Aloha Airlines Sues Mesa Air Group

Soverytired

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mdanno808 said:
No airline I have ever heard of has set price levels at an unsustainable level, and bragged about coping with the associated losses for 5 years.

Wasn't the whole Independence Air an experiment in trying to run an airline by selling tickets at prices that were less than what it cost to run the flights? Didn't hear a whole lot o' whinning about "it ain't fair, that's ILLEGAL ,<gasp!>", just alot of chuckling at how stupid a model THAT was. And of course, look where that got them . . .

Except Mesa IS profitable. VERY profitable, actually. Been making $$$ for something like 16 quarters in a row (not that I'll ever see one penny of it). So you could very easily make the argument that you have to judge the whole operation (i.e., MAG), not just pick and choose a couple of flights to focus on.

Hell, YOU CAN"T tell if "Go" is profitable or not . . . that info is NEVER going to be broken down in our SEC filings . . . anymore than Hawaiian would break down a HNL-LAS unprofitable flight vs a profiable KOA-LIH flight in theirs.

mdanno808 said:
(Especially after unsuccessfully attempting to acquire the competition in Bankruptcy). On top of that, company emails have surfaced which show the true nature of MAG's hawaii venture (which indeed was to drive AQ out of the market and pick up their market share).

Actually, I'd think the fact that Mesa made an $$$ offer after reviewing that info would strongly suggest they made a good faith effort to use that info as part of a bankruptcy bailout deal. If they DID keep it and use it after the fact, well. . . that's wrong, of course. But good luck proving it in a court of law. If that info was available ANYWHERE else (probably not Aloha, which is private, but I suspect Hawaiian will have lots of publicly available info), this lawsuit is pretty much doomed.


mdann0808 said:
So dork (aptly named) show me another example of one, or any of these. The airline market is highly competitive in America, yet I have not heard of Jetblue, or Airtran, or SWA, or UAL, (etc.) charging prices (other than introductory) which will not, and can not make them a profit.

I'm genuinely curious about this "introductory" distinction. Mesa's been pretty clear that these fares aren't going to last - the $19 fares are EXTREMELY limited as it is anyway. When does "introductory" end and predatory pricing begin? Mesa's been there, what, 3-4 months?

Was it introductory on day 1, then predatory on day 2? Or was it day 5 the wolf showed it's teeth?

=====

Anyhoo, hope both Aloha and Hawaiian come out on top. I really do. Seem like they're good places to fly, and they actually make it worth your while to fly there. Mesa is the only airline in the world that could make its flight crews dread being based in paradise (cuz it costs so g-danged much).
 
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Freight Dog

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T-Rex, the main difference between Indy's independent operation vs. Mesa's operation is that Mesa still has fee for departure system plus EAS subsidies through Air Midwest (our federal tax money) to blatantly try to put an airline out of business through predatory pricing as evident by comments by your CFO and JO.
 

skydivinguy

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criminal charges?!?

So, J.O. and his crew will be breaking rocks in the hot sun eh? Gimme a break!

Looks like hysteria is creeping in with some posters here....
 

mdanno808

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Wasn't the whole Independence Air an experiment in trying to run an airline by selling tickets at prices that were less than what it cost to run the flights?

Don't know. I don't see how they based a business plan on selling tickets for a loss. Show me where they bragged about being able to lose money for five years straight (great bargaining power in 07 for you guys).

Except Mesa IS profitable. VERY profitable, actually. Been making $$$ for something like 16 quarters in a row (not that I'll ever see one penny of it). So you could very easily make the argument that you have to judge the whole operation (i.e., MAG), not just pick and choose a couple of flights to focus on.

This is on the fee for departure basis, while Hawaii is the standalone, non-subsidized operation. Apples and oranges.

Hell, YOU CAN"T tell if "Go" is profitable or not . . . that info is NEVER going to be broken down in our SEC filings . . . anymore than Hawaiian would break down a HNL-LAS unprofitable flight vs a profiable KOA-LIH flight in theirs.

JO has himself said that Go! is in fact losing money.

Actually, I'd think the fact that Mesa made an $$$ offer after reviewing that info would strongly suggest they made a good faith effort to use that info as part of a bankruptcy bailout deal. If they DID keep it and use it after the fact, well. . . that's wrong, of course. But good luck proving it in a court of law. If that info was available ANYWHERE else (probably not Aloha, which is private, but I suspect Hawaiian will have lots of publicly available info), this lawsuit is pretty much doomed.

Don't know anything about the AQ suit, but the HAL suit will most likely end in substantial damages awarded come april. Mesa plagarized HAL documents (and used them to lure investres to Go!) after claiming that they had destroyed it all months earlier. Here's some of what the BK judge at the injunction hearing said...

But U.S. Bankruptcy Judge Robert Faris also lashed Mesa with criticism, saying "the evidence raises real doubts about the propriety of Mesa's conduct." Faris levied particularly harsh comments against Mesa's executive vice president and chief financial officer, George Murnane III, calling his "self-contradictory testimony ... profoundly troubling."
Although Faris said Hawaiian failed to meet the onerous requirements needed to get the court order against Mesa, the judge said Hawaiian can pursue the injunction as part of a final judgment in the litigation. Faris also said Mesa likely will be found to have violated a confidentiality agreement at the center of the dispute.

Not only did Faris determine that there was a likelihood that Mesa had violated the nondisclosure agreement, as Hawaiian alleged, the judge also expressed skepticism about Mesa's management, Bennett said.
"Mesa's credibility is clearly found to be wanting by a judge who has seen all sides of this dispute," Bennett said.
In a memo accompanying his order, Faris criticized Mesa executives for misleading statements concerning their use of Hawaiian's information. The judge singled out Murnane in particular.
In one instance, Faris pointed to testimony in which Murnane stated, "At no time was the information I obtained (from Hawaiian) used in any fashion whatsoever in evaluating or considering whether Mesa would enter the Hawaiian interisland air service market or in formulating its plan to do so."
But Faris said Murnane later was "forced to admit that his initial testimony was incorrect in some respects." For instance, the judge said that Murnane eventually acknowledged that Mesa had used the information provided by Hawaiian repeatedly, in a memo sent to potential Mesa investors and in information sent to Mesa's board of directors.
"Mr. Murnane now testifies that although he does not remember doing any of these things, he must have done all of them," Faris wrote.
Another discrepancy Faris pointed to involves Mesa's internal discussions about the benefits of killing off an established Hawaii airline.
Faris pointed out that Murnane stated in a declaration that at "no time did Mesa base its business plan or decision to enter the Hawaiian market on (Aloha Airlines) or (Hawaiian Airlines) exiting the market." Furthermore, Faris wrote, Murnane testified that Mesa had not even analyzed what would happen to Mesa's business if a competitor were to fold.
"Both statements," Faris wrote, "are false."
As evidence, Faris pointed to the following language from a memo written by Murnane to a consultant one week before Mesa announced its plans to enter the interisland market: "I agree that if we assume (Aloha) stays in market and in business forever, this project makes no sense," Murnane wrote. "We definitely don't want to wait for them to die, rather we should be the ones who give them the last push. ... Clearly, if we can get (Aloha) out of the market without anyone else stepping in this is a home run."


Was it introductory on day 1, then predatory on day 2? Or was it day 5 the wolf showed it's teeth?

How long does an introductory fare go on? How about lowering fares back to the 19 dollar level and naming them HERO fares.

=====

Anyhoo, hope both Aloha and Hawaiian come out on top. I really do. Seem like they're good places to fly, and they actually make it worth your while to fly there. Mesa is the only airline in the world that could make its flight crews dread being based in paradise (cuz it costs so g-danged much).

Thanks for the well wishes. Right back at you.
 

islandhopper

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Hell, YOU CAN"T tell if "Go" is profitable or not . . . that info is NEVER going to be broken down in our SEC filings . . . anymore than Hawaiian would break down a HNL-LAS unprofitable flight vs a profiable KOA-LIH flight in theirs.

Of course you CAN prove how much it costs to run those flights. Pretty damn easy as a matter of fact. Or is Scott Hamilton smoking crack too?

From his website...

“Competitive Intelligence: A systematic and ethical program for gathering, analyzing, and managing external information that can affect your company's plans, decisions, and operations.”

Leeham has undertaken CI assignments for a start-up company to one of the world’s largest cargo airlines and aircraft leasing firms. We have spent more than 25 years in gathering and analyzing information, and distilling it down into understandable data.

If a guy like this goes under oath and says go! needs to sell tickets for $69 to break even, no matter how much OJ flips out or tries to spin things the Judge and Jury are going to listen to Scott Hamilton.

Oh maybe I should back up a bit and point out to you what Scott Hamilton has ALREADY said about go!
 

islandhopper

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[FONT=Times New Roman, Times, serif][SIZE=-1]
[/SIZE][/FONT]The funny thing about this quote is if you know Scott Hamilton, he doesn't like David Banmiller at all. That makes this quote EXTREMELY UNBIASED.
[FONT=Times New Roman, Times, serif][SIZE=-1]
[/SIZE][/FONT]

I've heard the same thing, sounds good if it's true!
 

mdanno808

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I screwed my post up, and my responses to soverytired ended up in the quote as well. For some reason I can't edit it... Sorry for the confusion.
 

relief tube

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If I lived in Hawaii, I'd fly just once on Go!..I'd take a ******************** on the bathroom floor and hope the flight delays enough to make them loose more money.
 

Soverytired

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T-Rex, the main difference between Indy's independent operation vs. Mesa's operation is that Mesa still has fee for departure system plus EAS subsidies through Air Midwest (our federal tax money) to blatantly try to put an airline out of business through predatory pricing as evident by comments by your CFO and JO.


Nothing wrong with fee for departure business models. Rahter than being a n easy $$$ guarantee,they're INSANELY competitive, and this IS the regional forumn, where everyone relies on F-F-D agreements to a very large extent. EAS? . . so what? Every major competes for and carries a bunch of US Govt mail, troops, etc. Govt subsidizes for the airlines are as common as slutty flight attendants (god bless them and their speed-dropping unmentionables).


But yeah ,JO and his BIG FAT MOUTH are probably A & H 's best chances for winning in court. Guy's a pretty good businessman, but just has ZERO class.

That said, every "intro fare" is designed to chase competitors out of the market. I mean . . does anyone really think Southwest came in with intro fares into, say, CLT w/o the clear intent to put a dagger through the heart of a newly reorgainzed USAir? If Virgin America ever starts up, they're gonna do exactly the same thing in other markets. Nature of the beast, really.
 

Soverytired

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Of course you CAN prove how much it costs to run those flights. Pretty dang easy as a matter of fact. Or is Scott Hamilton smoking crack too?

From his website...

Yes, but I doubt that the mere fact that they're running a loss on a couple of flights (2% of Mesa's flying) is going to be the end of the world. I read somewhere that Aloha dosen't make ANYTHING on it's mainline flying (they actually lose money).. . does that make them "predatory", or just bad businessmen? It certainly explains why they're freaking out about a low cost competitor on the inter-island stuff, because gouging the locals is their bread and butter!

This obvious truth: Aloha and Hawaiian are great companies for their employee's (compared to Mesa, anyway), and provide good service for those who don't mind paying through the nose . . . but they SUCK for the average joe who wants to jet around on the cheap.

Some of the media is picking up on this . . . witness this avaition blog:

http://iagblog.blogspot.com/2006_10_01_iagblog_archive.html

Mesa runs into more island flak

Mesa's go! airline, operating in Hawaii, is running into more trouble. A local group is aiming at go! Their website is full of links and images.
The myopia is amazing. Mesa came to the inter-Island market to cut fares and make getting around cheaper. Imagine if this happened where you live.... would you react by starting a campaign against the airline? Its no surprise then that the site is runs by people who think they are heroes - really they do. Here is what the word hero means to them: Hawaii's Airline Employees Repelling Ornstein.
Perhaps its time for travelers in and to Hawaii to start a website for the consumer



 

Freight Dog

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Soverytired, here is one question to ask yourself:

What would JO do if Aloha and Hawaiian stopped flying interisland or severely
reduced capacity interisland as unprofitable?

Do you think JO would just bring more planes and fly them at $19 or $29 or even $39 for that matter out of goodness of his heart?

You don't have to go far to see what would happen. Right on Mesa's website, you can look at ABQ to FMN. This is a 148 mile trip. Roughly comparable to HNL-OGG market. This is an EAS subsidized route as well. Mesa charges $191.50 for round trip with advance purchase. Are we to believe that JO cares more about the people of Hawaii than the people of New Mexico?

Now... here's another thing. He never actually mentioned the INTRO fare of $39 or $19. According to go's website, $39 fares are here indefinitely. We all know he's not making money *OR* breaking even. Well, that's predatory pricing, and it's illegal.

As for Aloha's mainland ops, we're actually making money on it again, but interisland is sagging because of go. We'll see....
 
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Soverytired

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Soverytired, here is one question to ask yourself:

What would JO do if Aloha and Hawaiian stopped flying interisland or severely
reduced capacity interisland as unprofitable?

Do you think JO would just bring more planes and fly them at $19 or $29 or even $39 for that matter out of goodness of his heart?

....


JO would immediately rape the inter-island market. No question about it. Fact is, he just wants to supplant A & H and do what they've been doing to islanders for decades.

That's what every carrier does (just with more class and better marketing). I just can't get excited because "Corporation X" wants to do the same thing that "Corporation Y and Z" have been doing all along.

Take Southwest . . . everyone "knows" they're a "cheap" airline . . . but that's really B.S. PHX-PHL is a heck of alot cheaper on USAir than Southwest, for example. PHX-ABQ used to be cheap, but now that they've beaten USAir back (reduced their trips significantly over the years), cost has been creeping up and up.

I suppose the only "solution" for the consumer is to have as many cutthroat competitors in the market as possible . . . keeps the costs down. Be honest . . A & H haven't really competed with each other for a very long time. Kind of a "gentlemens agreement" to screw the little guy. Now JO wants to do the same and everyone is all va-clemped.
 

mdanno808

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You simply don't know what you are talking about. Interisland has been a shrinking market for a while now, and had been until the last few years, an unprofitable market for HAL (don't know about AQ). In and around the time HAL got the 717's, the fares were crept up to a profitable level (70-90 bucks per ticket average). Just because JO is telling the press that HAL and AQ have been in bed together scewing the Hawaiian public does not make it true.
 

Freight Dog

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Actually Soverytired, you really don't know much about interisland market. Prior to 9/11 and HAL/AQ merger attempt, both of us had a coupon system. Basically, you'd buy coupons for dirt cheap, and you'd be able to go on any flight, any time of the day. You just showed up. That was a pretty crummy deal for both carriers and both were bleeding big time. Far cry from screwing the little guy like JO would have you believe. However, unlike the popular belief, neither us nor Hawaiian are subsidized by the state for providing interisland transportation.

It wasn't until after 9/11 and AQ/HAL attempted merger that the coupons went away, and the interisland market got introduced to yield management. Prices went up some, but it's a far cry from Mesa's gouging. For example, ABQ-FMN on Mesa with 14 day advanced purchase is $191.50. That's an EAS subsidized route too, isn't it? 148 miles. That's the same distance as HNL-OGG. Who gouges whom?

JO is a vulture manipulator. Don't fall for his lies.
 

Soverytired

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JO is a vulture manipulator. Don't fall for his lies.

Hah! Well, there's something I think we can all agree wholeheartedly on!

Too bad your merger attempt fell though, by the way. Probably would've put you both in a better position to swat flies away.

BTW, I don't think anyone flying the line on the mainland seriously expects Mesa to last in the islands more than a few months. Certainly, nobody here cares one way or the other.
 

Soverytired

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Bullsh!t soverytired

6 months ago, you might have been right. The abuse around this lovely airline is so out of hand nobody cares about anything other than doing the absolute bare minimum required to complete our contractual duties and get that paycheck.

For example: The rumor is that Mesa has purportedly traded in its 40 options for the CRJ900 in exchange for being the launch customer for the CRJ-900X. . . a s-t-r-e-c-h-e-d CRJ 9 with 100 seats. Universally, the only thing I've ever heard from MAG pilot is groans . . . not cheers. Pilots here just want to be treated like human beings . . . wild expansion plans and crazy new aircraft are things nobody gives a shizit about.

Now, I can guarantee you the only pilot who care about go! are the few guys flying out there.
 

skydivinguy

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My A&P friend that works at Go! tells me the planes are junk and the mechanics don't give a ******************** about the airline either. Looks like more trouble in paradise!
 

islandhopper

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Now, I can guarantee you the only pilot who care about go! are the few guys flying out there.

You and I both know everybody is watching what happens in Hawaii with go! They may not "care" in a personal "how will it effect me" way but that will change if the US Attorney General begins to notice this case.

JO's head must spin around every day Aloha stays in business, wins a poll, has a favorable story in the press, or gets supportive comments from industry insiders such as Scott Hamilton or Raymond Neidl.

Notice nobody is complementing JO on a job well done in Hawaii. Its all about if he can put Aloha out of business. There is no other way he can win. He is still losing money and will not raise prices and risk losing his precious +/- 60% load facotrs.
 
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