Aloha Airlines Sues Mesa Air Group

[Soverytired]

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.

(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.

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).

 

[Freight Dog]

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]

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]

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]

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]

[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]

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]

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]

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]

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