Island Air CEO optimistic despite loss

Island Air has endured some growing pains under new billionaire owner Larry Ellison.

But CEO Paul Casey said that while shifting to a larger aircraft has put a strain on operations, flight delays have improved the last two months with about two-thirds of the airline’s flights now arriving on time.

"We are an airline in transition and the focus of the entire company is daily incremental improvement," said Casey, a former CEO with both Hawaiian Airlines and the Hawaii Visitors and Convention Bureau.

Casey, who has limited his public comments since assuming his position May 1, responded briefly by email about the company Monday on the day that the U.S. Department of Transportation released financial data on Island Air’s first quarter.

The airline had $5.8 million in revenue, but operating expenses came to $7.5 million, leaving Island Air with an operating loss of $1.7 million. The airline reported $7.4 million in nonoperating income and net income of $5.6 million.

Casey declined to comment on the financial data as a matter of policy because he said the company is privately owned.

Island Air had been late reporting the data, which was required once it began operating at least one aircraft with capacity of more than 60 seats. Island Air began flying a 64-seat ATR-72 two months into the first quarter.

While Casey wouldn’t comment on the financial performance, he did note that Island Air’s flight operations have gotten better.

In August, 74 percent of its flights arrived at the gate within 15 minutes of the scheduled time compared with 68.9 percent in July, Casey said. On-time departures improved to 63.8 percent from 57.4 percent during the same period, Casey said. Flights without cancellations, meanwhile, slipped to 96.1 percent from 96.7 percent, he added.

"Not satisfactory, but an upward trend," Casey said about the overall data.

Island Air does not report on-time data to the Department of Transportation, agency spokes­man David Smallen said.

When Ellison acquired Island Air on Feb. 26 for an undisclosed price, it was his second major purchase in Hawaii after having bought 97 percent of the island of Lanai in June 2012. At the time of the Island Air acquisition, the small carrier was a shoestring operation with two 37-seat de Havilland Dash-8 aircraft and was in the midst of a fleet transition to the ATR-72s. The Dash-8s have since left the fleet, and by the end of next month, Island Air will have five ATR-72s with one used as a spare aircraft, Casey said.

Ellison’s purchase of Island Air also ensured that the Oracle Corp. CEO would be able maintain a steady stream of passenger service to Lanai, where he owns the two major hotels.

When asked whether Island Air is giving priority to flights to Lanai, Casey said all the islands are important to Ellison.

"Obviously, reliable service to Lanai is important to Mr. Ellison, but so is the entire network," Casey said.

"My instructions when I started were to improve on-time performance and customer service across our system with a goal of being on time every time. The customer and our owner expect nothing less, and as a result he gets daily performance reports."