Aloha Airlines' shutdown of passenger flights will leave a gap in the amount of air service among Hawai'i's major islands even with other carriers stepping in to help fill the void.

That, along with a flooding of the state's job market with 1,900 newly unemployed workers, will be among the main economic fallout when Aloha grounds its passenger flights tonight.

The announcement that the airline will let go more than half of its workforce follows other high-profile closings in the state lately, most recently Molokai Ranch saying it will close and lay off 120. NCL America has pulled one interisland cruise ship out of Hawai'i and is withdrawing another ship in May.

NON-ECONOMIC ISSUES

Some people might see the problems at Aloha and Molokai Ranch as a blemish on the state's economic image, said Pearl Imada Iboshi, chief economist for the state Department of Business, Economic Development and Tourism. But she noted both cases involved company-specific issues.

"For Aloha, it's a long-standing competition issue," Iboshi said. "For Molokai Ranch, it's not like they were doing really really well and now they're doing bad."

"I don't think of it as being related to the economy."

Aloha's action will be tough on those being laid off but shouldn't produce a huge jump in the unemployment rate in the state's more than 650,000-person workforce, Iboshi said.

She said an informal calculation placed the state's unemployment rate rising by about 0.2 percentage points with the displacement of Aloha's workers. In February, Hawai'i's seasonally adjusted unemployment rate was 3.2 percent, with 20,900 people unemployed.

That compared with the national average of 4.8 percent.

The shutdown of Aloha's passenger service will leave about 1,900 full- and part-time employees without work. The airline said its 3,550-person workforce includes 185 on Kaua'i, 541 on Maui, 473 on the Big Island, about 20 on the Mainland and the remaining majority on O'ahu.

OTHERS WILL STEP IN

Paul Brewbaker, economist for Bank of Hawaii, said he expects Aloha's disappearance from the passenger business — the carrier has at least one offer for its profitable air cargo business and is still trying to sell its aviation services — will eventually be replaced with service from other airlines if there is money to be made.

"There continues to be a tremendous amount of transpacific and interisland travel demand," Brewbaker said.

"That doesn't go away just because a carrier withdraws service. That means there's an opportunity for somebody to restore that lift."

Interisland airlines are "critical for the efficient functioning of Hawai'i's economy," Brewbaker said.

He said he was sorry to see Aloha quit the market.

Aloha, which filed for bankruptcy protection on March 20, said yesterday the last of its about 700 weekly interisland flights and 120 transpacific flights will be flown tonight.

While both Hawaiian and go! airlines said they would boost flights, it doesn't appear the increase will be enough to match what Aloha offered. At 700 weekly flights, the bankrupt carrier offered around 88,000 seats for sale in the interisland market.

But the planned increases by Hawaiian and go! will only replace about 56,000 of those seats. Hawaiian, the No. 1 interisland carrier, and No. 3 go! plan to boost their weekly seat offerings by 42,000 and 14,000, respectively.

"No matter what, there's going to be disruption even if there's a lot of seats added in," Iboshi said.

'LITTLE IMPACT'

She said Aloha played a smaller role in carrying people to and from the Mainland and that it appears existing carriers should be able to absorb Aloha's passenger shutdown easily.

"They are relatively small and the timing is such that this is the slower season for Hawai'i (tourism)," Iboshi said.

"From the visitor point of view, you would expect it to have very little impact from the visitors being able to get here."

The Hawai'i Tourism Authority said there will probably be some travel inconveniences and that hotels statewide are offering special considerations to stranded passengers for extended or emergency stays. It recommended tourists check with hotels on what assistance is available.

Other disruptions are expected as tour wholesalers try to find seats for travel packages they sold with Aloha air service. There are other possible disruptions for people who travel within the state for business, as they have a tougher time getting reservations.

The pullback also will be notable for some second-tier Mainland markets such as Sacramento and Orange County, where Aloha was carving out a niche with direct flights to Hawai'i, he said.