Hawaiian Airlines is expanding its fleet again with an eye toward the neighbor islands.
The state’s largest carrier said Monday it plans to acquire up to 25 new long-range, single-aisle aircraft largely for nonstop flights between the neighbor islands and the 10 cities it currently serves in the U.S. West.
Hawaiian said it signed a memorandum of understanding to acquire 16 new Airbus A321neo aircraft between 2017 and 2020, with rights to purchase an additional nine aircraft.
Terms of the agreement were not disclosed, but the aircraft have a total list-price value of about $2.8 billion if all of the purchase rights are exercised. The fleet expansion is expected to generate roughly 1,000 additional jobs at Hawaiian, which had 4,900 employees at the end of 2012 and expects to add 500 more this year.
"The A321neo will be the most fuel-efficient aircraft of its type after its introduction in 2016," said Mark Dunkerley, president and CEO of Hawaiian. "With its slightly smaller size we’ll be able to open new markets that are not viable for wide-body service, while also being able to augment service on existing routes to the West Coast."
The A321neo seats approximately 190 passengers with three seats on each side of the aisle. That is far fewer than the 294-seat Airbus A330-200 and the 264-seat Boeing 767-300 ER twin-aisle, wide-body aircraft that Hawaiian uses now for long-haul routes. Hawaiian said it will phase out its existing fleet of 16 Boeing 767s over the next 10 years.
"We serve more cities on the West Coast than any other airline, but they’re pretty much all to Honolulu with only a few to Maui," Dunkerley said. "By acquiring single-aisle airplanes, we’ll be able to fly to more cities from the U.S. West Coast to the neighbor islands directly."
Dunkerley said the Airbus A330 and Boeing 767 have too much seating capacity to make it economically feasible to fly from the mainland to most of the neighbor islands.
"By getting a smaller aircraft, some more of these opportunities will become feasible for us," Dunkerley said.
Hawaiian has California departures from Los Angeles, Oakland, Sacramento, San Diego, San Francisco and San Jose, as well as flights from Las Vegas, Phoenix, Portland, Ore., and Seattle.
Dunkerley indicated that Hawaiian likely would concentrate on its existing U.S. West markets with the new aircraft.
"You need only look at the 10 cities that we operate on the U.S. West Coast and look at some of some of the neighbor islands that we don’t fly to nonstop, and that will give you a pretty good picture what we have in mind," he said.
Hawaiian currently operates a fleet of 43 aircraft. Its 16 Boeing 767s and nine A330s that comprise its 25-plane wide-body, long-haul fleet, and its 18 narrow-body 123-seat Boeing 717-200 aircraft for neighbor island flights. Hawaiian’s existing orders include an additional 13 new A330s between 2013 and 2015, and six next-generation, longer-range A350XWB-800 aircraft starting in 2017.
Dunkerley said Hawaiian is the only airline that exclusively operates two-aisle planes between the mainland and Hawaii, but said the addition of the single-aisle aircraft will allow Hawaiian to efficiently tap into the neighbor island markets from the mainland.
He said French aircraft manufacturer Airbus outbid Chicago-based Boeing — which has a comparable 737 MAX — for the order. However, Dunkerley said the A321neo aircraft that Hawaiian ordered are likely to be built in Alabama when Airbus starts a production line there in 2015.
The A321neo acquisition is contingent upon Hawaiian signing new agreements with its pilots and flight attendant unions covering operation of the new aircraft. The company has a tentative agreement with the Air Line Pilots Association that is currently in the ratification process while it has yet to reach agreement with Association of Flight Attendants.
Aviation consultant Mike Boyd said Hawaiian can’t go wrong with the acquisition.
"It’s a great airplane," said Boyd of Evergreen, Colo.-based Boyd Group. "This is a brilliant move. That’s a tremendous airplane performance-wise and comfort-wise. It’s an airplane in big demand, and, if a year from now they find out the economy has turned down, they won’t have any problem getting rid of them and being stuck with them. I think they’ll be able to use them very effectively."
Boyd said he doesn’t think that Hawaiian is growing too fast or spreading itself too thin even though by July it will have added nine new mainland and international routes since November 2010.
"They’re doing the right thing," Boyd said. "The historical application of Hawaiian Airlines was to fly in the Hawaiian Islands. Nobody can make money doing that, but opening up those routes in the South Pacific and Asia, it’s brilliant. There’s a lot of discretionary income in Japan and China, and Hawaiian’s in the right spot with the right name at the right time. It’s a very sound strategy."
