Ellison buying go!

First it was Island Air. Now it’s go! Airlines.

Larry Ellison, the billionaire owner of Lanai, is arranging to take control of a second interisland airline in Hawaii.

Island Air, which Ellison bought in February, confirmed that discussions are ongoing between the company and go!’s Phoenix-based parent, Mesa Air Group.

“We are committed to building a strong regional airline and part of that process is exploring all options including discussions with Mesa Air,” Paul Casey, Island Air’s chief executive officer, said in a statement Thursday.

Island Air did not disclose the nature of the discussions, but a source familiar with the deal told the Star-Advertiser that it involves an acquisition in which Mesa would continue to operate go! planes under the Island Air name.

Mesa CEO Jonathan Ornstein said he couldn’t confirm or deny whether a sale was imminent.

The Wall Street Journal published an article June 14 based on an interview with Ellison that said he was closing on the purchase of another airline.

Local aviation historian Peter Forman said he isn’t surprised by what he termed a bid by Island Air’s new owner to become a bigger competitor to dominant interisland carrier Hawaiian Airlines.

“He’s making a play to become the second serious interisland competitor,” he said. “It’s a major move.”

Forman said a combination of go! and Island Air should result in more service to neighbor islands at competitive prices over the long term, especially if go!’s jets are replaced with more efficient aircraft.

Island Air operates 224 flights a week between Oahu, Maui, Molokai, Lanai and Kauai. After Ellison’s purchase, the company announced a general intent to increase service to all major islands and to replace its small fleet of 37-seat Dash 8s with 64-seat ATR 72s.

The carrier was established in 1980 to provide air service between Kauai’s resort area of Princeville and Hono­lulu.

Go! operates five 50-seat CRJ-200 jets and serves similar destinations as Island Air. 

Mesa started go! in 2006 and launched a fare war with Hawaiian and then-major rival Aloha Airlines.

For the first few years, it was common to see go!’s lowest one-way fares ranging from $19 to $39. On its first anniversary it sold tickets for $1.

The fare war contributed to the eventual demise of Aloha Airlines. The 61-year-old carrier shut down passenger operations in 2008, which cost about 2,000 employees their jobs — the largest mass layoff in state history.

Mesa, go!’s parent, has had its own financial difficulties and filed Chapter 11 bankruptcy in 2010. It emerged a year later with 26 percent fewer employees after eliminating more than 100 aircraft and canceling all its stock.

While enduring, go! has faced an image issue as it is perceived by some as a predatory airline.

Hawaiian and Aloha accused go! of misusing confidential business information obtained while the two carriers were in bankruptcy. A judge validated the claim by Hawaiian and awarded the carrier
$80 million in damages.

Forman said that Island Air taking over go! and disposing of its name will be positive. “The name go! has been a liability since Aloha went out of business,” he said.

If the deal comes to fruition, it will be the third major Hawaii acquisition by Ellison in a year. The co-founder and CEO of software giant Oracle Corp. bought 97 percent of Lanai last June from fellow billionaire David Murdock for a reported $300 million.

Ellison has laid out a plan to build a luxurious new oceanfront hotel on the island, expand the existing Four Seasons Resort at Manele Bay, add a second airport runway, re-establish commercial farming and increase the supply of fresh water through desalinization.