Wednesday, July 18, 2012

Hawaiian Airlines aims to create subsidiary carrier

Kapalua, Molokai and Lanai airports are "absolutely all on the list" of places Hawaiian Airlines is considering to fly as it takes its first steps in the process of forming a subsidiary airline, a Hawaiian official said Tuesday.

Hawaiian's parent company, Hawaiian Holdings, has signed a letter of intent to acquire turbo-prop aircraft "with the aim of establishing a subsidiary carrier to serve routes not currently in Hawaiian's Neighbor Island system," a news release from the company said. This would include expanding capacity with daily flights into rural areas.

Peter Ingram, Hawaiian's executive vice president and chief commercial officer, said that the letter of intent, which is not contractually binding, is a "first step" in the process. Due to the nature of the negotiations and confidentiality agreements, Ingram could not give many details but did say that the aircraft the airline is eyeing is a "sub-50 seater."

Hawaiian's current fleet of Boeing 717-200s, with 123 passenger capacity, flies in and out of the major airports in Hawaii but cannot serve some of the smaller airports, he said.

When asked if Kapalua, Molokai and Lanai airports would be served by the planned subsidiary airline, Ingram said: "Those three are definitely the places we are considering operating out of. . . . Those are absolutely all on the list."

Ingram said nothing is firm at the moment; he said it is too early to talk about when the subsidiary will be up and flying.

Hawaiian's intent to begin the formation of a subsidiary airline was part of a news release about a new fare structure for Neighbor Island travel, which lowers ticket prices across all fare classes from 4 to 25 percent.

The lowest fare for a one-way, nonstop ticket (including taxes and mandatory federal fees) is $65 for travel from Honolulu to Kahului and Lihue. The three lowest fares from Honolulu to Kahului, Lihue, Hilo and Kona are all lower than previously published Web fares.

Some fare highlights:

* Kahului-Honolulu, $65 (a new fare), $73 (down from $80.30) and $79 (down from $88.30).
* Kahului-Hilo, $78 (new), $90 ($97.30), $99 ($106.30).
* Kahului-Kona, $79 (new), $91 ($97.30), $100 ($106.30).
* Kahului-Lihue, $85 (new), $98 ($97.30), $104 ($106.30).

The new fare structure compliments the 13 percent increase in Neighbor Island flight capacity for the airline over the past year. This included the creation of a Maui hub to increase service between Maui, Kauai and the Big Island.

"We are pleased with what we are seeing now" with the Maui hub, said Ingram.

They have tinkered a bit with the times to accommodate passengers' flying schedules since the hub concept at Kahului Airport began in January.

It's also been "a positive development" for Maui, providing more opportunities to bring visitors to the island, which is good for the hotel industry and the island economy in general, he said.

Passenger surveys indicated that they would fly more if there were greater availability of fares, Ingram said. With that in mind, the airline has been experimenting with lower fares to see if that would stimulate demand during less full flight periods, he said. The airline has offered the "Hawaiian Saver" fare sales, which has some restrictions, over the last several months.

Encouraged by results, the airline developed the idea of "readjusting the entire Neighbor Island price structure," he said.

"By offering a greater variety of pricing options across our flight schedule every day, we hope to make it easier for people to take the extra trip they might not have taken if the lower fares weren't available," Ingram said.

Early returns on the new fare structure, which went into effect Tuesday, "are quite positive," he said.
The airline was selling twice as many tickets Tuesday than a normal Tuesday in July, he reported.

For information on the new fares, go to


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