Hawaiian Airlines is more prepared for current price slashing by the newest competitor in the interisland market than three years ago when Mesa began undercutting fares with the debut of its subsidiary go!.
Hawaiian CEO Mark Dunkerley told analysts during a 28 April earnings call that Mokulele Airlines has discounted interisland fares to a low of $28 "as they struggle to gain a foothold".
Although those fares are reminiscent of those offered by go! when it entered the market Dunkerley explains currently, "I just think we [Hawaiian] are in a stronger position. You have to remember when Mesa came in we were at market position parity with Aloha".
Aloha went out of business roughly a year ago, and said price undercutting by go! was largely the reason for its demise.
Mokulele's interisland partner Republic Airways Holdings in March converted its loan to Mokulele into an equity stake in the airline, and named one of its executives temporarily as CEO. Dunkerley explains by the beginning of May Mokulele will have introduced service to all four of Hawaiian's primary interisland destinations-- Hilo, Kahului, Kona, and Lihue --as it adds a third Republic Embraer E-170 to its operations. Prior to its agreement with Republic Mokulele operated Cessna Grand Caravans.
As Mokulele continues to build a presence in the interisland market Dunkerley explains the "ongoing economic malaise" and the general drop in tourists to Hawaii are also pressuring interisland traffic.
"For the first quarter the net result of this environment for us was the decline in interisland revenue per available seat mile of just under 5% with slightly higher year-over-year average fares," says Hawaiian's chief executive. Those higher fares are being somewhat offset by lower average load factors.
Falling traffic and the discounted fares offered by Mokulele "will tend to suppress the financial performance of our interisland business", says Dunkerley. "It is difficult at this point to be sure when more sustainable pricing will return."
Source: Air Transport Intelligence news
