Are You GO for $39?

[pzarquon]

Re: Are You GO for $39?

Interisland fare war filling Hawai'i skies

The fare war that started last month among airlines flying interisland routes appears to be boosting travel by local residents for the first time since the Sept. 11 attacks. "People who haven't traveled for years are traveling," said Rachel Shimamoto, manager and vice president of Travel Ways Inc. "I have several customers whose relatives are getting married in Hilo or Maui. Because the fares are so low, they're not passing them up."

Is go! playing dirty? Are prices unsustainably low? Will the endgame be the loss of an incumbent carrier and a quick return to high prices? Maybe. These prices definitely won't last. But the fact of the matter is, the opportunity to fly cheap is here now, and folks should take advantage of it.

Both go! and Hawaiian report greater than 80 percent capacity, Aloha won't tell but says it's doing well. Considering that most of my friends are using the price war that go! started to fly Hawaiian (rather than go!), I'm beginning to think that the local carrier closest to falling back into bankruptcy is Aloha.

[aloha-anon]

Re: Are You GO for $39?

Interisland fare war filling Hawai'i skies
Is go! playing dirty? Are prices unsustainably low? Will the endgame be the loss of an incumbent carrier and a quick return to high prices? Maybe. These prices definitely won't last. But the fact of the matter is, the opportunity to fly cheap is here now, and folks should take advantage of it.

Both go! and Hawaiian report greater than 80 percent capacity, Aloha won't tell but says it's doing well. Considering that most of my friends are using the price war that go! started to fly Hawaiian (rather than go!), I'm beginning to think that the local carrier closest to falling back into bankruptcy is Aloha.

Might be true, while Aloha has the lowest fixed costs now of any of the three, fuel has got to be killing AQ.

Mesa has the most unrestricted cash but labor unrest and other issues.

Hawaiian has the brand dominance but also the highest costs of any of the three.

This is far from over!

[Hawaii SEO]

Re: Are You GO for $39?

One thing to keep in mind is that Mesa Airlines is not Wall-Mart.

Wall-mart comes to town with low prices. Quite often this creates a situation where local retailers like the Mom & Pop hardware store can’t compete with the massive buying power and efficiency of distribution that Wall-Mart has. They predictably loose customers to Wall-Mart and close shop.

The big difference between Wall-Mart and Mesa Airlines is that Wall-Mart comes to town with low prices & the prices stay low. They stay low even after the local hardware store closes. They also come to town with low prices that are just high enough to still allow a profit margin on the sales. They don’t open new stores designed to operate at a huge loss.

(Yes I worked at a new Wall-Mart in a small town for a while & Yes we made a profit the day we opened the door & Yes, several local business in my home town eventually went under.)

Wall-Mart might open a new store with a few coupons or free balloons for the kids or $0.50 hot dogs and Coke for a week or so after the grand opening but they don’t discount all hardware items to 75% off until every hardware store in the area is out of business then raise the prices to 125% what the locals were changing after they have cornered the market.

That would be predatory pricing and it wouldn’t work with Wall-mart anyway because it’s too easy for an individual to open a new hardware store if Wall-Mart raised the prices too high.

Airlines are a different story. The cost to enter the market is mind-boggling. Only a few large companies have the cash and ability to pull it off.

You can read more about predatory pricing schemes at Wikipedia
http://en.wikipedia.org/wiki/Predatory_pricing

Here is a quote from Wikipedia on the issue.
(Quote) “Predatory pricing through sharp discounting is not beneficial to a business in the short run, as it may result in a price war and will cause loss of revenue and/or profits. Yet businesses may engage in predatory pricing because it may pay dividends in the long run.

This is because competitors who are not as financially strong as the predator will suffer even more, either due to loss of business or reduced profit margin caused by the aggressive price competition. The predation continues until the competitor is driven to failure and forced to leave the market. After the weaker competition has been driven out, the surviving business can raise prices above competitive levels (to "supra competitive pricing"). The business hopes to thereby reap revenues and profits that will more than offset the losses during the predatory pricing period.” (End quote)

It’s almost impossible to prove in court, but I believe this is what Mesa is attempting to do. Here is a quote from Jonathan Ornstein, chairman and chief executive of Mesa.

"Yeah, they responded to our $39 fares, but how many seats can they sell for $39?" he asked. "I don't think they can do it for long. We can fly planes empty and cover it. The Hawaii operation costs about $20 million to $25 million a year -- we can lose that much money. We can cover it."
http://pacific.bizjournals.com/paci.../03/story7.html

He may be right. The local carriers may not be able to cover the losses for as long as Mesa can and may be forced out of the interisland market.

The only protection we have against predatory pricing schemes is to recognize it when we see it and not fall for it the best we can.

We should also remember that these kamaaina companies are upstanding members of our community with a generous history of philanthropy. Once they’re gone, they may never return.

If Mesa gouges us the same way they do people all over the mainland after the local carriers are gone, it could be several years before another company can pull together the tens of millions of dollars to come to Hawaii and challenge Mesa.

[aloha-anon]

Re: Are You GO for $39?

You should write letters to the editors of our local newspapers.

The only protection we have against predatory pricing schemes is to recognize it when we see it and not fall for it the best we can.

We should also remember that these kamaaina companies are upstanding members of our community with a generous history of philanthropy. Once they’re gone, they may never return.

If Mesa gouges us the same way they do people all over the mainland after the local carriers are gone, it could be several years before another company can pull together the tens of millions of dollars to come to Hawaii and challenge Mesa.

[Hawaii SEO]

Re: Are You GO for $39?

Thanks, but it's just my opinion. Everyone has one.

[aloha-anon]

The Predatory Skies

http://airlinesofhawaii.blogspot.com/

The Predatory Skies

To call an airline “predatory” is a bold accusation. Nonetheless, it’s difficult to reach any other conclusion regarding Hawaii’s newest interisland airline, go!. The actions of this newcomer don’t tell the whole story. One must also consider the timing of those actions.

First, let’s look at go!’s announcement to enter the interisland market. It came while Aloha Airlines was involved in delicate negotiations with potential investors aiming to bring the airline out of Chapter 11. This timing was, of course, more than coincidence. Go! took on the job of spoiler, the villain intent on scaring away investors and then profiting from Aloha’s demise. The tactic didn’t work, and Aloha’s financial backing came through anyway. Go! chose to make good on its threat and it entered the market quickly thereafter.

Next, consider the $45 fares ($39 plus fees and taxes) which go! has brought to the interisland market. Airline analysts agree that neither go! nor its competitors can break even with such low fares. It is reasonable for a new entrant to come into a market with a low fare to capture the media’s attention and build a customer base. At some point, however, the airline needs to move on and make a profit. Go!’s insistence that these low fares remain is an indication that a prolonged period of losses will plague Hawaii’s interisland carriers.

Go!’s announced plans to acquire 8-12 large (90 seats or more) jets for the Hawaii market is noteworthy for a couple reasons. First, the startup airline has only been in business for a month and a half during the busiest tourist season, giving it no real opportunity to properly assess the potential for profitability. Second, go!’s announcement came just a few days after Israel’s invasion of Lebanon. Why in the world would an airline announce a major investment in aircraft immediately after news that unsettles financial markets and drives oil to new highs? The answer can only be that the purpose of the announcement was to undermine one or more of its competitors.

Keep in mind that Hawaii’s interisland market has been shrinking for years now. The reasons are obvious. Airlines have increased direct flights to neighbor islands and thereby eliminated many connection flights. Medical and shopping facilities on neighbor islands now eliminate many needed trips to Honolulu. As for Oahu residents taking vacations on other islands, island hotel room rates exceeding $200 a night put the kibosh on many such plans, even if air fares are reasonable. With low airfares to the mainland, a week in Las Vegas is noticeably less expensive than a week on Maui. Why then is go! planning to add an enormous number of seats to the interisland market? Such a plan only makes sense if at least one of its competitors is eliminated, and go! appears hell-bent on making this happen. Stay tuned.

[aloha-anon]

Re: Are You GO for $39?

Thanks, but it's just my opinion. Everyone has one.

CLICK HERE KONAGUY! for sample airfares Mesa charges on the mainland and compared them to inter-island airfares here...

[Miulang]

Re: Are You GO for $39?

A little "oopsie" on Mesa's financial spreadsheet for 2005:


"NEW YORK, July 18 (Reuters) - Regional air carrier Mesa Air Group Inc. (MESA.O: Quote, Profile, Research) on Tuesday said it plans to restate its consolidated statement of cash flows for fiscal 2005.

The company said in a filing with the U.S. Securities and Exchange Commission that it expects to finalize the restatement, which it does not expect will affect earnings per share for the year ended Sept. 30, in about two weeks.

The restatement relates in part to an inappropriate allocation of a $10 million payment to UAL Corp.'s (UAUA.O: Quote, Profile, Research) United Airlines as part of the airlines' code share agreement. Other smaller sums were also misclassified, the company said in the filing.




© Reuters 2006. All Rights Reserved.

P.S. Here is the original SEC filing that was submitted today.

[aloha-anon]

Re: Are You GO for $39?

Nothing but more shenanigans from Mesa. READ THIS STORY "Of Mutual Benefit"

A little "oopsie" on Mesa's financial spreadsheet for 2005:


"NEW YORK, July 18 (Reuters) - Regional air carrier Mesa Air Group Inc. (MESA.O: Quote, Profile, Research) on Tuesday said it plans to restate its consolidated statement of cash flows for fiscal 2005.

The company said in a filing with the U.S. Securities and Exchange Commission that it expects to finalize the restatement, which it does not expect will affect earnings per share for the year ended Sept. 30, in about two weeks.

The restatement relates in part to an inappropriate allocation of a $10 million payment to UAL Corp.'s (UAUA.O: Quote, Profile, Research) United Airlines as part of the airlines' code share agreement. Other smaller sums were also misclassified, the company said in the filing.




© Reuters 2006. All Rights Reserved.

P.S. Here is the original SEC filing that was submitted today.

[aloha-anon]

Understanding Go!

Understanding Go!

What happens if Mesa stops growing? There will be upward pressure on pilot wages because advancement will be greatly slowed, and the copilots become interested in making a livable wage if they’re going to spend a substantial amount of time in that position. An increase in wages decreases Mesa’s ability to cut a deal with larger airlines, and the whole business model is threatened. The “young airline growing quickly” honeymoon is a phenomenon we’ve seen before at many airlines, and once it’s over the employees demand higher wages. In the case of Mesa, higher wages present a greater than normal threat to the company’s ability to flourish.

So, if you want to understand go!, realize that it is a subsidiary of a company that’s all about cutting the deal. Mesa realizes nearly all of its revenues selling the components of airline travel to airlines. That’s a tricky business and the parent company may make decisions which are inconsistent with your expectations about a startup airline. The interactions between go!, Hawaiian, and Aloha Airlines are sure to be anything but dull.

by Peter Forman http://airlinesofhawaii.blogspot.com/

[dick]

Re: Understanding Go!

...violins play a weepy tune...

Geez.. as someone who has been fucked (fucked!) over too many times by these supposed "local" airlines... I don't give a rip about all that... I hate paying $400 fucking (yeah, "FUCKING") dollars to go back home... to Maui... from Honolulu... for me and my significant other.

That is simply twisted.

And don't deny it.

go! gives it to me for cheap - now - I fly them. To hell with Hawaiian and Aloha... they fucked (yeah, FUCKED!) us over for too long.

I can see the whole "mainland airline" devouring the "local" airline thing.. but why didn't Aloha and Hawaiian give a shit about us before Mesa came on the scene???

For that very reason I couldn't care less if both Aloha and Hawaiian airlines went down the toilet.

'Oh, but then Mesa has a monoply!!'

Don't be lame, some other airline will come and tune up the whole works.

I hear more violins...

Can't get any more absurd than the way things are now...

[mel]

Re: Understanding Go!

Thanks Dick. Mr. Aloha Airlines has a clear agenda. We know that. In the meantime we will enjoy flying for $39 on whatever airline is willing to give us that price. Hawaiian and Aloha went through this all in the past... their victims... Mid Pacific (fought gate placement at HNL), Discovery (they fought against the ownership) and Mahalo (can't remember if HA or AQ had any issues with them)... but all of em went down.

The two "local" airlines (with many mainland investors holding the reins, so what is local?) were lucky in the past to have undercapitalized competitors. Now they're running scared because Go's parent have deep pockets.

I remember years ago both airlines vehemently opposed United Airlines' possible entry into the interisland market. I think they got our congressional delegation to intervene at the time. Can't remember now... was many years ago, and United I don't think was even close to starting... they had only stated their intentions.

Discount airlines such as JetBlue and Southwest could have come into the island market at any time... and can still do... perhaps if one or both of the long established incumbents go down. There will always be some kind of competition for interisland travel, even though the routes are harder to make money with than in the past. Thanks to de-regulation, interisland is not as profitable today because of direct flights to and from the mainland/Asia from the neighbor islands.

It also seems that both HA & AQ can compete very well in those out of Hawaii going elsewhere markets and don't put up a stink about their competitors.

Don't forget that through their long histories HA & AQ at two points and possibly more in their history wanted to create a monopoly by merging with each other... most recently was right before the 9-11 tragedy.

And until the Superferry ever shows up, Hawaii's interisland travelers are pretty much stuck with only one option to get from one island to another... fly on any of the airlines going between them. Unlike our mainland counterparts the possibility of driving or even taking a train to another county (island) is totally out of the picture. The mainland have that option so if they don't want to pay $400 to travel 150 miles, they don't have to on an airplane. Simply hop a car, bus or train and go that way.

We have no options.

We will enjoy the ride at $39 or whatever cheap fare any of the airlines can manage to throw at us. Demand for interisland travel has spiked up since Go's entry and that is good. We can all go holo holo more often off island to visit tutu, uncles, aunts, parents, siblings, friends and cousins more times this year than we did in the very recent past. Thanks to the $39 fare war.

My trip on Hawaiian is coming soon. $39 folks. Enjoy the ride.

[aloha-anon]

Re: Understanding Go!

The two "local" airlines (with many mainland investors holding the reins, so what is local?) were lucky in the past to have undercapitalized competitors. Now they're running scared because Go's parent have deep pockets.

This isn't about deep pockets. This is about breaking the law. A crook is a crook is a crook. Do you accept theives into your home because they are backed by the mafia or a powerful gang?

[aloha-anon]

Re: Are You GO for $39?

In his most recent article, Understanding Go! Peter writes;

Mesa Air Group’s announcement to begin interisland service came within hours of Aloha’s announcement that it had chosen other partners with which to exit Chapter 11. This timing indicates that Mesa was some type of player in Aloha’s bankruptcy dealings. If Mesa could enter the Hawaii market and prevail over Aloha, this action would serve notice to other airlines that there are consequences to turning Mesa down.

This is true, and exactly what the writer of this blog has been saying all along. Ornstein freely admits he looked at investing in both Hawaiian and Aloha. He openly bragged about seeing the books of both airlines, causing Mesa to get sued by Hawaiian Airlines.

During AQ & HA's respective bankruptcies, Ornstein and Mesa were politely "shown the door" by both airlines, only because Mesa bid too low. Ornstein's took it personally. This airline go! is all about somebody's hurt ego! Mesa's prices are much higher on the mainland and incriminating evidence that Ornstein's go! is predatory. CLICK HERE FOR CHART

From the beginning, airline employees familiar with Mesa Airlines knew immediately that with Mesa's announcement of "a new inter-island airline", they were up to their predictably predatory tactics, more of the same old "HANA INO" from the thugs at Mesa.

This wasn't just a few disgruntled ex-mesa employees saying this. Industry analysts and insiders also knew. From the nov 4th PBN. Mesa Prowls for opening in Market

Reprinted from the Mesa Lies web blog.

Now, My Comments...

While I agree with Mel, that some of this is violins playing, and if Aloha can't hack the modern airline environment, they don't deserve to remain in business. HOWEVER it is clearly predatory what Mesa has been doing to Aloha and Hawaiian and continues to do as detailed in these well written blogs. Mesa should not be alowed to get away with their illegal and hostile maneuvers. Mesa is doing everything they possibly can to irrepairably cripple Aloha and Hawaiian, most of which is hard to prove in court yet VERY ILLEGAL. The authors of these two blogs, the Mesalies and Forman's new Air War blog, are exposing the masses to what is really going on in our skies. I thank them for their efforts bringing this information to the laypersons.

[admin]

Re: Are You GO for $39?

aloha-anon, please limit your posts here to your own comments. If you want to mention other writings, link to them with a brief excerpt, don't republish them wholesale. Also, please don't start a new thread with every new anti-Go! thought that occurs to you. This combined thread is more than sufficient.