American Hawaii Ready for Aloha Operations

The entrance of Aloha Pacific into the Hawaiian cruise market (CIN 9/30/87) has prompted American Hawaii to accelerate its ship renovation plans and take measures to improve passenger services, according to American Hawaii's President, Peter Huang.

"The public will ultimately benefit from the introduction of competition in the Hawaiian market," said Huang. "It will spur us on to provide better services," he said.

New competition will also raise awareness for the entire Hawaiian market, he added.

The heavier emphasis on passenger services will be overseen by a new hotel manager for the line. Fred Badenberg, formerly of Continental Airlines, has been hired for the job and has already instituted a scoring system that holds cabin stewards responsible for any cabins found to be less than perfect during regular inspections.

Other plans he will coordinate call for improving airline transfers and embarkation and debarkation procedures, including the facilitation of renting cars, and making day rooms in hotels available for passengers waiting for flights.

The line will spend $10 million to completely renovate all cabins and public rooms on its two ships, said Huang. The renovations are already taking place while the ships are in service, and major work will be done while they are in annual drydock at Tacoma Boatbuilding. The Independence goes into drydock this January, the Constitution in June of 1988. The ships, which were built in 1951, were last refurbished in 1980 and 1982.

Not Worried

Huang said he is not worried about Aloha Pacific eating into his company's market share. "Aloha Pacific is probably right when they say there is enough of a market for more than two ships," he said. He hinted, however, that Aloha has to get into the market first. "They have been working toward their goal since 1980 - that's a long time," said Huang.

There has been speculation in the industry as to the probability of Aloha's ship, the 31-year-old Monterey, ever returning to her top form. In a September 24 article, The Journal of Commerce reported that because the ship has been laid up for almost 10 years, there is disagreement among members of the International Organization of Masters, Mates and Pilots, the maritime union that owns 10-percent of her, over the soundness of the union's investment.

Wartsila has promised to rebuild and deliver the ship in fine working order by the summer of 1988.

As far as pricing goes, Huang pointed out some distinctions between the two lines he felt are worth noting. American Hawaii will offer lower prices than its competition, said Huang, comparing his line's lowest-priced K category cabins at $995 to Aloha's lowest J category at $1,195. According to Aloha's brochure, the Monterey will only have two cabins in the J category, while American Hawaii has 61 cabins between its two ships in the J category selling at $1,195, said Huang.

In addition noted Huang, American Hawaii has a guaranteed K category program where passengers requesting the $995 price can be upgraded at no extra cost if K cabins sell out.

Financial Problems Solved

American Hawaii was in financial trouble earlier this year as a result of what Huang calls its "misadventure" in Tahiti with the Liberte. He said the company lost $50 million because it "was impossible to fill a large ship 6,000 miles away" and the Tahitian officials were "difficult to work with."

He also said that demand for the Far Pacific destination was not great, noting that the Liberte was at one time handling 25-percent of all visitors to Tahiti.

Huang came to the company last January at the peak of the trouble, masterminding a refinancing by private investors, including Paine Werber, Ta Associates (part of TransAmerica Corp.) and himself, that rejuvenated the line with $85 million in new capital.

Besides being president, he is now chairman and chief executive officer of the new San Francisco company that owns American Hawaii, American Global Lines, in which he is also a major stockholder.

Huang was previously with the New York-based financial firm City Investors, a diversified industrial finance company with interests in publishing, canning, air conditioning, and insurance, among others.


Huang said the future looks extremely good for the Hawaiian market. The two ships are sailing at over 90-percent of their capacities, together taking some 80,000 passengers to the Hawaiian Islands each year. The total amount of visitors to Hawaii has reached 3.6 million annually, said Huang, and is rising steadily.

According to Huang, 1.5 million of these visitors are from Japan, probably attracted there due to the weakness of the dollar versus the yen, and their numbers are rising faster than the American visitors'. Right now, American Hawaii is taking some of those Japanese on their two ships, but Huang is looking into the possibility of taking more.

American Hawaii currently operates the only ocean-going passenger ships sailing under the American flag.

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