Mesa Air Group's low-fares intra-island operation in Hawaii will continue despite a judge's ruling that Mesa must pay $80 million in damages to settle an unfair practices suit brought by the state's dominant airline.
Hawaiian Airlines had sued Mesa and its colourful chief executive, Jonathan Ornstein, claiming that Mesa officials had based their business strategy on trade secrets and other confidential data obtained from Hawaiian.Mesa officers were allowed to examine Hawaiian's books during the carrier's 2004 bankruptcy reorganisation because there were seen at the time as potential investors in the carrier.
However, instead of making a bid to buy Hawaiian, Mesa began its own low-fares local operation in June 2006. Dubbed go!, the unit has brought down almost all local fares on routes where its five 50-seat regional jets compete with Hawaiian's Boeing 717s and Aloha Airlines' Boeing 737s.
Some airports in the state, such as Lihue, have seen fare deceases of nearly 30% in the last year, according to the US Transportation Department. Hawaiian president and chief executive Mark Dunkerley says Mesa "pretends that they are in Hawaii to help the consumer" but that Mesa's "intent was to drive out local competition and raise fares".
Hawaiian asked the judge who oversaw its bankruptcy to punish Mesa for using confidential data to undercut Hawaiian. The judge at the end of October ruled in favour of Hawaiian and ordered Mesa to pay it $80 million plus interest and attorney fees for damages incurred between June 2005 and October 2007. But Ornstein vowed to appeal and says go! will continue to operate in the meantime.
Source: Airline Business
