Hawaii's Interisland Air War - Chapter 4

[Random]

Re: Hawaii's Interisland Air War - Chapter 3

How's the worldwide supply for used, Boeing 737-200 jetliners?

By any chance does China Airline have such a fleet, mainly one that burst into flame (after landing) in Okinawa the past weekend?

[Miulang]

Re: Hawaii's Interisland Air War - Chapter 3

By any chance does China Airline have such a fleet, mainly one that burst into flame (after landing) in Okinawa the past weekend?

China Airlines is based in Taipei, the "other" China. They have in the past had a very spotty flying record.

Miulang

[808shooter]

Re: Hawaii's Interisland Air War - Chapter 4

The economic business model behind commercial air travel is based on supply and demand. The pricing the airlines charge is not based on their cost of providing the service plus a reasonable margin but based upon the price the market will bear.

With this type of pricing structure, consumers are trained to be price sensitive. The airlines greed post deregulation is at the core of the mindset of consumers today.

There are many industries where a product or service could easily be commoditized. The most successful companies have done something called "branding". You pay more for stuff that you perceive to have value.

Xerox - original innovator, high quality, reliability
Tiffanys - high quality, consumer image
Coke mind-numbing mass-marketing mindshare
McDonalds - consistant uniform delivery of service, product and experience
Toyota - high quality, reliability

All of the above companies thrive in industries that could easily be commoditized, yet they are highly successful because of successful branding. If the local airlines want to be successful, they could capitalize on their nation-leading on-time stats. That is a major differentiator, there are probably many others. Yet they continue to choose to compete solely on the basis of price. The only area where Mesa has the advantage.

Whose fault is that?

In my mind that is poor leadership, direction and focus from Aloha and Hawaiian. You do not compete where you opponent is strongest, you change the game and force them to compete where you are strong.

[mel]

Re: Hawaii's Interisland Air War - Chapter 4

Another firm that has been good at building their brand and even expanding on it is Apple.

I think as long as the interisland market remains price sensitive, it will be hard for the any of the airlines to break out of that competitive box. The one firm that may build on their brand and not compete much on price is Hawaii Superferry. They are the newest inter-island alternative. They may end up being perceived as the premium mode of inter-island travel while the airlines continue to duke it out on price.

As things are going now, I don't mind one bit if they continue as is. The price breaks are great and people are enjoying the ride.

[Kalihiboy]

Re: Hawaii's Interisland Air War - Chapter 4

Island Air tickets are cheap, I just bought online 30 each way to Kapalua for the Maui Invitational in November in the past I have usually paid around 100-200 bucks round trip for these.

Aj

[mel]

Re: Hawaii's Interisland Air War - Chapter 4

Enjoy the ride AJ.

[joshuatree]

Re: Hawaii's Interisland Air War - Chapter 4

In my mind that is poor leadership, direction and focus from Aloha and Hawaiian. You do not compete where you opponent is strongest, you change the game and force them to compete where you are strong.

They don't want to hear constructive criticism and address what's wrong with their business structures. We're already on chapter 4 of this thread and I've yet to see any of the pro HA/AQ folks ever discuss what they can do within those companies to offer better product, just a lot of one-line propaganda jingles. You only hear what they are doing right, never wrong.

[GeckoGeek]

Re: Hawaii's Interisland Air War - Chapter 4

They don't want to hear constructive criticism and address what's wrong with their business structures.

It is very easy for a small company to grow. It is very difficult and painful for a large company to slim down.

With little competition, it was easier to bloat and raise ticket prices blaming whatever for the rise in price then to deal with the real problem. With all the competition, they actually have to work hard, cut out the fat and change their processes and contracts. They have to do the previously unthinkable.

[joshuatree]

Re: Hawaii's Interisland Air War - Chapter 4

It is very easy for a small company to grow. It is very difficult and painful for a large company to slim down.

With little competition, it was easier to bloat and raise ticket prices blaming whatever for the rise in price then to deal with the real problem. With all the competition, they actually have to work hard, cut out the fat and change their processes and contracts. They have to do the previously unthinkable.

But by airline standards, HA and AQ are actually smaller companies. And both had gone through bankruptcies which enabled them to slim down. Did they? Sure but in my opinion, minimally and without any forward game plan. Let's play armchair CEO here for the sake of discussion. What if the Sept ruling in court merely punishes go! with a fine and allows them to stay? What will AQ or HA do then to compete? What things do they have in line to prepare for that scenario? I see nothing. And sure, people can say that's company secret but we've seen what airlines have done and there is nothing, quite honestly, that is a secret weapon in this business.

I don't think go! will be going anywhere after Sept. Westjet of Canada is sorta the Southwest of that country. They were caught redhanded hacking into Air Canada's computer systems to gain company secrets. That's even more bolden than what go! supposedly did, which was not honor the two year non compete clause when they legitimately looked at AQ's and HA's books. All they got was a fine slapped on them. Westjet continued to stay and is now the 2nd largest airline in Canada. It is also completely non-unionized.

[Miulang]

Re: Hawaii's Interisland Air War - Chapter 4

Well, one thing AQ did is enter into that new operating agreement with United, which probably means they will be able to buy fuel using United's huge volume discount, as well as piggyback on any marketing efforts by United.

And HA just did a huge revamp of its website that now includes a pretty nifty portal with all kinds of new stuff...webcams at various locations, music, photos of Hawai'i, etc. obviously geared to the Mainland customer, and they outsourced their reservation function to the Philippines (although customers have encountered some problems with long wait times...the answer to that is to go online rather than use the phone for reservations). And where it's available, I use the "Hele-On" check-in kiosks at the airport and preprint my boarding passes before I even get to the airport to avoid the long lines in the airport. Hawaiian even has a service for tourists where you can have your luggage picked up at your hotel instead of your having to lug it to the airport.

And HA and AQ do have their reputation as the #1 and #2 most on-time airlines in the country to use in their PR, which is definitely a plus for them, especially in this summer of delayed and cancelled flights.

I think the advent of go! is forcing both HA and AQ to start making major changes in the way they do business--some good, some bad for customers.

Miulang

[GeckoGeek]

Re: Hawaii's Interisland Air War - Chapter 4

What if the Sept ruling in court merely punishes go! with a fine and allows them to stay? What will AQ or HA do then to compete?

First question I have is how are the three airlines doing profit-wise? Didn't the estimates indicate that go! had the highest costs? As long as HA and AQ stay in the black, they can do what they did twice before. Match and wait.

[joshuatree]

Re: Hawaii's Interisland Air War - Chapter 4

First question I have is how are the three airlines doing profit-wise? Didn't the estimates indicate that go! had the highest costs? As long as HA and AQ stay in the black, they can do what they did twice before. Match and wait.

I would surmise the three ain't doing so hot but Mesa's in the best shape out of all of them with the cash reserves. But I am starting to doubt the study. First of all, it's paid for by AQ, can we 100% say the report is neutral? Second, every anti-go! bashes Mesa for being cheap on labor. So wouldn't it be logical to assume out of the three, go! has the lowest labor costs? Third, that leaves the planes. Mesa bought those ex-Independence Air CRJ-200s cheap. So there's no lease to worry about unlike HA or AQ. Fourth, fuel consumption, probably worse than the 717s but dunno vs the 737-200s. And what if go! does finally bring in the bigger CRJs with better operational costs?

Match and wait? And that's exactly what 808shooter was saying, it's just bad management to simply play the game on someone else's advantage instead of trying to shake things up.

[GeckoGeek]

Re: Hawaii's Interisland Air War - Chapter 4

Match and wait? And that's exactly what 808shooter was saying, it's just bad management to simply play the game on someone else's advantage instead of trying to shake things up.

Unless you can beat them at their own game - or use it as an excuse to beat up the unions to get better rates.

[joshuatree]

Re: Hawaii's Interisland Air War - Chapter 4

Unless you can beat them at their own game - or use it as an excuse to beat up the unions to get better rates.

So which do you think it will be for the incumbents?

[Star of Gladness]

Re: Hawaii's Interisland Air War - Chapter 4

First question I have is how are the three airlines doing profit-wise? Didn't the estimates indicate that go! had the highest costs? As long as HA and AQ stay in the black, they can do what they did twice before. Match and wait.

I dont think anybody is in the black.