Airlines of Hawaii

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 .

Friday, September 28, 2007

Hawaiian's Day in Court

Hawaiian Airlines has reached it's court date with archrival Mesa Airlines. After just three days of pretrial motions, Hawaiian has prevailed on most issues. The only two issues remaining to be resolved by the court are 1) whether the thousands of pages of data provided by Hawaiian Airlines contain any confidential information and 2) what the damages will be in this matter. It's a safe bet that Hawaiian will indeed prove that the thousands of pages do indeed contain confidential information. Thus, the real issue before the judge is how much to award Hawaiian for Mesa's illegal and unethical behavior.

Hawaiian Airlines is asking for $173 Million in damages, plus interest, attorney's fees, and other considerations. An earlier report claims that Hawaiian also wishes to restrict Mesa's ticket sales at go! for a one year period. What are we likely to see? If Hawaiian receives a large cash award, the judge is likely to rule that this amount compensates Hawaiian for the losses due to Mesa's misuse of data. A large award and a one year restriction on Mesa's ticket sales are not likely to both transpire. So then, what is likely?

Mesa has competent legal representation, who will argue on enough areas of contention that the award is likely to be noticeably less than the $173 million asked for. The real drama will be answering the question, “How much less?”

Should Hawaiian be awarded a particularly large amount, It is quite possible that Mesa and Hawaiian may haggle on a settlement. In return for forgiveness on a certain amount of cash payment, Hawaiian could see Mesa pull up and leave the islands. In the long run, this approach makes more sense for both airlines than a prolonged fare war. Mesa may very well negotiate with Aloha for an end to its legal action as a prerequisite for go!'s departure, as well.

The amount awarded to Hawaiian may have a significant impact upon CEO Jonathan Ornstein and his management team. The activities of Mesa in this court issue showed blatant disregard for the law and for ethical conduct. At some point, shareholders at Mesa may recognize that such a management team is more liability than asset. Aloha's day in court is scheduled for April, and a victory by Aloha would bankrupt Mesa. There is little rationale for Mesa's foray into Hawaii's interisland market when you consider the cost versus likely payback.

A victory by Hawaiian is a further wakeup call to Hawaii residents regarding the truthfulness of statements made by Mesa officials. Mesa knows how to work the media for maximum spin factor, but such tricks don't work in a courtroom. Let me correct myself, they don't make any difference with the judge. Today in court I witnessed an interesting strategy by Mesa's attorney. He introduced snide statements about the intentions of Hawaiian Airlines which had absolutely no relevance to the matter under consideration. Why? I believe he is carrying out Mr. Ornstein's wish to continue the propaganda war. He's hoping that the newspaper reporters in the crowd will pick up on the comments and salt them into their articles. One can only get away with such strategies when one is spending tons of money on newspaper advertising (which Mesa is doing). It'll be interesting to see if the strategy works.

One thing is for certain, however. No matter how guilty the courts find Mesa to be, its CEO Jonathan Ornstein will continue to claim that Mesa is the victim.