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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 www.airlinesofhawaii.com .

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.

3 Comments:

Blogger Ozguy said...

Great to see some sensible reasoned comment back in the on-going saga.
I noticed the very cavalier attitude displayed by a Mesa lawyer in a "quick interview" outside the courthouse last week. With lawyers like that, who needs "spin doctors"? But you are quite correct. When it is all over, Mr Ornstein will still be there crying "poor me".

1:12 AM  
Blogger Stan said...

Peter:

Just to let you know, your analysis is again spot on. As to whether Go will be asked to disappear after the court cases are done, I am not sure. It is not often that a court will tell an established business to disappear and leave a market once it is in. It typically works the other way, letting other companies into a former monopoly (AT&T - telephone, etc)

What might happen, though, to remove go! from Hawaii is that the shareholders finally get religion of good business practice and realize that JO is not the Saint of Aviation that he has made himself out to be. ON the flip side, he might be forgiven if it comes down to where everyone says "he took a risk....that is what we asked him to do....move on." He then lives to battle another day

2:18 PM  
Anonymous Anonymous said...

1. Many years ago I read a book about the silent film era and the ending chapter had a old photo of a well dressed lady in a fur coat ( this was 1920’s or so) looking up from a vacant street set at a roof top where a cameraman took her picture. The last chapter was titled “Where do we go from here?”
That photo of a single lonely well dressed woman with nowhere to go on a vacant movie set street spoke a multitude of words about the ending of the silent film era and the loss of a great number of workers who could not transition to sound films and of the movie heads who perished with their silent film studios.
Aloha Airlines is gone, gone by the hands of those mainland leaders in the end who really did not have the drive and passion of Rudy Tong or the brilliance and dedication, drive and leadership of Dr. Ching.
So, Mesa lives on for now and Go! is showing a tidy profit as of June 08.
All of us now pay and pay well for air travel, just as Mesa’s CEO stated in 2007 stock holders meeting…remember?
Has the Ohana really finally died by those who could not or would not remember why Aloha ( Then TPA ) was really started?
Has it come to be that the vast majority of us now really just don’t care?
Thank you to the ones hurt most by Aloha’s passing into history…the little guys…those lifetime workers who really cared!

8:53 PM  

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