Hawaiian Airlines cuts outlook amid sluggish demand
  • Tuesday, December 18, 2018
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Hawaii News

Hawaiian Airlines cuts outlook amid sluggish demand

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Hawaiian Airlines’ parent company cut its outlook for a key revenue measure, citing low fares and sluggish demand — the second U.S. airline to issue a gloomy forecast in as many days.

“Year-over-year visitor growth from North America to Hawaii remains positive, but at a slower pace than industry capacity growth,” Hawaiian Holdings Inc. said Wednesday. Revenue for each passenger flown a mile, a gauge of pricing power, will decline 3 to 5 percent this quarter, the carrier said. It previously estimated that the figure would drop no more than 2.5 percent.

Hawaiian also said it had lower-than-expected demand within its neighbor island network, primarily to Hawaii island where lava eruptions deterred visitors from booking trips.

The update came a day after Delta Air Lines Inc. said so-called unit revenue would increase 3.5 percent, pared from a previous outlook of as much as 5 percent.

The twin warnings stir uncertainty about how the quarter will play out for the industry. Delta’s statement Wednesday pushed its shares down the most in two years, carrying other airlines down amid a broad market rout. Fuel costs have been swinging wildly, however, and were down almost 20 percent in November. Alaska Air Group Inc. and Spirit Airlines Inc. recently boosted investors by offering bullish outlooks.

Hawaiian is bracing for more competition, meanwhile. Southwest Airlines Co. plans to begin flying to the islands from California next year, which could further depress fares. The stock market was closed Wednesday to honor the late former President George H.W. Bush.

Hawaiian said fourth quarter unit costs are likely to decrease 1 to 3 percent. That would be slightly better than previous expectations, owing to nonrecurring items and lower-than-expected benefit and administrative expenses.

The airline also said that passenger traffic dipped 0.8 percent last month to 937,815 frm 945,568 in the year-earlier period. Its load factor, or the percentage of seats filled, fell 1.8 percentage points to 84.1 percent from 85.9 percent.

Hawaiian’s revenue passenger miles rose 2.8 percent to 1.37 billion from 1.33 billion while its available seat miles, or one seat transported one mile, increased 5 percent to 1.62 billion from 1.55 billion.

The airline also said Wednesday it is expanding its business class auction upgrade service called Bid Up to flights operating between Hawaii and Japan and South Korea.

The addition of Japan and Korea completes the rollout of the program that is now available on all of Hawaiian’s trans-Pacific flights. The service is available to all ticketed main cabin passengers on Hawaiian flights with an itinerary that contains at least one segment between Hawaii and any of the airline’s international destinations including the Osaka, Sapporo and Tokyo in Japan; Seoul; Auckland, New Zealand; Brisbane and Sydney in Australia; Pago Pago, American Samoa; and Papeete, Tahiti.

Eligible passengers will receive a Bid Up email approximately 10 days prior to departure inviting them to bid for available business class seats. Successful bidders will be notified 48 hours prior to departure.

Passengers accepted for Bid Up will receive two complimentary checked bags with priority baggage handling, expedited check-in lines, access to Hawaiian’s Premier Clubs or Plumeria Lounge (international business class only), priority boarding, cuisine from Honolulu Chef Lee Anne Wong and other featured chefs, unlimited in-flight beverage service, free access to the latest movies and over 150 hours of TV and music programming.

Since Hawaiian launched Bid Up in 2016, over 55,000 guests have received upgrades through the business class auction program.


Star-Advertiser reporter Dave Segal contributed to this report.


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