New Hawaii Regional Airline

[IBNAV8R]

I'm thinking, in this case (if the rumor is even true), HA could be in serious trouble. Aloha went belly up because of a largely unknown, two-bit (to put it nicely) mainland regional offering cheap seats and no feed or code-share. If a recognized brand (I.e. in United/Continental paint) shows up with cheap fares, locals will flock to the deals. UniCal can afford to operate inter-island at a loss, especially by feeding mainline flights.

Don't get me wrong, I'm an HA fan but I don't think the wide-body operation can support a bleeding inter-island operation if there was a serious competitor in the market.

 

[Poahi]

Your statement is true for certain places, but, here in Hawaii, PRICE, is the determing factor, not jet or turbo-prop.

Passenger surveys have shown, that local travelers require only two thing when flying inter-island. One, they leave on-time, and two, they get the cheapest fare offered.

slatsnfive

Not going to happen. HA will match fares and won't let a Q400 operation ruin their market share. It doesn't matter how cheap seat miles are, HA won't be undersold.

 

[Dan Roman]

I'm thinking, in this case (if the rumor is even true), HA could be in serious trouble. Aloha went belly up because of a largely unknown, two-bit (to put it nicely) mainland regional offering cheap seats and no feed or code-share. If a recognized brand (I.e. in United/Continental paint) shows up with cheap fares, locals will flock to the deals. UniCal can afford to operate inter-island at a loss, especially by feeding mainline flights.

Don't get me wrong, I'm an HA fan but I don't think the wide-body operation can support a bleeding inter-island operation if there was a serious competitor in the market.

No worries, but inter-island is a pretty small slice of the operation.
We are in our own little world out here so a lot of misconceptions about Hawaiian exist. Here are some actual facts.

1) Hawaiian has the highest operating profit margin in the industry.

2)Air Transport World had a list of the financially fittest airlines in the world based on 10 different parameters. They ranged from operating profit, balance sheet, relative strength in the markets they served, fuel hedging, suitability of the aircraft they operated etc. Hawaiian was number 1 in the U.S and number 13 in the world.

3) Right now Hawaiian is very well run, outstanding marketing and very strong operationally. We used to at most have anywhere from 20 to 40 million cash and always struggle to get by. Now Hawaiian has 300 million and that's after making constant investments in the operation. We have gone from being a shoe string operation to having all the latest and greatest technological investments made in the airline. They are doing a lot of positive things right now and are not afraid to invest in the well being of the airline.

4) Our Trans Pac flying is more profitable than inter-island. The Asia flying is particularly profitable, strong loads, high yield and very favorable exchange rates

5) We have a better product and lower seat mile costs than any of our competitors to the mainland,

I could go on and on, but the bottom line is, Hawaiian can easily stand a little competition inter-island. Although there is no counter or gate space available to set an operation the size of AQ any more. Inter-island is basically big enough for 1 and 1/2 airlines. Hawaiian survived when they competed with a stronger better run AQ (we were the weak one of the 2 in the 90's). They now have very strong management, a very strong balance sheet, and we just used our own money to refinance the 717's. They are very well suited for inter-island and a weak competitor locally would have a harder time establishing itself than Hawaiian would have surviving a fare war. Obviously we don't want it, but an interisland fare war would hardly kill the airline.


BTW, Go didn't put AQ out of business, they were headed that way for lot's of other reasons, Go was just the straw that broke the camels back. Absolutely no relation between the fitness of HA now vs. AQ when Go came on the scene

 

[General Lee]

No worries, but inter-island is a pretty small slice of the operation.
We are in our own little world out here so a lot of misconceptions about Hawaiian exist. Here are some actual facts.

1) Hawaiian has the highest operating profit margin in the industry.

2)Air Transport World had a list of the financially fittest airlines in the world based on 10 different parameters. They ranged from operating profit, balance sheet, relative strength in the markets they served, fuel hedging, suitability of the aircraft they operated etc. Hawaiian was number 1 in the U.S and number 13 in the world.

3) Right now Hawaiian is very well run, outstanding marketing and very strong operationally. We used to at most have anywhere from 20 to 40 million cash and always struggle to get by. Now Hawaiian has 300 million and that's after making constant investments in the operation. We have gone from being a shoe string operation to having all the latest and greatest technological investments made in the airline. They are doing a lot of positive things right now and are not afraid to invest in the well being of the airline.

4) Our Trans Pac flying is more profitable than inter-island. The Asia flying is particularly profitable, strong loads, high yield and very favorable exchange rates

5) We have a better product and lower seat mile costs than any of our competitors to the mainland,

I could go on and on, but the bottom line is, Hawaiian can easily stand a little competition inter-island. Although there is no counter or gate space available to set an operation the size of AQ any more. Inter-island is basically big enough for 1 and 1/2 airlines. Hawaiian survived when they competed with a stronger better run AQ (we were the weak one of the 2 in the 90's). They now have very strong management, a very strong balance sheet, and we just used our own money to refinance the 717's. They are very well suited for inter-island and a weak competitor locally would have a harder time establishing itself than Hawaiian would have surviving a fare war. Obviously we don't want it, but an interisland fare war would hardly kill the airline.


BTW, Go didn't put AQ out of business, they were headed that way for lot's of other reasons, Go was just the straw that broke the camels back. Absolutely no relation between the fitness of HA now vs. AQ when Go came on the scene

Dan,

My question is how much of your inter-island flying is connections from OTHER airlines? If UAL (who now has CAL in the stable) decided to bring 10 Dash-8-400s over from Colgan for example, and flew them for cheap carrying their own connections (from SFO, LAX, ORD, IAH, DEN, EWR, GUM, NRT, etc), would that affect your business? I know they already have nonstops from LAX and SFO to all of the islands, but the overflow or connections from the other hubs could help fill the planes, or allow their passengers to see more than one island on their trip. United/CAL has the money to do it, and the planes to fly it (Dash-8-400s have plenty of seats to offset the costs compared to a CRJ). If anyone can afford it and do it, I would say UAL could, and they have a NRT flight too that could allow Japan connections.


Bye Bye---General Lee

 

[slatsnfive]

Not going to happen. HA will match fares and won't let a Q400 operation ruin their market share. It doesn't matter how cheap seat miles are, HA won't be undersold.

Poahi,

You misunderstood my statement, entirely.

slatsnfive

 

[Dan Roman]

Dan,

My question is how much of your inter-island flying is connections from OTHER airlines? If UAL (who now has CAL in the stable) decided to bring 10 Dash-8-400s over from Colgan for example, and flew them for cheap carrying their own connections (from SFO, LAX, ORD, IAH, DEN, EWR, GUM, NRT, etc), would that affect your business? I know they already have nonstops from LAX and SFO to all of the islands, but the overflow or connections from the other hubs could help fill the planes, or allow their passengers to see more than one island on their trip. United/CAL has the money to do it, and the planes to fly it (Dash-8-400s have plenty of seats to offset the costs compared to a CRJ). If anyone can afford it and do it, I would say UAL could, and they have a NRT flight too that could allow Japan connections.


Bye Bye---General Lee

Can't give you an exact number but probably not the high. UAL flies direct now to the outer islands. But if they did try to set up their own feed with Turboprops, they would put themselves at a marketing disadvantage as most people prefer our 717's (any fare that gets put out by the competition will obviously be matched) United's product would be a UAL flight connecting to a turboprop on the other side of the airport vs our relatively seemless operation of connecting to a 717, not a very good marketing plan on UAL's part. Everyone they compete with would have connections to our 717's while they would offer the turboprops. They would also be spending a lot of money just to compete with their own direct outer island flights.

 

[slatsnfive]

Can't give you an exact number but probably not the high. UAL flies direct now to the outer islands. But if they did try to set up their own feed with Turboprops, they would put themselves at a marketing disadvantage as most people prefer our 717's (any fare that gets put out by the competition will obviously be matched) United's product would be a UAL flight connecting to a turboprop on the other side of the airport vs our relatively seemless operation of connecting to a 717, not a very good marketing plan on UAL's part. Everyone they compete with would have connections to our 717's while they would offer the turboprops. They would also be spending a lot of money just to compete with their own direct outer island flights.

Dan Roman,

Well analyzed and stated. My guess at this point is that it is just a strong rumor.

Appreciate the insight.

slatsnfive

 

[Dan Roman]

Thanks.
It's a common misconception that Hawaiian is somehow vulnerable to competition because they are a relatively small legacy. The reality is that as long as people want to fly to Hawaii, Hawaiian will always have a marketing advantage serving Hawaii and fortunately they are now very well run operationally. There will always be plenty of competition and plenty of ways to get to Hawaii. Hawaiian has kept it simple by concentrating on flying widebodies to cities they can fill up with people that want to go to Hawaii on Hawaiian Air for their vacation. As far as inter-island goes, you just have to look at how poorly Go is doing to get a sense of how trying to get market share by selling cheap tickets works.

 

[IBNAV8R]

Well analyzed and stated. My guess at this point is that it is just a strong rumor.

I hope it's just a rumor.

Having spent a significant part of my formative years in the islands, I was constantly indoctrinated with ideas of "kokua" (to help one another) and "Aloha" (affection, peace, compassion, mercy, love, hello, goodbye, etc.). That a flea-bitten outside operation like GO (with absolutely no feed or code-share) was able to take down a home-grown island carrier (albeit in a weak position already) was a very bitter pill to swallow.

The point is that type of aircraft and airline or "home-grown" loyalty are both trumped by price.

 

[islandairDHC8]

Well....the next few months will be very interesting... I'm told that Pen Air from Alaska will be wet leasing a Saab 340 to Island Air for one year while Island Air crews get trained on ATR 72's. If this is true about the Q400's, I could see another airline or two leaving the market. The past has shown that the Islands can realistically support only 2 airlines.

 

[Hikoushi]

It's all bulls#!t.

 

[sniper]

Is there much icing in the Hawaiian chain?

Sorry I forgot ASA swallows

 

[A-V-8]

Is there much icing in the Hawaiian chain?

Friend of mine at Mesa hit some out there after being there for around 18 months or so. They literally tried to sound it out. I C E. Integrated ..... Engine. Integral Control..... They opened the CFM and while reading out loud the F.O. said the word "Ice" and the both shouted "Ice" and turned it on. Laughter ensued for the remainder of the leg which was about 10 minutes. Funny how we forget things.

 

[SPDBRD747400]

Sorry I forgot ASA swallows

Go find your hole, sniper