From a Maui Reader:
It would seem that the real reason that the Hawaii Superferry company is stopping operations is that their financial model is NOT working. They seem to be using the Supreme Court decision as an excuse and as a potential basis for a suit against the State. The failure to attract enough passengers/vehicles, even with severely discounted fares, seems to be the real rationale for the HSF withdrawal from the Hawaii inter-island market. The investors are probably thankful that they have been given an excuse to immediately cease operations.
The Superferry Company claimed to the PUC that it would have a capacity for 866 passengers (50% break-even would be 433), and a capacity to carry 282 vehicles (50% break-even would be 141). If it is NOT attracting enough passengers and vehicles, it will be unable to cover its expenses.
It was claimed by Hawaii Superferry Company that their financial break-even point was to be able to travel at 50% of vessel capacity. The financial break-even assumed higher ticket prices (rather than the discounted fares now being offered), and it required a "fuel- adjustment surcharge" that is NOT being imposed. They have failed to attract sufficient ridership.
[Webmaster note:]As you can see from the chart below they are running at only about 25% capacity instead of the 50% required.
HAWAII SUPERFERRY -- RIDERSHIP
Passengers (Break-even=433) | Autos
| Commercial Vehicles | |
NOVEMBER 2008 | 18,890 | 5,100 | 621 |
DECEMBER 2008 | 16,590 | 4,868 | 586 |
JANUARY 2009 | 13,312 | 3,718 | 622 |
3 Month TOTAL | 48,792 | 13,686 | 1,829 |
NOV-2008 Approx Average per one-way trip | 249 | 67 | 8 |
DEC-2008 Approx Average per one-way trip | 207 | 61 | 7 |
JAN- | 166 | 46 | 8 |
3 MONTH | 207 | 58 | 8 |
Ridership Source: Numbers from the Wednesday, March 18, 2009 Honolulu Advertiser.
3 comments:
It's about time Maui had her day in court. Cunning Lingle should be impeached for ramming that thing down our throats without an EIS. She has no concern for the outer islands and maybe should stay on Oahu after she is out of office. It was clear that this whole sham was for the big $'s on Oahu without any concern for protecting us from invasive species and removal of our natural resources. Maybe we'll start seeing some fish in our reefs again now that they can't come over here and deplete our land and ocean.
Here is my take: They already knew that they were going to leave. Our informal calculations showed that they were possibly only grossing about $15,000 per one-way transit. This barely covered the fuel, much less the $191,000 in monthly harbor fees, or the debt service on loans totaling almost $200 million, or the expensive marine insurance, liability insurance, or the employees salaries and benefits, or the advertising, or the numerous new trucks and vans and equipment and the auto insurance for those vehicles, etc. It is the economy that is killing them more than anything. Also, they had a flawed business plan from day one; Alan Lerchbacher, the recently retired CEO of Austal (the shipbuilder), told the story of how he begged them to build a much smaller boat, telling them that because of Hawaii's rough seas, the Superferry would have to travel at full speed in order to rise up above the swells - and that this would burn unbelievable amounts of fuel. But, according to Lerchbacher, they "wouldn't hear of it". We don't know for sure if Lehman himself was involved behind-the-scenes in the initial order of the ship. But in any case, a smaller boat wouldn't have worked for him because he needed the boat to measure between 300 ft and 350 ft long in order to have the boat qualify as a demonstration model for the 55-ship military Joint High Speed Vessel project. The Dept. of Defense awarded a 10-ship contract to Austal just last month (after "deciding" on the "Superferry Hull Design")
So, I believe that Lehman and his Board had already realized that the ferry project was not viable economically and were just waiting for the Supreme Court ruling to come out so they could save face, blame the environmentalists, and have an excuse to stop the bleeding by laying off all the employees.
From Lee Cataluna at the Honolulu Advertiser
"The old-fashioned admonition "start bad, end bad" is so fitting to the saga of Superferry. Maybe the modern sensibility is that mistakes and skipped steps can be fixed, covered up or forgotten in the flash of a snazzy marketing campaign, but the truth is, few big projects make it that way. If Hawaii Superferry execs had made sure all the laws had been followed and all the regulatory steps checked off before they ever got in the water, they wouldn't be in this predicament."
At last. A voice of common sense. Read the rest at Superferry didn't have to be fiasco
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