Aloha Airlines

[bgl]

Sad news for Hawaii and Aloha Airlines and its employees and customers. They filed for Chapter 11 bankrupcty just over a week ago, two years after getting out of Chapter 11, but continued to operate. However, today they announced that all passenger operations will be shut down as of tomorrow evening, Monday March 31st. All inter-island flights will operate tomorrow, Monday, and all flights from the U.S. mainland to Hawaii will also operate, but apparently the Hawaii-Mainland flights have been cancelled.

Governor Lingle has just made an announcement that she's going to try to have them operate beyond Monday by coming up with some temporary financing. My guess is that all Honolulu-Hilo flights are full this week because of the Merrie Monarch Festival here in Hilo (the world's premier hula competition for those of you who're not into this kind of stuff..!), so the shutdown comes at a particularly difficult time. If there is an extention of operations, my guess is that news will be coming out on very short notice, and unfortunately, this seems to be the end of Aloha Airlines.

Mesa Airlines entered the inter-island market in 2006 (under the marketing name "Go Airlines"), with some very predatory prices (as low as $9 for a one way ticket) and this forced both Hawaiian Airlines and Aloha Airlines to remain competitive with low prices that were great for the passengers but not great for the airlines. Unfortunately, it seems as if Aloha now ran out of cash.

[John in Andalucia]

Sorry to hear that, Bo. We had a Go airlines in the UK (Go Fly  was it's registered name). It was a no-frills operation created by the British Airways chief at the time, in 1997, three years before his retirement. The company was then sold at a profit to a rival budget airline. No doubt he received his cheque in the post! On the subject of prices, the Irish budget airline, EasyJet, offer prices so low (£1 return to Europe) that their aim is to introduce "free" flights. Of course, they aren't entirely free, there's still airport tax to pay, and they are upping the luggage charges, but as a marketing coup it's feasible for them to do. I can't believe an airline as long-standing as Aloha won't be back.

[Dypsisdean]

Bo,

I have always flown Hawaiian Air, but I have a feeling I will feel the pain as well. While other airlines can fill the void from the mainland to Hawaii, I am not so sure who will pick up the slack inter-island. I haven't been on a Hawaiian inter-island fight that had an empty seat in a long time. There will be many more people looking to fly inter-island than there are seats. I would assume Hawaiian and Go can expand their operations, but that will take some time, won't it? Go's plane's are so small, and I would assume Hawaiian has limited financing available at best. And the other prop plane operators aren't really even in the hunt.

[STEVE IN SO CAL]

Looks like you guys will be going back to the outrigger canoes for island hopping...

[SubTropicRay]

This is very sad.  Another old airline dissappears into oblivion.

[Palmhut1]

Ouch, just had to rebook my flight with Hawaiian. It took another $200 out of my palm budget.  Hope I can get that Aloha ticket refunded someday. I'm not really feeling the aloha with the message the has been posted on the Aloha Airlines site. Hopefully someone will bail them out.

Don...

[doubravsky]

Crap!

I'm on hold with cheaptickets.com right now... and have been for like twenty minutes or so. Gotta rebook for my July trip... trying to do it early since we are 6 flying together, and my exit flight leaves at like 9:30 from Honolulu on the way back.

[spockvr6]

(Palmhut1 @ Mar. 31 2008,09:30)

QUOTE

I'm not really feeling the aloha with the message the has been posted on the Aloha Airlines site.

Yes....this Q&A from their FAQ surely doesnt give one a good "welcome to the islands" feeling.....

"Q: What if I paid by check or cash can I still get a refund?

A: You can file a claim with the Bankruptcy Court. "

[realarch]

Too bad, there goes another option for getting to and from the mainland and inter island.

I don't think Hawaiian airlines is all that financially sound  either. Sorry to see all the lost jobs.

Tim

[doubravsky]

well, had to book with Go for the interislands, as hawaiian didn't have an earliy enough return flight for us. Now I gotta figure out how to get a refund...

[jdapalms]

This news is very disappointing to me as I had tickets on Aloha for April 1st. We have been flying out of Orange County on Aloha for several years now and the convenience from Orange County has been great. I hate going to LA. I hope that another airline comes around to pick this gap up.

We are now flying on Southwest from Orange County to Oakland and on ATA direct to Hilo. This is a better option for us keeping us out of LA. Bo I will give you a call later

Jerry

[bgl]

Assuming the unfortunate obvious - that Aloha Airlines is going to disappear - the short term scenario for inter-island travel will in all likelihood mean two things: higher prices and less available seats. I understand that Mesa Airlines has sent over two more CRJ jets for "Go Airlines", but those are smaller jets with only 50 seats and will not really make much of a difference. Hawaiian Airlines may decide, on occasion, to use their longrange Boeing 767s (252 seats) on some inter-island flights, but that would certainly not be their preference in the long run. They would need to acquire either more Boeing 717s (123 seats in HA configuration), OR (very long-term) replace them with an entirely different, suitable, aircraft type. No new 717s are being built, so they would have to find second-hand aircraft, and there are not that many around. Only 154 Boeing 717s were built, and AirTran Airways operates a majority (87) and they're not getting rid of any of theirs!

As far as Aloha's Hawaii-Mainland flights go, my guess is that some other carrier will pick up at least some of those routes. ATA Airlines would be the most likely candidate. ATA already has a strong presence in Hawaii, and they seem to be interested in operating "odd-ball" routes, such as the ones that Aloha operated. ATA's existing Oakland-Hilo route is the ONLY nonstop mainland service from and to Hilo. They could easily add more routes out of Oakland. Orange County would be more of a challenge for them since they don't currently have a presence there, but certainly feasible if they conclude that the market is large enough.

PS to Jerry - just let me know what your new plans are. And talk about unfortunate timing!!

[TikiRick]

Wow....so sorry to hear this news. I have flown Aloha many times and it is the spirit of the Hawaiian Islands.

[Al in Kona]

Sorry to see Aloha Airlines go too as we have flown the KONA to ORANGE COUNTY (Santa Ana) direct flight many times in the past.  We still can fly direct from Kona to the west Coast on both American and United, however.

Another option to go interisland would be to take the Superferry but that won't happen to the Big Island for another year.  It is operating now to both Maui and Kauai tho'.

[LJG]

Falling ticket prices forced down by competition (some predatory like with Go) and the increase in fuel prices will be sinking a few others soon too. Soon we will be paying Aussie prices to fly. I am sure things have changed in OZ but I remember flying around AU in 1996 and paying 3 times the price for tickets found in the states.

[Matt in SD]

Thanks for the prophecy Len,

We just got an email from ATA saying they are now finished and won't be honoring our tickets to Hawaii that we just bought.  I'd imagine that basically kills our trip entirely since getting tickets from anyone else at this point will be more than $1000 each and we've got three kids.

At some point, if prices for tickets go high enough I could see this affecting property values as well.  Who wants a vactation house in Hawaii if it casts 2 grand per person to fly there.

Matt

[Cycadcenter]

I feel for those of you who "commute" to your second homes.  

Regarding the costs of flights in OZ it's pretty reasonable now with Jetstar, Virgin and Tiger we have a pretty good choice for internal travel if you plan ahead.  

And it looks as though it will get better on the USA-OZ route later this year when Virgin starts flying.  Although I would say that I just got a $1129.00 USD fare for my next trip so thats not too bad.

Bruce

[bgl]

Matt,

I'm really sorry to hear that, and this is particularly bad news for Hilo, since ATA Airlines provided the ONLY nonstop flight between Hilo and the U.S. Mainland (to Oakland). It also means that ATA is obviously NOT going to pick up any of Aloha's "odd-ball" routes.

Bruce,

Yes, V Australia (Virgin Blue's sister company) will begin daily LAX-SYD flights on 15 Dec 2008 with brand new Boeing 777-300ERs, so I'm sure that'll be good for passengers!

Bo-Göran

[bgl]

There's an interesting rumor going around that Southwest Airlines is interested in buying Aloha Airlines. Why they would want to pick up Aloha's liabilities is a mystery, but they might be interested in certain parts of Aloha. For instance their maintenance facilities, and maybe even the name itself. The fact that ATA Airlines stopped flying only 48 hours after Aloha Airlines stopped flying is an amazing coincidence, and actually provides an opportunity for Southwest Airlines that, in all likelihood, will never present itself again. In one neat swoop, Southwest could enter the Hawaii market, both with flights from and to the mainland (replacing Aloha's and ATA's cancelled flights), and the inter-island market. Southwest Airlines bailed out ATA a couple of years ago when ATA was in Chapter 11 bankruptcy, and ever since ATA and Southwest has had a unique relationship, where Southwest would feed ATA's flights to Hawaii. With Southwest's strong presence at airports like Oakland and Orange County, they could easily add flights to destinations in Hawaii with very strong feeds from their mainland markets. If Southwest is indeed interested, my guess is that they will act quickly in order to take advantage of the current void.

[Dypsisdean]

Bo,

That sounds to me like it would be a very shrewd move on the part of So. West Airlines. And it would seem as if a lot of the pieces fit.

And I'm sure you could tell me, aren't their planes similar if not the same? If so, wouldn't this be another crucial piece.

[bgl]

Dean,

Yes, that's correct. Aloha Airlines operated eight 737-700s (all leased) for their Hawaii-Mainland operations. Southwest Airlines operates a fleet of 313 (yes, 313!!) 737-700s. That's by far the largest 737-700 fleet of ANY airline. The only difference between Aloha's and Southwest's aircraft is that Aloha 737-700s are ETOPS qualified. ETOPS stands for Extended Twin Engine Operations, and involves some additional equipment and some minor modifications to make it safer to fly long distances over water. Southwest could quickly take over Aloha's fleet of 8 leased ETOPS 737-700s, and either keep those, OR equip some of their own 737-700s for Hawaii operations.

ATA Airlines used 737-800s (somewhat larger than the 737-700) and 757-200s on their Hawaii flights, and even though neither of these are currently in Southwest's fleet they could conceivably pick up the leases and use them on Hawaii flights.

IF Southwest, one way or another, were to enter the Hawaii market, especially the inter-island market, that would not be good news for Mesa Airlines/go airlines since the Southwest aircraft would be larger, and thus much cheaper to operate (per seat) than Mesa's smaller 50 seat CRJ jets. AND, Southwest would have the financial resources to compete aggressively against Mesa/go. Something Aloha obviously was unable to do.

If this were to happen, it would be very good (and exciting) news for Hawaii, and for people coming here.

[doubravsky]

God this Sucks!  I just spent another $700 re-booking my Aloha tickets through Go!......   and now freakin' ATA goes down! So now I have 6 interisland tickets and no mainland flights. Talk about double-screwed!!!!

AAAARRRRRGGGGHHHHH!!!!!!

[freakypalmguy]

Dave, that is a real bummer. I hate the fealing when we have to cancel even one flight due to mechanical or FAA regs, all those peoples plans thrown out of whack or ruined. Talk to some of the other airlines, they might offer some help in hopes of gaining a loyal customer.

Take care,

Matt

[doubravsky]

ok... after a frenzied white knuckled search, I found and booked through  united.... for a total of about $900 more for the 6 tickets. Oh well..... now to try and recoup for the original tickets.

what are the odds? Two airlines go down in a week.... and I'm on both of them!

[bgl]

Dave,

I don't quite understand. If you're using ATA from Oakland to Hilo you wouldn't need an inter-island flight?Exactly what routing do you have, and on what airline(s)? And if you made the reservations within the last couple of days you should be able to contact your credit card company and cancel the transaction - assuming you used a credit card.

Bo-Göran

Edit: Dave - you posted while I was still typing my response...

[doubravsky]

hee hee... thanks Bo...

My original itinerary was ATA Lax to HNL, then Aloha to Hilo. When Aloha went down I re-booked with Go because Hawaiian's schedule didn't fit my ATA flights. So then when ATA went down, I found flights on United to fit my Go flights.... just a bit more expensive than the originals.

Just talked to Citibank... and they agreed to credit my original charges within 48 hours... I was impressed!

So now.... I'm drinking a glass of wine and letting the stress go....     (and then I'm gonna go look at my chamaedorea plumosa seeds and see if anything is starting to germinate!)

[freakypalmguy]

(doubravsky @ Apr. 03 2008,20:27)

QUOTE

hee hee... thanks Bo...

My original itinerary was ATA Lax to HNL, then Aloha to Hilo. When Aloha went down I re-booked with Go because Hawaiian's schedule didn't fit my ATA flights. So then when ATA went down, I found flights on United to fit my Go flights.... just a bit more expensive than the originals.

Just talked to Citibank... and they agreed to credit my original charges within 48 hours... I was impressed!

So now.... I'm drinking a glass of wine and letting the stress go....     (and then I'm gonna go look at my chamaedorea plumosa seeds and see if anything is starting to germinate!)

Ahhhh! Even I feel a bit more relaxed now. Good work Dave.

Matt

[bgl]

Dave,

OK, now I get it! I made the mistake of automatically thinking "Oakland-Hilo" when I saw the name ATA!  Glad it seems to be working out now. I've never flown Go Airlines (and out of sheer principle I have no intention to in the future...), but I've been told that they don't have an interline agreement with any other airline. If this is correct, you can only check your luggage to HNL on United, then you would need to collect it, make your way over to the Go terminal (next to the main Inter-island terminal) and check it in again. United should be able to confirm this.

Bo-Göran

Oh, yes, enjoy the wine!

[MattyB]

So here's a related question for Bo 'cause of his airline expertise and for Dean and Kim 'cause of their stock market expertise:

Should I buy Southwest stock now? ???   I think it's currently about $12/share.

[bgl]

Matt,

I'm no expert when it comes to buying stocks, but I wouldn't expect any drastic changes with the Southwest stock. It's probably a safe one to buy for the long haul, but it would surprise me if there are any significant gains. Dean or Kim may be able to provide more background info.

Bo-Göran

[MattyB]

Any more word that SW may buy Aloha and ATA though?

[bgl]

At this point it was just a rumour, and personally I don't believe Southwest would actually buy either Aloha OR ATA. If they did, Souithwest stock would certainly drop in value. But what they COULD do would be to simply decide to begin service to Hawaii on their own, operating former Aloha and ATA routes that are potentially profitable. Many of those were routes where neither Aloha nor ATA faced direct competition. This is of course just speculation at this point, but Southwest actually lost out a little bit when ATA stopped flying. They had a codeshare agreement on ATA's flights that connected thru (for instance) Oakland, and now Hawaii bound passengers may opt for another routing, bypassing Oakland, and thus not fly Southwest either. Southwest could easily make both Oakland and Orange County into hubs for new service to Hawaii, and they would have a terrific feed from many mainland cities.

[Kim]

(MattyB @ Apr. 04 2008,08:59)

QUOTE

So here's a related question for Bo 'cause of his airline expertise and for Dean and Kim 'cause of their stock market expertise:

Should I buy Southwest stock now? ???   I think it's currently about $12/share.

Matt, find some palms for $12 apiece, that will be a better long-term investment.*

*This data is for informational purposes only and should not be used to make a decision to buy or sell a security or mutual fund.

As your agreement for the receipt and use of market data provides, the securities markets (1) reserve all rights to the market data that they make available; (2) do not guarantee that data; and (3) shall not be liable for any loss due either to their negligence or to any cause beyond their reasonable control.

[MattyB]

So you're saying sell the house and buy a lot of it.  OK, gotta go.

[Norm]

Bo and Matt:

It may come as a surprise, but the one stock which has benefited from the Aloha demise is Hawaiian air.  Since the announcement of Aloha operations shutdown, the stock of Hawaiian has risen 34%.   And one might think the same has occurred with Mesa/Go! stock.  However, the opposite has happened there.  Mesa's stock has fallen 41% since the announcement.  These are very large moves for a stock issue in one week's time.  

Another interesting point is that Mesa's stock has plummeted 86% since the inception of their Hawaiian interisland routes (GO!) in June, 2006.  The interisland business is a far better fit for Southwest's business model than it is for Mesa.  There may be something to that rumor after all.

[bgl]

Norm,

Hadn't paid attention to the Hawaiian or Mesa stock, so that's interesting. Not surprised that Hawaiian stock is up, but IF Southwest (or any other carrier) were to enter the inter-island market, watch for it to drop!

I can understand why Mesa's stock dropped after they entered the inter-island market in 2006 because they must have lost tens of Millions$ in these two years! Not sure what the rationale is for it to drop after Aloha went out of business, though!? But Mesa's problem is that they just don't have any aircraft that are suitable to compete against Hawaiian's 717s, and as long as they fly with smaller aircraft, they're going to have higher seatmile costs. PLUS with a very small fleet in Hawaii, their fixed cost per aircraft seat must be MUCH higher than, say, Hawaiian's, so whenever they sell a $49 seat they're going to lose more money than Hawaiian selling that same $49 oneway ticket. As far as I'm concerned, the only question is for how long Mesa is willing to lose money here. Unless they expand inter-island operations (higher frequencies) with larger aircraft, they will always be at a disadvantage.

And this has never been a 'three airline market'. In good times it's more like a 'two airline market', but the current situation with Aloha gone is more like a 'one and a half airline market' and my guess is that the void will be filled, one way or another. In my opinion, a brand new entrant, with appropriate aircraft (to effectively compete against Hawaiian) is the most likely scenario.

Bo-Göran

[Norm]

Bo,

My thinking, too.  I frankly do not see Mesa operating this time next year in this market.  

They are good managers, there at Southwest.  If they can see a decent profit coming out of interisland operations, they might go for it.  (Put another way, I do not see any other outsider stepping into Aloha's position with good profit prospects.)  Cash outlay might very well be minimal for such a takeover since the Aloha's cargo ops are already spoken for.  

My offhand guess as to the counterintuitive move in Mesa's stock price has to do with the likely perception on the part of investors of just this type of possibility (Southwest getting into the game), and soon.  Mesa's 40% price drop in five days just might be the forerunner of your rumor

becoming reality.

[PalmGuyWC]

I have an airline buddy who just quit his job with ASA, (Atlantic Southeast Airlines) a regional airline that feeds Delta airline. He was just hired by Emirates, the Dubai based airline. He will be moveing as Captain flying a 50 passenger jet, to a 260 passenger AirBus flying as co-pilot and makeing twice as much money and flying to exciting destinations in Europe and the middle east, and even India.

Since he was hired by Emirates, he has recieved several offers with other airline and regionals.  He tells me Masa is falling apart, as no one wants to work for them because of poor relations with it's employees and poor pay. Masa is very short on pilots and so are a lot of the other regionals.

For those who have not heard of Emirates, they are a first class airline, and are growing with leaps and bounds. They have many new jets on order, and even though their oil supplys are rapidly deminishing, they have enough cheep fuel to keep the airline going and a definate advantage over competitors. They plan to be the largest airline on earth in a few years. They fly direct from Dubai to New York and Houston now, and plan to start nonstop service to Los Angeles soon.

I'm sorry about the demise of Aloha, but where there is a vacume, it will soon be filled by someone.

Dick

[bgl]

Dick,

Very interesting! I have also heard about Mesa's poor employee/pilot relations. Stuff like that has a tendency to catch up with you over time.

And to say that Emirates is growing by leaps and bounds would be an understatement. It is definitely a first class airline, which will continue to expand for quite some time, but long-term I'm very skeptical of its ability to compete. When I say long-term, this could be 10 years from now, or so. Here are some numbers, to show you what I mean:

Emirates is based in Dubai, population 1.2 million.

Current fleet: 29 Airbus A330s and 18 Airbus A340s (these are roughly 250 seaters) and 57 Boeing 777s (roughly 350 seaters). Total fleet: 104 aircraft, all widebodies.

Aircraft currently on order: 70 Airbus A350s (roughly 300 seaters), 46 Boeing 777s (including 6 to be acquired through leasing companies) and 58 Airbus A380s (555 seaters): total 174 widebodies on order (plus 8 777 freighters and 10 747 freighters, but those are not relevant to my point here).

In other words, a current fleet of 104 with 174 more on order. This planned growth is absolutely astounding. And what's even more astounding is for an airline, with a home population of 1.2M, to have such a large fleet AND an even larger number of aircraft on order.

It should also be noted that Airbus has a total of 192 orders for the A380. 58 for Emirates is 30% of the total order book. Another astounding number. Other airlines with large orders: QANTAS 20, Singapore Airlines 19, and Lufthansa 15.

There is not a single airline in the USA, pop. 300M, that has placed ANY orders for the A380. And the world's largest airlines (American, United and Delta) are in the USA!

Emirates business plan, to put it bluntly, is to steal traffic from other markets. For instance, traffic between Europe and Australia, Europe and the Far East, the USA and Asia, etc. A passenger flying from New York to Mumbai or Bangkok, for instance, can get a good deal on Emirates, with a connection in Dubai. The problem, long term, for Emirates, is that airlines in the Far East, Australia, Europe or the USA are not going to sit idly by when Emirates begins to siphon off their traffic with 58 humungous A380s, in addition to hundreds of other widebodies. And the problem for Emirates is that it will always be cheaper to operate nonstop between, say, London and Hong Kong than to have to make stop in Dubai. And Emirates will ALWAYS have to make that stop, and that connection, in Dubai, while its competitors won't.

But, like I said, this is longterm, and for the foreseeable future Emirates will continue to expand and be looking for more pilots from the west since tiny Dubai can't produce enough local pilots that are qualified.

I guess we got away from Aloha Airlines, but at least this is still about aviation! Didn't seem to make any sense to begin a new thread...

Bo-Göran

[Dave-Vero]

Honolulu Advertiser says Southwest is seeking new code-sharing partner(s).  I doubt they'd want to take on mainland-Hawaii service.  The headline points out that Hawaii might lose 500,000 visitors.

[Emirates is in sort of an unusual situation in that Dubai has become a big destination in itself, and they're unusually able to serve as a hub for flights from smaller cities, including many in Africa.]