Chief Executive Officer Paul Casey is trying to change the culture at Island Air.
The former CEO of Hawaiian Airlines, who on Thursday reached his first anniversary at the small regional carrier, said he basically had to start from scratch when he took over.
"A year ago Island Air was essentially a startup," said Casey, who headed up Hawaiian from 1997 to 2002. "By Hawaiian Airlines standards we are very small, but with size comes the personal touch and flexibility and we are privately owned."
Casey may be heading up a small airline, but he has a big-time boss. Larry Ellison — who bought the airline in February 2013 less than a year after he purchased 98 percent of Lanai — is the fifth-richest person in the world with a net worth of $48 billion, according to Forbes magazine.
Casey declined to say how much input he receives from Ellison, but there’s no question that Lanai is a top priority, as is evidenced by the lounge Island Air recently opened at Honolulu Airport in partnership with the Four Seasons Resorts Lanai. Casey called the hotel-branded lounge, which is exclusively for the resorts’ guests, "a global first."
Ellison, who clearly wants first-class treatment for people who visit Lanai, owns two Four Seasons properties on Lanai: The Lodge at Koele and the Four Seasons Resort at Manele Bay,
Island Air has launched several new initiatives under Casey during his first year at the helm. They include a new guest services department and upgrades to Honolulu’s commuter terminal that include modern check-in counters, a new customer service gate counter, complimentary Wi-Fi for all guests, and USB charger stations and electrical outlets for charging up mobile phones, tablets and computers. The airline also introduced a new paint scheme for the outside of the aircraft and a logo that reflects the re-branding of the airline. It also launched a new in-flight magazine, Kikaha.
"Island Air has been doing some exciting things under Paul Casey’s leadership," Hawaii Tourism Authority President and CEO Mike McCartney said. "The most important thing is they have the capacity to invest in new aircraft, which will help them stay competitive and grow as an interisland airline. With the loss of go!, Island Air’s presence has become even more important to the interisland travel market."
On March 31, go!’s last day of operation, Island Air stole some of the thunder by announcing it had signed a purchase agreement with Canadian aircraft builder Bombardier for two Q400 NextGen turboprop aircraft to be delivered in November and December. Island Air currently operates a fleet of five 64-seat ATR-72 turboprops.
Not coincidentally, Casey said Lanai will be the first island served when the airline takes delivery of its first 71-seat Q400. Casey said Island Air is still exploring the possibilities of where to fly the second Q400.
Island Air’s two Q400s will cost Ellison $60.9 million. Island Air said it has an option to purchase four more Q400s that could increase the value of the deal to $188 million.
David Uchiyama, vice president of brand management for the HTA, said he has high hopes for the carrier.
"Based on the direction and leadership that I see with Island Air, as well as the new ownership, the quality of the aircraft that they’re investing in and their efforts to improve service levels, it looks very promising," Uchiyama said. "Paul is very experienced in this market having been the leader of Hawaiian Airlines for so long. So I’m very confident that he is going to provide the direction needed to make Island Air very competitive in the market."
Uchiyama said he doesn’t expect Island Air to significantly drop fares to try to attract customers.
"I think they’ll probably fall a little bit more in line with Hawaiian because of the quality of product they’re developing," he said.
Island Air and Hawaiian currently offer a similar range of prices, including one-way interisland tickets that start at $65.
Casey said Island Air is seeing improvement in its on-time performance, an area that plagued the carrier during Casey’s earlier days on the job. More than 89 percent of the flights are on time, Casey said. "Clearly not perfect, but I am very proud of the way the employees have responded to the need to get customers to their destination on time."
One Island Air employee, who requested not to be identified because he was not authorized to speak for the airline, said he’s never seen the airline as good as it has been for the last month or so.
"He (Casey) has done a fantastic job," the employee said. "You have to see where we’ve been as a company under the old management and see where we are today. We’ve made leaps-and-bounds progress with the customer and making sure we have on-time performance. Paul really does care about making sure the customer has a way better experience than the last management. The old management didn’t believe in spares, and if an airplane was down for maintenance, we were stuck. They believed an airplane on the ground wasn’t making any money."
Casey said Island Air’s two major projects for next year and beyond are bringing in more new aircraft and expanding its routes.
Island Air has more than 200 hundred weekly flights now between Oahu, Maui, Lanai and Kauai and is exploring the possibility of adding service to Hawaii island. When the airline dropped service to Molokai on April 1, it added service to Maui and Kauai, Casey said.
As a private company, Casey won’t talk about the airline’s finances, but the most recent U.S. Department of Transportation financial data showed that Island Air lost $3.7 million during the first two full quarters (April through September 2013) under Ellison’s ownership.
Although there were early hiccups that Casey endured with flight delays, he believes now that the company’s 250 employees have bought into changes implemented over the last year.
"Changing the culture, seeing the pride the employees have in their jobs, using new technology to improve the customer experience and our employees’ work environment, and working towards creating a level of service equal to our partners at The Four Seasons (are among the accomplishments)," he said. "Our employees deserve all the credit for turning the company around. They are dedicated and eager to learn."
Motivating the employees, said local aviation historian Peter Forman, is important because they aren’t paid as well as their counterparts at Hawaiian.
Ironically, Casey might have ended up as CEO of Island Air even had Ellison not purchased the airline. He and former Hawaiian Airlines CEO Bruce Nobles were the principals in a group seeking to buy Island Air when Ellison stepped in and purchased it.
"Had we been successful in acquiring Island Air, we were going to be co-CEOs," Nobles said by email from Myanmar, where he is CEO of a startup operation called FMI Air Ltd. "Paul would be local and handle certain issues, and I would commute from the mainland and handle certain other issues."
As it worked out, Nobles said he and Casey are in similar positions now.
"We are both currently running the smallest airlines we have ever been involved with, but the challenges are no less daunting," Nobles said. "It is a tough business."
Casey, who also served as CEO of the Hawaii Visitors and Convention Bureau from 1995 to 1997, said the makeover of Island Air during his first year of the helm is just the start.
"Every company can improve," he said. "At Island Air we are focused every day on our three core principles: safety, on time, the customer."
Along the way, Casey said, they are having a good time.
"The airline has a sense of fun, from a hangar barbecue recently for all employees where senior management manned the grill to the way our ramp and customer service people wave aloha to each departing and arriving flight," he said.
TIMELINE
» Founded: 1980 as Princeville Airways » Initial service: Flights between Honolulu and Princeville, Kauai, to transport Princeville Resort passengers » Today’s service: More than 200 weekly flights between Oahu, Maui, Lanai and Kauai >> Initial fleet: Two 19-seat DHC-6 Twin Otter aircraft » Fleet today: Five 64-seat ATR-72 turboprops » Future fleet: Two 71-seat Q400 NextGen turboprops due by year-end with an option to buy four more » Owner: Larry Ellison (acquired Feb. 26, 2013) » Previous owner: Gavarnie Holding LLC owner Charlie Willis (acquired from Aloha Airgroup on May 11, 2004) » Aloha connection: Princeville Airways purchased by Aloha Airlines in May 1987 and later renamed Island Air » Employees: 250
Source: Island Air, Star-Advertiser research
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