Hawaii's Interisland Air War - Chapter 2

[joshuatree]

Re: Hawaii's Interisland Air War - Chapter 2

Going back to that merger thing, I think Hawaiian would probably be put in a weaker position if they acquired Aloha. I think if Aloha wants to do something drastic, they should probably look for an outside investor or merge with another airline on the mainland. To me the best fit for Aloha may be Southwest as both operate 737s and to my knowledge are not directly competing on most routes. An Aloha-Southwest merger may be a good thing, especially if Aloha could somehow keep their identity.

Of course this is all speculative. Anyone know what the relationship of Southwest and other airlines on the mainland are with Mesa? Is Southwest profitable? Do they have enough $$$ to acquire a smaller airline like Aloha?

Curious, how would a merger between HA and AQ make HA weaker? Yes, AQ could merge with SWA assuming the two agreed and it would be very easy given they use the same equipment model - 737s. But I doubt SWA would allow AQ to keep a separate identity, what would be the point for them? And more importantly, I would see a merger with SWA removing more local jobs than a merger with HA. For one thing, I think they would eliminate all local call center jobs. Another and more important one is the elimination of the AQ mechanics. Why need them when they have fleet maintenance on the mainland?

On the mainland, SWA may compete with Mesa on some routes but not as Mesa but as whatever legacy carrier that has contracted Mesa. As for profitablity, they are THE airline to emulate. All the likes of Jetblue, Ryan Air, and new low cost carriers in Asia are basically imitations of SWA. SWA was founded in 1971, made it's first profit in 1973 and has done so ever since, it's a record unmatched in commercial airline industry history. So they are loaded with $$$. And the best part is, it's never gotten to their heads, they still keep operations lean.

[mel]

Re: Hawaii's Interisland Air War - Chapter 2

I would assume that Aloha Airlines may have a bigger debt load than Hawaiian... I don't really know... I think Hawaiian being the bigger of the local 2, would be better off flying alone or perhaps merging with another deep pocket mainland carrier.

Maybe a merger with better financed mainland carriers may be better for both local airlines vs. merging with each other.

But then again, who am I to know?

It's all idle speculation for now.

[Miulang]

Re: Hawaii's Interisland Air War - Chapter 2

Going back to that merger thing, I think Hawaiian would probably be put in a weaker position if they acquired Aloha. I think if Aloha wants to do something drastic, they should probably look for an outside investor or merge with another airline on the mainland. To me the best fit for Aloha may be Southwest as both operate 737s and to my knowledge are not directly competing on most routes. An Aloha-Southwest merger may be a good thing, especially if Aloha could somehow keep their identity.

Of course this is all speculative. Anyone know what the relationship of Southwest and other airlines on the mainland are with Mesa? Is Southwest profitable? Do they have enough $$$ to acquire a smaller airline like Aloha?

Next to Jet Blue, SWA is the most profitable American carrier. They are able to do it because both companies are pretty much no-frill airlines and don't have to pay commissions to places like Travelocity (you can only book flights on Jet Blue and SWA directly through Jet Blue and SWA). In fact, the only way you can book flights on Jet Blue is via the internet (when they first launched, that was one of their marketing points, and their "reservationists" all work from home, not in any large call centers, which increases job satisfaction and keeps costs down). They fly smaller, mostly newer planes. I was talking with someone yesterday who's got ohana working for SWA who said one of the reasons why SWA was able to offer such cheap fares for years is because they stockpiled fuel when it was cheap...now they don't have the surpluses and have to buy fuel at the prevailing rate, which will probably increase the ticket prices, too.

And ATA right now code shares with SWA. Of course, that's not the same as being owned by the same company, so that relationship could change eventually.

If AQ merges with HA, then you would be back in the situation you had before go! started flying in Hawai'i, which would probably end the price wars you are enjoying right now. Since AQ is privately held, it's hard to judge just how viable they are. If they could find a sugar daddy to infuse some cash into the company to help them get more efficient equipment, they might be able to turn the corner on their own without a merger or buyout.

Miulang

[Konaguy]

Re: Hawaii's Interisland Air War - Chapter 2

This is scary considering I read an article somewhere recently that reported something to the effect of Kona's airport having more Private jet landings then anywhere in the world due to the "World Class" hotels that are on that side of the island. (if anyone can recall and lin that article it would be appreciated.... I can't find it off hand)

I'm not sure if that is totally accurate. Yes the south ramp at Ke-ahole during
the winter months or major holidays gets loaded with private aircraft. But I doubt we are the busiest in the world
as so far private jets.

[Konaguy]

Re: Hawaii's Interisland Air War - Chapter 2

Because of Maui's reluctance to have longer runways, they perhaps missed out on direct flights to and from Japan on JAL who at one time flew 747s to Kona (I don't know if they still do or have switched to a smaller plane), When Hawaiian and other airlines used to fly DC-10's to Maui, they had to fly them out without full loads and I think had to have them refueled in HNL before continuing to the mainland.

Before Ke-ahole's runway was extended from 7,000 to 11,000 back in the early 1990s, United couldn't take off a fully loaded DC-10 from Kona. Either less passengers or they'd have to stop on Maui.

I believe depending the passenger loads, JAL flies either a 747 or DC-10 on
that NRT-KOA-HNL-NRT flight.

[Miulang]

Re: Hawaii's Interisland Air War - Chapter 2

Today's PBN reports that AQ is suffering from go!s entry into the Hawaii interisland market: they lost 17% of their passengers this past July compared to the previous July. go! accounted for about 10% of that lost traffic. HA's comps for July-July increased by over 24,000 passengers.

Despite a 7.9 percent surge in year-over-year interisland traffic in Hawaii's four major markets this summer, Aloha actually flew 53,194 fewer customers in July than it did last year, a 17 percent drop, according to the U.S. Bureau of Transportation Statistics.

Clearly, if the current trend continues, AQ will be the one who will have to fold.

Miulang

[GeckoGeek]

Re: Hawaii's Interisland Air War - Chapter 2

Next to Jet Blue, SWA is the most profitable American carrier. They are able to do it because both companies are pretty much no-frill airlines and don't have to pay commissions to places like Travelocity.

It's helps, but I've heard a few more reasons. One, is that being a young airline, they aren't paying any pensions like the older ones are to their retirees.

Second, they run direct routes rather then the less efficient hub and spoke system. The advantage of hub and spoke is that it makes it easy to fly from anywhere to anywhere that the airline serves. The disadvantage is that the airplane (a very expensive asset) tends to stay on the ground more waiting for it's connecting flight. SWA flies direct popular routes. But depending on where you are traveling to, you may find you can't get there from here. Nothing connects.

[aloha-anon]

Re: Hawaii's Interisland Air War - Chapter 2

Aloha Airlines isn't going to stand on the sidelines anymore. They just filed a lawsuit against Mesa/go! citing the same reasons that HA did when it filed its suit. Aloha also wants an injunction to stop go! from selling underpriced tickets.

If the HA settlement is any kind of precedent, the court will probably throw out the injunction part but rule that Mesa did use proprietary information from Aloha in order to gain an advantage over Aloha. If that's the case, then go! will have to ante up to Aloha too, which would help Aloha financially.

Miulang

http://www.dontflygo.com/aloha_lawsuit.asp

The Aloha lawsuit differs substantially from the recent Motion for a Preliminary Injunction by Hawaiian Airlines against Mesa. In the Hawaiian Air case HAL sought an injunction barring go! from selling ANY tickets for one year. By comparison, Aloha is very reasonably seeking an injunction to prevent Mesa from competing unfairly in Hawaii and from selling tickets below cost. Another substantial difference from the Hawaiian Air Lines case is that the confidentiality agreements between Aloha and Mesa have a provision allowing Aloha to obtain an injunction without proving damages. Judge Faris was unable to find that HAL would be irreperably harmed by Mesa. Aloha does not have to prove irreperable harm to get an injunction, if the court finds that the confidentiality agreement was breached.

Aloha was probably shrewd to wait for HAL's preliminary injunction to be resovled, as a tremendous amount of incriminating evidence in Aloha's favor was uncovered in that case. Mesa's e-mails prove that they intended to put Aloha out of business. Mesa's statements prove that they are selling tickets below cost, and that they intend to sell tickets below cost indefinitely. Indeed, judge Faris even noted in that case that it was Mesa's intention to put Aloha out of business.

Another important note is that the statutes allow the Attorney General or the Consumer Advocate to bring a suit under the same sections that Aloha is suing under. Once Aloha finds civil liability, it will be easy for the State to find criminal liability. Under those statutes the officers and the board of directors may be held personally liable for commission of a felony. Perhaps this is why Mesa Board Member Ron Fogleman recently resigned.

The civil complaint, filed in Hawaii State Court seeks injunctive and monetary relief. Aloha alleges the following causes of action:

1. Predatory pricing under Hawaii Revised Statutes HRS sec. 481-3
2. Attempted Monopolization in Violation of HRS sec. 480-9
3. Unfair Competition under common law and in violation of HRS sec. 480-2
4. Breach of Contract
5. Breach of the Implied Covenant of Good Faith and Fair Dealing
6. Fraud
7. Tortious Interference With Prospective Contractual Relations
8. Tortious Interference With Contract

[aloha-anon]

Re: Hawaii's Interisland Air War - Chapter 2

It's helps, but I've heard a few more reasons. One, is that being a young airline, they aren't paying any pensions like the older ones are to their retirees.

Second, they run direct routes rather then the less efficient hub and spoke system. The advantage of hub and spoke is that it makes it easy to fly from anywhere to anywhere that the airline serves. The disadvantage is that the airplane (a very expensive asset) tends to stay on the ground more waiting for it's connecting flight. SWA flies direct popular routes. But depending on where you are traveling to, you may find you can't get there from here. Nothing connects.

A couple of popular myths, Jet Blue isnt doing so well anymore now that the airplanes are no longer brand new... The reason Southwest makes so much money is they keep their airplanes in the air more than any other airline.

Airplanes dont make money when they are on the ground. Simple as that.

[joshuatree]

Re: Hawaii's Interisland Air War - Chapter 2

A couple of popular myths, Jet Blue isnt doing so well anymore now that the airplanes are no longer brand new... The reason Southwest makes so much money is they keep their airplanes in the air more than any other airline.

Airplanes dont make money when they are on the ground. Simple as that.

Jet Blue fumbled with their acquisition of the Embraer planes. They started with Airbuses and introduced a second model to their fleet, kinda contradicting to the low cost carrier blueprint of using only one model. Plus they don't hedge their fuels as much as Southwest.

[GeckoGeek]

Re: Hawaii's Interisland Air War - Chapter 2

Airplanes dont make money when they are on the ground. Simple as that.

Exactly. That's what I was getting to with the second point.

[aloha-anon]

Re: Hawaii's Interisland Air War - Chapter 2

Exactly. That's what I was getting to with the second point.

go! is unsustainable,

Mesa has comited Fraud and could be liable for triple damages to Aloha. Read about the Aloha lawsuit with Mesa Air Group here.

[Quyp]

www.dontflygo.com SHUT DOWN

Does anybody know specifically why www.dontflygo.com shut itself down? PBN has an article today, but HERO isn't saying much. http://pacific.bizjournals.com/pacif...l?surround=lfn
My guess -- Ornstein sicked his lawyer thugs on HERO.
Quyp

[Miulang]

Re: www.dontflygo.com SHUT DOWN

Does anybody know specifically why www.dontflygo.com shut itself down? PBN has an article today, but HERO isn't saying much. http://pacific.bizjournals.com/pacif...l?surround=lfn
My guess -- Ornstein sicked his lawyer thugs on HERO.
Quyp

Since the dontflygo.com website only has a splash page requesting pro bono legal assistance, more than likely Mesa filed an injunction (even though Ornstein claims he doesn't know anything about a lawsuit). A judge may also have placed a gag order on all parties until the suit can be heard.

Miulang

[Quyp]

Re: www.dontflygo.com SHUT DOWN

How long has it been down?