Economy

The return of direct flights between Kona and Japan in December 2016 was one of the significant wins to happen for the Hawai‘i Island economy in a long time – a development that will offer opportunities for businesses across the diverse spectrum of West Hawai‘i’s economy. After years of advocacy, Hawaiian Airlines Flight 852 from Haneda InternationalAirport in Tokyo – the first direct fligt from Japan to Hawaiʻi Island since 2010 – landed in Kona on December 21. The Hawaiʻi Tourism Authority reports on average, a visitor from Japan spent $266 a day in Hawai'i in 2016 – higher than the average visitor spending from all destintions, $201 a day. The tri-weekly Haneda-Kona service, with nearly 900 seats a week aboard its Airbus A330 aircraft, is expected to spur $56 million in annual visitor spending.

Hawaiian Airlines has also hired 34 employees in Kona associated with the new flight. Entrepreneurs on Hawai'i Island – our farmers and ranchers in agriculture and aquaculture especially – will also benefit from direct air cargo, increasing freshness and reducing cost. Until this flight, Kona was the third largest U.S. airport without nonstop service to Tokyo. Welcoming visitors from Japan directly into Kona is attactive for travelers, and it also alleviates congestion at the Honolulu International Airport.

Many stars needed to align for the flight to take off. Hawaiian was in competition with other U.S. airlines for the coveted slot at Haneda Airport. The state Department of Transportation needed to coordinate with federal Customs & Border Protection to reopen the Federal Inspection Station to facilitate the arrival.

All along the way, advocacy from our local leaders and the Kona-Kohala Chamber of Commerce helped move the process forward. Hawaiian wasn’t the only airline to add service to the newly-renamed Ellison Onizuka Kona International Airport at Keāhole in 2016. Island Air launched service between Kona and Honolulu in June 2016 with five flights a day, hiring 22 employees in Kona to support the service. Alaska Airlines also added seasonal weekly service between Bellingham, Wash. and Kona from November through April.

Improvements to the airport are anticipted to begin in early 2017. Part of a statewide airport modernization project launched in 2006, the $60 million in improvements to Kona airport will connect the north and south terminals, improve baggage handling and security checkpoints, and enhance the traveler experience. Another project will build the infrastructure to fully support internationalarrivals, including a new terminal and Federal Inspection station. These new developments are important to the visitor industry, which employs over 14,000 people on Hawai 'i Island - that's more than one in five jobs on the island, according to state labor statistics - and the growth of the visitor industry is growth for all sectors of our economy.

Public Works Projects Drive Construction
Over 4,000 jobs in the constructon industry on Hawaiʻi Island were supported in large part in 2016 by public infrastructure investment by the state and county governments.The finalcounty road to be completed in West Hawaiʻi by the administrationof Mayor Billy Kenoi was the $28 million southern segment of the Māmalahoa Highway Bypass in South Kona, completinga long-awaited 5.7-mile extension of Aliʻi Drive from Keauhou to Nāpoʻopoʻo. The roadway opened in November 2016, providing traffirelief to South Kona residents who commute daily along Māmalahoa Highway.The state judiciary broke ground on its largest project in West Hawaiʻi to date – the $90 million Kona Judiciary Center in Kailua-Kona. The three-story, 143,000-square-foot facility will bring together services that are currently scatered around North and South Kona in aging, inadequate facilities,making the justie system more accessible.

Ground was broken in late 2015 for the widening of Queen Kaʻahumanu Highway in North Kona, a 5.2-mile stretch between Honokōhau Harbor and the airport. Due to a delay related to the discovery and inadvertent impact to archaeological sites, the state estimtes the $100 million project will be complete in late 2018. In 2017, the Chamber will be advocatingfor continuedinvestment in public infrastructure – especially wastewater and reclaimed water pipes along Queen Kaʻahumanu Highway to Honokōhau Harbor, safety improvements along Queen Kaʻahumanu from the airport to Kawaihae, and improvements to the intersectionsof Māmalahoa Highway and Hina Lani Street, and Palani and Henry Streets. The Chamber will also support efforts by the countiesto receive a larger share of the Transient Accommodations Tax, a tax collected by the state on temporary accomodations like hotel rooms. The intent of the tax was to offset visitors’ impact on state and county public infrastructure and services, though the revenues have not been proportionally distributed to counties in recent years – leaving local taxpayers to make up the difference.

Housing Sales Continue Strong
Single-family home sales were strong on Hawai'i Island in 2016 – up 13.9 percent in 2016 compared to 2015, though the median home price was almost flt. The median price of  the 2,297 single-family homes sold was $330,400, an increase of 0.4 percent over the 2015 median price. Twenty-nine condominiums were sold at a median price of $305,000, a 10.9 percent increase over 2015. To address the demand for afordable housing in West Hawaiʻi’s urban core, the state and partners Forest City Hawai'i and Michaels Development Company broke ground on the fist phase of Kamakana Villages at Keahuolū, along the Ane Keohokālole Highway near Kealakehe High School. The $52 million project will make 170 units of afordable family and senior housing available when complete. Ground was broken in October 2016.

New & Growing Industries
Kona has become the hub of transmedia productionin Hawaiʻi with state, county, and private investment in the GVS Transmedia Accelerator. The program is a collaboration between the county’s Big Island Film Offe, the state Hawaiʻi Strategic Development Corp’s HI Growth inititive, and Global Virtual Studios headed by filmmaker David Cunningham. Housed at Honua Studios in Kaloko, the accelerator helps creative entrepreneurs through a development pipeline with industry mentors and seed funding. The first film to go through the pipeline and into productionon Hawai'i Island – Jo, The Medicine Runner – began shooting in Kona in late 2016.

To ensure the continued growth of the transmedia production industry, the Chamber will be advocating for an extension of the film and media production tax credit at the 2017 state legislature. The credit, which provides a 25% credit for production activities on Hawai'i Island, is scheduled to sunset at the end of 2018. The Chamber is also monitoring and engaged in the process to establish rules regarding the growing ocean recreation industry in West Hawai'i waters. The Kona coast is home to one of Hawaiʻi’s longest contiguous reefs, which supports an abundance of corals and fish, of which nearly a quarter are found nowhere else in the world. West Hawai'i is also one of the few places in the world to see manta rays in their natural habitat. Due to the success and growth of the ocean recreation industry, the state and the community are working toward more regulationof the industry’s activities most recently looking to limit the number of boats and divers viewing manta rays at Keauhou and Makakō Bays. The Chamber is advocating for regulations that protect the unique environment while allowing for economic activities to keep Hawaiʻi Island's people working.