulu and Apia, Upolu Island, Samoa, there are two foreign air carriers – Fiji Airways and Air New Zealand – charging round trip fares typically in the range of $900 to 1,000 per person. The flight distance between Pago Pago International Airport (PPG) on Tutuila Island and Faleolo International Airport (APW) on Upolu Island is approximately 93 miles.

As RNZ reported, “American Samoa's governor, Lolo Matalasi Moliga, says for tourism to develop the federal cabotage law must be waived. Over the years American Samoa has been pushing for a waiver to allow foreigner carriers such as Fiji Airways or Air New Zealand to fly in and out of Pago Pago to Honolulu or Los Angeles. Lolo told the Legislature that unless the US Congress exempts American Samoa from the federal cabotage law, any large amount of money spend on promoting the territory overseas will not make a great difference.”

Federal legislation permanently exempting American Samoa from U.S. aviation cabotage could address just the interstate sector or both the interstate and intrastate sectors, and would likely follow the successful enactment of Cong. Radewagen's current intrastate or future legislation of the same tenor that would only amend USDOT's emergency cabotage authority for American Samoa.

Talanei reported on August 4, 2016, “The CEO of Hawaiian Airlines, Mr. Mark Dunkerley, says Hawaiian Air fully supports cabotage exemption for inter island travel in American Samoa.”

Presumably Hawaiian Airlines would oppose lifting the aviation cabotage restrictions on American Samoa’s interstate air transportation. This would likely put the Hawaii State administration and Congressional delegation at odds with a future effort by the American Samoan delegate to introduce legislation in Congress to exempt American Samoa's interstate sector from U.S. aviation cabotage as they seek to support Hawaiian Airlines.

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