Schoolyard Bully

Mesa’s critics have previously used the analogy of a schoolyard bully to describe the company’s tactics in assaulting the Hawaii interisland market with its startup airline go! Little did I expect this comparison to play out so colorfully in the recent Hawaiian vs. Mesa trial.

The primary target for Mesa’s cut-rate entry into the market was Aloha Airlines, according to email statements brought into court as evidence. One communication stated that Mesa planned to finish off Aloha Airlines within 24 months and then raise fares to 105% of the pre-go! fares. According to the author, Mesa’s operation would be unfeasible if Aloha remained in the market.

Mesa’s attorney argued against any conspiracy to sink Aloha and claimed that the statements about Aloha were but one scenario in planning. He stated that Mesa also planned what would happen if Aloha remained in the market. Hmm, Mesa had two plans to choose from: one feasible and one unfeasible. Which do you think they’d pursue?

During closing arguments on the trial’s final day, Mesa’s attorney felt the need to explain the advantages gained by Mesa from its entry into the Hawaii market. According to Max Blecher, Mesa negotiates with large airlines for whom it supplies aircraft, crews, and other services. If Mesa can show these big airlines that it has the ability to take over these routes and operate them itself, then it gains a negotiating advantage. One problem with this argument is that Mesa never provided such a service for Aloha. Another problem is that what Blecher is actually doing is explaining the philosophy of the schoolyard bully (If I rough up a kid from time to time it’ll keep the other kids in line). For a supplier of airline services to demonstrate that it will turn against its host airline and inflict financial pain should negotiations go badly is not a smart tactic, Mesa.

Comments made so far in newspaper editorials suggest that go! has already taken quite a PR beating from this trial. Go! may choose to resort to its old tactic of giving tickets away for a small fraction of their cost once the judge issues his ruling. Such a tactic by Mesa will only highlight its willingness to trash the economics of the interisland market to punish its competitors. Once again, not a smart move, for the eyes of Hawaii’s residents have been opened wider than usual by this trial.