Hawaiian Airlines, which transports 84 percent of interisland passengers, plans to start a turboprop operation that likely will increase its market share and put more pressure on other Hawaii-based carriers.
The dominant airline in the state said Tuesday it has signed a letter of intent to acquire turboprop planes so it can establish a subsidiary carrier to fly to smaller airports.
Hawaiian Chief Commercial Officer Peter Ingram said the airline will buy three to six used turboprops that seat 50 or fewer passengers. Hawaiian would then be able to get to smaller airports including Kapalua, West Maui; Lanai; and Molokai, which the airline doesn’t serve now.
Hawaiian also said it was lowering ticket prices on interisland flights from 4 to 25 percent. The airline doesn’t release information about the number of seats available at a given price.
"One of the things we have been asked from time to time from our customers and other people in the community is whether it would be feasible in some way for Hawaiian to serve some of the other airports in the state that can’t economically support jet-flying with (Boeing) 717-size aircraft," Ingram said. "So we’ve been looking at that for an extended period of time."
Ingram said the airline had to deal with issues related to its labor agreements before setting up a turboprop service.
"What we had to do to put this in place over the last couple of years was get the flexibility into our labor contract with the Hawaiian employees to sensibly build a business plan to serve the routes that are only well suited to turboprop aircraft economics," he said.
Ingram said the airline negotiated flexibility into its union labor contracts that allows it to fly planes of 69 seats or less.
A national spokesman for the Air Line Pilots Association acknowledged that there was language in the contract that allowed Hawaiian to start a turboprop operation.
"Our existing Hawaiian Airlines employees should be comforted to understand that any growth we do in the turboprop business is not going to come at the expense of our jet business," Ingram said. "This is meant to strengthen overall the product portfolio that we offer."
Hawaiian has been aggressively expanding internationally. It announced Sunday it would begin service to Auckland, New Zealand, in March, marking the airline’s eighth new destination since November 2010.
But the airline also has been expanding within the state.
"You’ve seen over the last year or so the addition of three more (interisland Boeing 717) aircraft to our fleet," Ingram said.
Hawaiian also created a Maui hub earlier this year designed to increase service between the Valley Isle and other neighbor islands by 25 percent and improve connections to and from the West Coast.
Island Air, the largest turboprop operator in the state, could be most affected by Hawaiian’s move. It averages 48 flights a day primarily to the smaller airports, including Molokai, Lanai and Kapalua. Island Air said in April it plans to replace its current fleet by the end of next year. It now has five aircraft, which include four 37-seat Bombardier de Havilland Dash 8s. It plans to switch to six 68-seat planes from French-Italian turboprop maker ATR.
Island Air owner Charlie Willis said he did not want to comment immediately on Hawaiian’s turboprop plans. "We will comment in detail in the next day or so," Willis said.
Jonathan Ornstein, president and CEO of Mesa Air Group, said Hawaiian’s move "will clearly put a lot of pressure on the other turboprop operators." Mesa’s go! airline, with its fleet of five 50-seat CRJ-200 jets, competes with Hawaiian on most interisland routes.
"They are a fierce competitor," Ornstein said.
Mokulele Airlines CEO Ron Hansen, whose company, Transpac Aviation Inc., bought Mokulele from go! last November, operates five nine-seat Cessna Caravans.
"I’m concerned about it, but they’ve got a lot higher operating costs than we have and we need very few passengers per flight to break even," Hansen said. "So our potential for survival is great, but I wish we could have worked something out with them directly so they wouldn’t have to do this.
"We’re just a little dinky operation. … We’re able to provide frequency and good service. I don’t know what their motivation is to do this."
Hawaii airline historian Peter Forman said Hawaiian will be able to offer different flights at various prices so it can serve a variety of customers.
"They should be able to compete with any low-cost carriers with the turboprops," he said.
