HAWAIIAN Phase III invites

[jonjuan]

Exactly right. I've had a couple of DL friends ask me about the rumor. Their sources seem very suspect, and I think it's mostly a case of 'Hawaiian fever', where they picture themselves on the beach with fruity drink in hand. As others have said, buying the entire airline for a single slot to HND is ridiculous. The Japanese authorities will be opening up HND for more slots in the near future, so what would be the point? The expense involved with a buyout and merger would completely overwhelm any gain for the route, and the ability of Hawaiian to make a profit is based on its being 'Hawaiian', not 'Delta flying to Hawaii'. The brand loyalty, and service that makes HA profitable would go away, and so would any concieveable profits from the merger.

Sure, it may happen, because airline management is human, and just as susceptable to Hawaiian fever as the pilots are. I'm just saying that it wouldn't bring the 'synergies' they love to talk about, and would ruin a very good thing for everyone involved - HA, DL, and the people of Hawaii too.

HAL

SWA bought airtran. Who would have thought that would happen? Consolidation is good for the bank account (managements, investors, wall st). I doubt people will stop flying to Hawaii because of the name on the side of the plane.

 

[Dan Roman]

SWA bought airtran. Who would have thought that would happen? Consolidation is good for the bank account (managements, investors, wall st). I doubt people will stop flying to Hawaii because of the name on the side of the plane.

Your first point is spot on. What your a little off on is the value in Hawaiian's marketing advantage because it is Hawaiian. Hawaiian has a strong marketing advantage and people fly them because they really do follow through on their marketing cliche that your Hawaiian vacation starts when you board the airplane, not when you get off. Paint Delta on the airplanes and crew them with ATL based Flt Attendants and we would lose half of what has made us successful. Hawaiian has a completely different business plan than DAL. We fly to cities that we can fill up a widebody with people that want to go to Hawaii on Hawaiian Air. It works for us, if DAL bought us, they would be paying for a business model that doesn't work for them.

 

[Dan Roman]

I'll give you an analogy. It would be like when USAir bought PSA or American bought AirCal. Both times the parent airline bought a route structure that ultimately was discarded because it didn't work for the acquiring airline. PSA was great by itself, USAir ended up buying it and nothing was left of the routes it flew after a couple years. DAL simply couldn't do what we do. The service (and jobs) Hawaiian provides to the state of Hawaii would be gutted. I don't see the people or politicians of Hawaii letting that happen.

 

[igneousy2]

I do think that Hawaiian does have an advantage over other carriers flying to Hawaii because they are Hawaiian, that being said, I don't think it is as big a deal as you are making it out to be.

The question is, how much pricing power does being Hawaiian give you. In other words, how much MORE is a person willing to pay for the privilege of getting on a Hawaiian Airlines Jet then an Alaska or Delta jet say. Another point is that if say Delta bought Hawaiian, there would (sadly) no longer be the option of flying Hawaiian, so what would that mean for those passengers? Would that mean that they now decide to go to Cabo instead? Probably not.

Perhaps all things being equal, in the final selection of tickets, I would agree that a person would pick Hawaiian over Delta or Alaska because they want to start their vacation "when they get on the plane", but I think at the end of the day, it has been proven time and time again that passengers pick tickets based first on price, then schedule.

 

[Dan Roman]

Good point if Hawaiian was gone, it would just reduce the choices for the traveling public. But that also is why merging them into a legacy would be an uphill political battle. I saw a chart a couple years ago that showed the average yield airlines to Hawaii were getting, and we do get a little more Yield than everyone else. But your right, price is the biggest factor. That said, we can match the lower fares easy enough and still sell the higher fare seats too, that's were the "Hawaiian" advantage helps.

 

[Dan Roman]

All that said, I think our best defense against a merger would be the PSA AirCal argument. The service they provided all but disappeared because they were absorbed into legacies. No one would take lightly the economic impact to the state should Hawaiian disappear.
If another carrier made a run at Hawaiian you would be blown away by the opposition that would come out of it.

 

[jonjuan]

All that said, I think our best defense against a merger would be the PSA AirCal argument. The service they provided all but disappeared because they were absorbed into legacies. No one would take lightly the economic impact to the state should Hawaiian disappear.
If another carrier made a run at Hawaiian you would be blown away by the opposition that would come out of it.

Economic impact to the state? Are you for real? All the acquiring carrier would need to guarantee is no loss of jobs (for a period of time). Hawaii isn't a foreign country, by the way. Look what happened with the SWA/AT merger. I think most would relish more jobs coming in. It will all be good in the end. Besides, you'll be retired by the time it all shakes out in 2014.

 

[Dan Roman]

Economic impact to the state? Are you for real? All the acquiring carrier would need to guarantee is no loss of jobs (for a period of time). Hawaii isn't a foreign country, by the way. Look what happened with the SWA/AT merger. I think most would relish more jobs coming in. It will all be good in the end. Besides, you'll be retired by the time it all shakes out in 2014.

You are right about it wouldn't effect me, in fact, I guess I would just have better pass benefits as a retiree. It's not me I am concerned about (although not sure what orifice you pulled out me being retired in 2014 from) My concern is for those after me.
You don't appear to be all that familiar with Hawaii, so I am not going to go back and forth whether Senator Inouye and the local politicians would easily let what Hawaiian has planned for the state slip away for a temporary assurance of no current jobs being lost.

 

[HAL]

Consolidation is good for the bank account (managements, investors, wall st).

Not always.

USAirways learned that the hard way with PSA; in the end, they lost a whole lot on the deal. Same for AA and AirCal. No merger has boosted revenue on a particular route for more than a few months; only until some new competitor stepped in, and fares fell again. And looking at the mainland-Hawaii market, don't you think that there's already a lot of competetors ready to keep fares low?

The question is not "Will people stop flying because of the name on the side of the plane," but rather it comes down to "Will we make more money by buying this other airline?" If you look at the surface and say, "Hawaiian is making money, lets buy them," then sure, it's a slam-dunk. But the problem is that if you buy them, they aren't Hawaiian any more! What makes the airline profitable is lost, then you're stuck with another anchor on the bottom line.

What does Hawaiian bring to Delta that they can't get cheaper on their own? Planes? Nope. Routes? Except for a single daily flight to HND, nothing they couldn't do on their own right now. Employees? If Delta wants to expand, their new-hires will cost them a lot less then the 'legacy' employees that Hawaiian would add.

Hawaiian's profit comes from its own business model. If Delta buys them, the model is broken, and the profits go away, making the deal a bad one.

So tell me again, from a business perspective, why would Delta buy Hawaiian?

HAL

 

[jonjuan]

Why did SWA buy AT? After all, couldn't they also have done all those things you brought up? 2 very different cultures.

 

[ChinaClipper]

Hawaii is a State, but...

for all practical purposes, it more like a Territory, as it was prior to becoming the 5-0. Its unlike any other "state" in the Union. Different identity, culture and priorities. I know that the local politicians will probably NOT let another Aloha-type scenario go down, no one could have ever predicted that outcome. Only the "Don't Fly Go!" people had it right, I wish the locals would have listened! The damage that doosh/felon Ornstein wrought was immeasurable, and long lasting. But.... the minuses for Hawaii, ie the infrastructure of a 121 Certificate that would most surely go, (MX, call centers etc.) in a potential DL/HA Merger, would make that deal, a hard one. Besides, HA has the Aloha spirit that DL couldn't match! I can only imagine hearing reservation call between a Hilo local trying to talk to a Southern accent trying to book inter-island! ...how much fo dah long board yah? Keep HA Hawaiian.......

Economic impact to the state? Are you for real? All the acquiring carrier would need to guarantee is no loss of jobs (for a period of time). Hawaii isn't a foreign country, by the way. Look what happened with the SWA/AT merger. I think most would relish more jobs coming in. It will all be good in the end. Besides, you'll be retired by the time it all shakes out in 2014.

 

[igneousy2]

Not always.

USAirways learned that the hard way with PSA; in the end, they lost a whole lot on the deal. Same for AA and AirCal. No merger has boosted revenue on a particular route for more than a few months; only until some new competitor stepped in, and fares fell again. And looking at the mainland-Hawaii market, don't you think that there's already a lot of competetors ready to keep fares low?

The question is not "Will people stop flying because of the name on the side of the plane," but rather it comes down to "Will we make more money by buying this other airline?" If you look at the surface and say, "Hawaiian is making money, lets buy them," then sure, it's a slam-dunk. But the problem is that if you buy them, they aren't Hawaiian any more! What makes the airline profitable is lost, then you're stuck with another anchor on the bottom line.

What does Hawaiian bring to Delta that they can't get cheaper on their own? Planes? Nope. Routes? Except for a single daily flight to HND, nothing they couldn't do on their own right now. Employees? If Delta wants to expand, their new-hires will cost them a lot less then the 'legacy' employees that Hawaiian would add.

Hawaiian's profit comes from its own business model. If Delta buys them, the model is broken, and the profits go away, making the deal a bad one.

So tell me again, from a business perspective, why would Delta buy Hawaiian?

HAL

I agree with you. The only reason I think Delta would have to buy Hawaiian is to eliminate a competitor...i.e. AA/Reno. Delta+Hawaiian would make Delta the number 1 carrier to Hawaii...but then why? It is a fairly low yield market, with a lot of glamour that leaves no shortage of entrants to the market.

I know a lot of people at HA and my conversations with them are very similar to my conversations with people at AS, and it is the fear of being bought and lately it is always Delta. I think a Delta buyout of either HA or AS is not likely in the near future mostly because of size...big fish eat medium fish and quite frankly AS and HA are at least for now, too small to move the needle for Delta. I think what is more likely (and maybe more scary) is a tie-up of Hawaiian and Jet Blue or Hawaiian and Alaska.

Hawaiian and Alaska have their niches, however, I think we are still swimming happily in our niches because they are niches the big players haven't really cared about. Alaska is the dominate West Coast carrier but people on the West Coast don't fly with the same frequency as people on the East Coast...not to mention the lack of population density.

Probably not as much with United, but with AA and Delta especially, the flights to Hawaii are there to let their frequent flyers redeem their miles. Selling a few tickets is just gravey.

 

[Dan Roman]

I agree with you. The only reason I think Delta would have to buy Hawaiian is to eliminate a competitor...i.e. AA/Reno. Delta+Hawaiian would make Delta the number 1 carrier to Hawaii...but then why? It is a fairly low yield market, with a lot of glamour that leaves no shortage of entrants to the market.

I know a lot of people at HA and my conversations with them are very similar to my conversations with people at AS, and it is the fear of being bought and lately it is always Delta. I think a Delta buyout of either HA or AS is not likely in the near future mostly because of size...big fish eat medium fish and quite frankly AS and HA are at least for now, too small to move the needle for Delta. I think what is more likely (and maybe more scary) is a tie-up of Hawaiian and Jet Blue or Hawaiian and Alaska.

Hawaiian and Alaska have their niches, however, I think we are still swimming happily in our niches because they are niches the big players haven't really cared about. Alaska is the dominate West Coast carrier but people on the West Coast don't fly with the same frequency as people on the East Coast...not to mention the lack of population density.

Probably not as much with United, but with AA and Delta especially, the flights to Hawaii are there to let their frequent flyers redeem their miles. Selling a few tickets is just gravey.

Agree I think AK and HA are both safe because we both have our own niche. Merging either one into DAL throws out what makes them successful and just adds a little more flying to their system. Not worth it. Especially at AK, with their stock price were it is, it would be a very evpensive way for DAL to get some more 737 flying on the west coast.
I don't see AK and HA as much of a match either. Combined they would still be a smaller than USAir legacy and both have strong brand loyalty by themselves.
Combining them would just make a few people richer and screw up a good thing for both employee groups.

 

[Dan Roman]

I'll give another analogy. USAir and Piedmont were both very successful, until they merged. Screwed them both up and just created a small legacy that was a shell of what they each were prior to merging.
I could see the same thing in a HA/AK merger.

 

[BentOver]

OK, OK!!! back on track.....Phase III, Phase III... anyone get a call/e-mail last week or today.. :beer:...My wife is tired of me checking my e-mail every 5 minutes