- Special Projects
WASHINGTON — Mark Dunkerley bristles when people talk about trying to limit tourism in Hawaii.
As president and chief executive officer of Hawaiian Airlines, which transports millions of tourists to the islands each year, Dunkerley is understandably sensitive on the subject. Tourism is, of course, good for the company he runs, and for its 6,000 employees.
But Dunkerley argues that Hawaii is also economically dependent on tourism, particularly since the state’s last sugar mill closed last year on Maui, and even more at a time stringent federal budget cuts are likely to mean fewer dollars arriving in the islands from Washington.
“The lesson for Hawaii is that we need to examine our ambivalence toward tourism,” he said in a recent, wide-ranging interview with Civil Beat.
Dunkerley was in the nation’s capital to meet with federal transportation officials and his colleagues on the board of Airlines for America, an airline-industry trade group.
Their mission was to press for increased infrastructure spending and a controversial solution proposed by the airline industry for what they see as a growing crisis in the air traffic control system.
But Hawaii’s debate about tourism was clearly on the front of Dunkerley’s mind. The industry has become a source of irritation to many residents of Hawaii, who have become increasingly frustrated by mobs of people trudging up Diamond Head, wobbly bicyclists blocking traffic in Lanikai, and once-serene residential neighborhoods converted into backdrops for what seems to be a production line of destination wedding photo shoots.
Hawaii set another tourism record last year, with some 8.9 million vacationers hitting the islands’ shores in 2016, according to the Hawaii Tourism Authority. In December alone, some 828,500 tourists came to the state, a number more than half the size of the entire permanent population. They spend their days swimming, surfing, sightseeing, eating and buying things. In that one month alone, they spent $1.7 billion, according to the tourism authority.
The transient accommodations tax, or TAT, generated some $485 million in revenue for the state’s coffers in 2016, up from $435 million in 2015, according to the tourism authority.
In the past, those tourist dollars and the tax revenues they create trumped all other political considerations. But amid growing public debate this year, Senate Bill 703, which pointed out the negative effects of tourism, proposed to transfer some tax money away from tourism marketing efforts and transfer it to beach and trail cleanup and maintenance instead.
The bill failed to get a hearing in the Senate Ways and Means committee, but it drew applause in many circles and served as a wake-up call to state officials that public sentiment is turning darker about tourism.
The opposition to vacationers bothers Dunkerley, who said he thinks that people in Hawaii aren’t recognizing how fundamentally the state’s economic position has shifted because of the changes in the federal government.
“There’s a lot of infrastructure we’d like to see happen — roads and schools and highways and hospitals, infrastructure that allows people to have a better standard of living,” he said. “That all has to be paid for. The days in which Hawaii can rely on federal largesse are gone.”
Not everyone agrees that tourism is an unadulterated good. Economist Paul Brewbaker, former chief economist at Bank of Hawaii, said the public backlash against the tourist horde is what he called a “legitimate reaction.”
“People don’t mean to ruin the destination, but there’s a social cost,” he said.
A longtime Kailua resident, he described his frustration with wending his way through tourist mobs who leave trash and debris in their wake.
But Brewbaker acknowledged that tourism is the state’s most important source of income.
“We’re left with tourism as our primary export and the military as a second source of income to the state,” he said in a telephone interview.
Hawaiian Airlines’ Dunkerley argues that instead of discouraging tourism, it needs to be more actively encouraged because, after adjusting for inflation, tourist spending is on a downward path. He considers that an ominous sign for the future.
Statistics from the tourism authority indicate that the top year for visitor expenditures was 1989, after adjusting for inflation, and it has never hit that same peak again, even during the boom years that preceded the economic collapse of 2008.
Brewbaker agrees that tourism spending is down in real terms. He said that the rising cost of renting a hotel room is causing visitors to schedule shorter trips and spend less money on other things while they are in the state.
But he stops short of saying, like Dunkerley does, that Hawaii needs more tourists, not fewer.
“It is math,” Dunkerley said. “It is true. And if you want to pay for schools and roads, what you actually need is more volume because the roads and the schools and the hospitals are paid for by tourists, directly in the form of TAT tax, and indirectly in the form of the employment base.”
And this is another pressing issue for Dunkerley — rebuilding America’s infrastructure. He said that many other countries have modernized and improved their highways and rail systems while the U.S. has stood still.
“We spend a lot of time in Asia and elsewhere, and if you spend time elsewhere you quickly see that the United States has gone from having the world’s leading productive infrastructure — roads, rails, electrical grid, all the things that help you do other things — to falling behind,” he said.
Hawaii’s bad roads and outdated public service facilities are not unique, he said.
“Hawaii reflects the lack of infrastructure spending that is evident throughout the country, which is why infrastructure is such a hot political topic at the moment,” Dunkerley said. “It’s coming to roost on a national scale, as we know in Hawaii. The question is not how we got here but what we do about it.”
Based on his meetings with federal officials, Dunkerley expressed optimism about the Trump administration’s determination to try to repair the nation’s aging infrastructure. He said he has known Elaine Chao, Trump’s Transportation Secretary, since she served as deputy secretary of transportation in 1989 to 1991. At that time, Dunkerley was working at British Airways.
He said that although his meeting with her in Washington this month was brief, it was immediately evident that Chao shared the same opinion about infrastructure shortfalls as the airline industry executives who were participating in the meeting.
Trump has proposed a $1 trilllion investment in infrastructure spending, and officials in his administration speak frequently of that goal, although exact details about a funding mechanism for it have never been clearly specified and are likely to be highly controversial in any case.
Dunkerley believes the Trump administration is committed to trying to make improvements. He said his industry association found no need to try to explain the problems, because it was clear they were already well understood by administration officials.
One specific thing Dunkerley would like to see is substantial reform of the air traffic control system, which he said has become badly antiquated.
Many countries have invested in better technology, he said, which allows aircraft within their borders to move from place to place more quickly, burning less gas and doing less environmental damage. They are also more secure from cyberattacks.
“If you could envision routes in the sky being like highways in the sky it would be as if we really haven’t invested that much since the 1950s,” he said.
Some lawmakers think that privatizing the air traffic control system is a dangerous idea.
Installing the equipment would be expensive, however, and airline industry executives believe the federal government’s funding mechanisms are too cumbersome and bureaucratic to be able to handle the tasks quickly and smoothly.
“The government budget process is ill-suited to long-term infrastructure projects,” Dunkerley said. “It is very hard to plan anything that has payback over 10 to 15 years when your budget cycle is annual and when the people in charge of getting these things done turn over with each administration.”
He said that infrastructure projects planned by state and federal governments go forward so slowly that they are outdated by the time they are completed.
“And often they are building for a point in the future that has already passed by the time that it’s finished,” he said.
Airlines for America would like to remove air traffic control from the Federal Aviation Administration and place it under control of a nonprofit organization that would operate under government oversight. Dunkerley said the Canadians have set up their air traffic control system in that way and that it is operating smoothly.
President Trump is inclined in that direction. Trump’s proposed federal budget, which was unveiled last week, calls for a “multi-year reauthorization proposal to shift the air traffic control function “ of the FAA to what it calls an “independent, non-governmental organization, making the system more efficient and innovative.”
Some lawmakers think that privatizing the air traffic control system is a dangerous idea. Sen. Bill Nelson, a Democrat from Florida who serves as ranking member of the Senate Commerce, Science and Transportation Committee, has expressed strong reservations about the proposal.
It will be another one of the new ideas under consideration in Washington in the coming months.
Dunkerley said he thought the atmosphere in Washington seemed different than in the past.
“It’s a fascinating time,” he said. “It’s clear that the world within the Beltway remains very different from the world outside the Beltway. Outside the Beltway, the world is going through an existential discussion about what kind of country we are, and it’s pretty clear there are some polarizing views out there.”
In Washington, however, he said, people are starting to work through their disputes and think about how best to get to work.
“People are trying to figure out how governance is actually going to happen,” Dunkerley said. “And I think what was striking about this visit was the relative lack of hyperbole within the Beltway about the focus now, the practicalities … what the budget will actually look like.”