Location: Kailua, Hawaii, United States

Peter Forman is the author of Wings of Paradise, Hawaii's Incomparable Airlines, a 400 page hardcover available online at .

Monday, July 17, 2006

Previous Interisland Air Wars

Hawaii’s two longtime interisland carriers, Hawaiian and Aloha Airlines, have battled startup air carriers before. Each skirmish brought unique lessons.

A renegade airline named Skybus challenged Hawaiian and Aloha Airlines during the summer of 1963 by employing a single, tired DC-4 transport. The plane was a flying dinosaur by the standards of the day, but it’s owner, a longtime pilot named Walton Wood, proved that islanders would fly on just about anything if it was big and the price was right. A combined effort of the FAA and CAB clipped the wings of Skybus.

When Mid Pacific Air became airborne in 1981, the two incumbent airlines gave in and allowed the newcomer to enjoy a $5 price advantage after a bruising fare war brought standby ticket prices as low as $10.95. It was a huge mistake. Mid Pacific climbed into the catbird’s seat and expanded at will. As Aloha’s Maury Myers later explained, “You can match the competitor’s price cuts and lose money, or you can resist the cuts and lose even more money.” Mid Pacific was finally brought under control after Aloha and Hawaiian matched fares and found other methods of leveling the playing field.

Discovery Airways rekindled the air war in 1991with four-engined BAe146 jets. This time, the startup met its end when Aloha and Hawaiian discovered that a majority of the new airline’s ownership belonged to a foreigner. Laws prohibited such an arrangement, and the battle was won by attorneys and political pressure. Never again would this defense be ignored.

In 1993, Robert Iwamoto (of Roberts Hawaii) and other investors brought Mahalo Airlines into existence. Although its ATR-42 turboprops were efficient, they couldn’t provide the speed and aura of safety that jet aircraft offered. Aloha and Hawaiian matched Mahalo’s ticket prices, and eventually won a slow war of attrition. If the competition offered a less attractive plane again, the incumbent carriers knew how to neutralize the threat.

During challenges by third carriers, the established interisland airlines tightened their belts and devised creative tactics in order to survive. Quick-thinking management and a healthy relationship between management and labor is essential for each established airline to maximize its chances of surviving the ordeal.


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