Hawaii's Interisland Air War - Chapter 2

[aloha-anon]

Re: Hawaii's Interisland Air War - Chapter 2

When they work.

Part of the reason that pilots get paid what they do is that they have to make the right decision quickly. They have to manage any emergency and they rarely have any backup other then the FO. They have to be "on top" of the situation at all times. They even have to know when following ATC's (or anyone else's) requests can not or should not be done. Ultimate responsibility for the safety of the flight rests with them. They don't just follow commands. Failure frequently results in a smoking hole. Not too many professions have that same level of possible bad outcome (100's killed, multi-million dollar aircraft lost) and backup and reaction constraints.

One issue, how much of a airline's costs is it's pilots? I don't have the stat, but it's not all that great a percentage. Fuel costs are much greater.

you are correct

[aloha-anon]

Re: Hawaii's Interisland Air War - Chapter 2

When they work.

Part of the reason that pilots get paid what they do is that they have to make the right decision quickly. They have to manage any emergency and they rarely have any backup other then the FO. They have to be "on top" of the situation at all times. They even have to know when following ATC's (or anyone else's) requests can not or should not be done. Ultimate responsibility for the safety of the flight rests with them. They don't just follow commands. Failure frequently results in a smoking hole. Not too many professions have that same level of possible bad outcome (100's killed, multi-million dollar aircraft lost) and backup and reaction constraints.

One issue, how much of a airline's costs is it's pilots? I don't have the stat, but it's not all that great a percentage. Fuel costs are much greater.

the airplane I fly actually does fly itself. Somebody still has to program it and that person is also able to troubleshoot any hiccups. Do you know we often need to reboot our computerized airplanes? This happens quite often. As long as there are computers in airplanes there will still be pilots.

Now for the military, unmanned drones are acceptable because safety is not the top priority. The top priority is the mission so if the computer takes a dump you can just call it a loss without any crying mothers.

[aloha-anon]

Re: Hawaii's Interisland Air War - Chapter 2

http://www.q400.com/q400/en/turbo.jsp#profit

great link. I will save that one for future discussions. Thanks!

[Miulang]

Re: Hawaii's Interisland Air War - Chapter 2

thats not a bad idea with the expiration dates.

The reason the coupon books killed the 2 local airlines is the same reason they were so popular, you could use them at the last minute and walk on any airplane. Those seats are usually sold for a premium price.

So offer coupon books with $10/OW ticket discounts off regular fares and put fine print on them (i.e., must be used within 2 years of the date of purchase, must reserve 24 hours in advance of the flight you want). In fact, with the way the whole credit card technology has evolved, you could load a card with the value of 10 OW trips (and if people misplace those cards, too bad) so each OW trip would automatically be deducted from the credit bank. Then when all the trips were used up, the card could be reloaded again with another 10 OW trips. That would save ucka pila money for the company because you wouldn't have to print all those coupon books. That's what Starbucks cards do now (you can load up to $150 worth of credit at a time, I think). It would also make it harder to resell those coupons so you'd know at any one time who was using the "card".

Miulang

[GeckoGeek]

Re: Hawaii's Interisland Air War - Chapter 2

In fact, with the way the whole credit card technology has evolved, you could load a card with the value of 10 OW trips (and if people misplace those cards, too bad) so each OW trip would automatically be deducted from the credit bank.

The downside of the card is the investment of equipment to make it run. It also might not be as popular. We used coupons quite a bit at work. The office manager kept a few in his drawer. If we needed to make a run to the neighbor island to fix a customer's system, he'd just pull two coupons out and hand it to us. We'd make the reservation and be off. So one stack of coupons served a whole company. A card wouldn't work as well.

[Miulang]

Re: Hawaii's Interisland Air War - Chapter 2

The downside of the card is the investment of equipment to make it run. It also might not be as popular. We used coupons quite a bit at work. The office manager kept a few in his drawer. If we needed to make a run to the neighbor island to fix a customer's system, he'd just pull two coupons out and hand it to us. We'd make the reservation and be off. So one stack of coupons served a whole company. A card wouldn't work as well.

They could have "corporate" accounts just as easily as individual cards. In fact, I'd give corporate buyers (the ones who buy say >100 OW trips at a time) an even bigger discount. The price of the technology is cheaper in the long run than having to perpetually print paper coupons. The corporate card could be used very easily if the corporation identified one person (or persons) to be the "corporate travel planner". That person would be the "keeper" of the account and would know who was using the "vouchers". You need that kind of accountability now for the IRS and SOX anyway. Can't be loosy goosy about corporate accounting if you're a large company, and if Congress has its way, that SOX oversite may be required for small companies that are publicy owned, too. (Note: I managed a corporate travel desk).

Miulang

[dick]

Re: Hawaii's Interisland Air War - Chapter 2

How's this for a wet dream...

I booked tix to go to Maui next month. $29 each way on Hawaiian.

Would this have been possible before go! came on the scene?

No.

Hawaiian and Aloha were ripping our collective ass off. For too long.

I only scratch my head and wonder why.

They all weep and moan. But frankly, as someone who has family on the outer islands, I was sick and tired of getting screwed over on ticket prices due to poor management by Hawaiian and Aloha.

All the hand-wringing about go! coming in and lowering prices... but guess what, now I can afford to go see mom on Maui more often... It used to cost over $100 to get over there...

Why couldn't Aloha and Hawaiian get thier crap together and give us reasonable rates? Dude, I've been flying interisland for over 30 years. Getting the shaft like we had been until go! came on the scene was sickening. I have no qualms about these low fares especially since I have no reason to believe we'd be getting lower fares had go! not come around.

[craigwatanabe]

Re: Hawaii's Interisland Air War - Chapter 2

Something tells me that we are selling our souls to the devil so to speak as Go! flies in this market.

As much as I like the low fares, if Aloha Airlines fails because of Go, there's a good chance that the high ticket prices will come back and we'll be back at where we were before Go came in but just with another airline to be ripped off by.

As the Devil would tell us, "Enjoy it now but you'll be paying for it later".

I think what we need is a committment from Go to keep their prices that way regardless if Aloha drops out.

Now the sneaky part. Is Go unionized? If not that would be a real sneaky way for either Hawaiian or Aloha to bust the unions that keep interisland travel at an all time high cost.

Imagine this scenerio. Hawaiian and Aloha collaborate with Go to come in and justify bancrupting one of them. With no Hawaiian or Aloha the employees of either sign up to work for Go.

The employment clause is that there is no unionization of employees and your pay is what management deems making all employees "At Will" allowing for termination with no cause.

This new "restructuring" will allow for greater investor profits while the ticket prices slowly climb back to pre-Go days.

Hey it could happen.

[joshuatree]

Re: Hawaii's Interisland Air War - Chapter 2

Here are some questions for thought. What do you think airfare would be now if go! had not entered the picture? What has changed in how Hawaiian and Aloha operate now after the bankruptcy proceedings? Aside from shedding debts and pensions and getting new investors, what do you see them doing different now that would indicate that would be able to offer cheaper fares if go! had not stepped in?

But having said that, go! itself is no angel. So what do you see happening a year from now? go! being forced out by the courts? Aloha going under? All three co-existing? What will the fares be around? Just some thoughts, what do you folks think?

[craigwatanabe]

Re: Hawaii's Interisland Air War - Chapter 2

Here are some questions for thought. What do you think airfare would be now if go! had not entered the picture? What has changed in how Hawaiian and Aloha operate now after the bankruptcy proceedings? Aside from shedding debts and pensions and getting new investors, what do you see them doing different now that would indicate that would be able to offer cheaper fares if go! had not stepped in?

But having said that, go! itself is no angel. So what do you see happening a year from now? go! being forced out by the courts? Aloha going under? All three co-existing? What will the fares be around? Just some thoughts, what do you folks think?

I think it's time for another turkey sandwich

[joshuatree]

Re: Hawaii's Interisland Air War - Chapter 2

I think it's time for another turkey sandwich

Not a bad idea at all.

[Miulang]

Re: Hawaii's Interisland Air War - Chapter 2

Here are some questions for thought. What do you think airfare would be now if go! had not entered the picture? What has changed in how Hawaiian and Aloha operate now after the bankruptcy proceedings? Aside from shedding debts and pensions and getting new investors, what do you see them doing different now that would indicate that would be able to offer cheaper fares if go! had not stepped in?

But having said that, go! itself is no angel. So what do you see happening a year from now? go! being forced out by the courts? Aloha going under? All three co-existing? What will the fares be around? Just some thoughts, what do you folks think?

Since talk is cheap, here are my prognostications:
First of all, HA has already started on some cost cutting measures by outsourcing some of its reservation and maintenance operations, which is resulting in the loss of some jobs .

Unless all 3 companies come to their senses and raise their prices (actually I think all 3 only sell a certain percentage of "cheap" seats now and the price of a regular ticket is around $70) to somewhere closer to break even (around $65) one carrier might go under or be bought up. This, of course, also presupposes that the price of jet fuel stabilizes or unless the companies start buying cheap fuel or contracts and stockpiling so their fuel costs are more predictable.

Eventually, I think the regular price of an interisland ticket will be around $70OW. This will allow all 3 carriers to make money. If one of the carriers goes under, that means Hawai'i will be in exactly the same state it was in prior to go!'s arrival. For the sake of cheaper tickets and more convenient schedules for you, you want to encourage more competitors--not discourage them--from entering the market.

Miulang

[GeckoGeek]

Re: Hawaii's Interisland Air War - Chapter 2

Since talk is cheap, here are my prognostications:

I think someone is going under. The problem right now is there is too much seat capacity. If demand isn't going to ramp up to fill it, someone's going out. But each airline can't just cut flights, they'll become uncompetitive if each one doesn't have a noon flight (or whatever). They can't change to smaller planes that easily. The only way to bring seat capacity down is for someone to bow out.

[joshuatree]

Re: Hawaii's Interisland Air War - Chapter 2

Since talk is cheap, here are my prognostications:
First of all, HA has already started on some cost cutting measures by outsourcing some of its reservation and maintenance operations, which is resulting in the loss of some jobs .

Unless all 3 companies come to their senses and raise their prices (actually I think all 3 only sell a certain percentage of "cheap" seats now and the price of a regular ticket is around $70) to somewhere closer to break even (around $65) one carrier might go under or be bought up. This, of course, also presupposes that the price of jet fuel stabilizes or unless the companies start buying cheap fuel or contracts and stockpiling so their fuel costs are more predictable.

Eventually, I think the regular price of an interisland ticket will be around $70OW. This will allow all 3 carriers to make money. If one of the carriers goes under, that means Hawai'i will be in exactly the same state it was in prior to go!'s arrival. For the sake of cheaper tickets and more convenient schedules for you, you want to encourage more competitors--not discourage them--from entering the market.

Miulang

Outsourcing at Hawaiian isn't a good thing for its employees but it's inevitable. In order to become leaner, it has to be done. The maintenance outsource I suspect would be on the 767s. Makes sense since there are companies that specialize in just maintenance and major carriers would have their planes serviced by them to cut cost. Not the 717s since you really can't fly them out to the mainland. As for reservations, it's debatable if outsourcing is the best method. I believe Jetblue keeps their reservations in house but they have their employees work from home to cut cost.

I don't think this $39 will stop until something big happens or an intervention. And I think that intervention will come when the courts rule on Hawaiian's case next year. The longer this $39 deal keeps going, the easier it will be to argue that predatory pricing is occurring. I think the courts will probably rule on some compensatory punishment on go!. Then whether go! will stay or not will depend how Mesa's board will feel about JO and go! at that point. Before that happens, I hope Aloha and Hawaiian are hedging fuel contracts. Price of oil has dropped and stabilized in recent months, now be a good time to stockpile fuel.

I'm not optimistic about $70 OW after this whole battle of airfares is over. I've never considered Aloha and Hawaiian as competitors because history has shown very little competition between them. So I see them trying to recoup all the losses incurred from this current fight. I wonder how bad Island Air is suffering from this or if their niche flights to the smaller airports are helping them sustain the losses?

Interesting side note, Alaska Air has been flying 737-800s to Hawaii to earn ETOPS certification. Wonder if they are deciding to jump into the Hawaii market too? A merger between Alaska and Aloha would make sense since they both fly 737 fleets and none of their routes overlap. Alaska still has some MD-80s but they are getting rid of them soon.

[Miulang]

Re: Hawaii's Interisland Air War - Chapter 2

I don't think this $39 will stop until something big happens or an intervention. And I think that intervention will come when the courts rule on Hawaiian's case next year. The longer this $39 deal keeps going, the easier it will be to argue that predatory pricing is occurring. I think the courts will probably rule on some compensatory punishment on go!. Then whether go! will stay or not will depend how Mesa's board will feel about JO and go! at that point. Before that happens, I hope Aloha and Hawaiian are hedging fuel contracts. Price of oil has dropped and stabilized in recent months, now be a good time to stockpile fuel.

I'm not optimistic about $70 OW after this whole battle of airfares is over. I've never considered Aloha and Hawaiian as competitors because history has shown very little competition between them. So I see them trying to recoup all the losses incurred from this current fight. I wonder how bad Island Air is suffering from this or if their niche flights to the smaller airports are helping them sustain the losses?

Interesting side note, Alaska Air has been flying 737-800s to Hawaii to earn ETOPS certification. Wonder if they are deciding to jump into the Hawaii market too? A merger between Alaska and Aloha would make sense since they both fly 737 fleets and none of their routes overlap. Alaska still has some MD-80s but they are getting rid of them soon.

Alaska currently code shares with HA and NWA, not that those alliances can't be changed. Island Air is thinking about hedging its bets by code sharing some mainland flights probably with Las Vegas as its hub (that way they can use that Q400 they had to "mothball" because of the increased competition in Hawai'i).

Mokulele Air, which now has a code sharing agreement with go! (I believe), is challenging Island Air for the federally-subsidized small airport market (e.g., Hana). I don't think Island Air is going to give that part of the market up without a fight .

It would be good to have another alternative for flying out of SEA to Hawai'i, though. Right now the only carriers with flights leaving SEA are HA and NWA. And I LOVE flying Alaska up and down the West Coast and to Las Vegas.

Miulang