Mokulele Airlines always had been somewhat of an outsider in a crowded interisland market.
But with Hawaiian Airlines emerging from the pack, Aloha Airlines and go! shutting down, and Island Air reinventing itself from virtually ground zero a year ago, Mokulele has become a vital contributor in the state’s air transportation system.
The Kona-based carrier, which President and CEO Ron Hansen purchased from go! parent Mesa Air Group Inc. in November 2011, has more than doubled the size of its fleet since then and tripled the number of passengers it carries each month to pull in 4 percent of the interisland market.
And it now has its own identity, no longer sharing its name with its former code-share partner, which at one time used to be known as go! Mokulele.
"What you see now is different management of Mokulele, and I think you’re going to see different kinds of decisions made by this management," local aviation historian Peter Forman said. "I think you will see a more successful business plan here in the next few years from Mokulele."
Mokulele, founded in 1994, already is venturing where no other commercial airline has gone before. On Tuesday it began the first-ever commercial service from Kalaeloa Airport, the former Barbers Point Naval Air Station, which was decommissioned and handed over to the state for general aviation use 15 years ago. Mokulele is starting off with three round trips a day between Kalaeloa and Kahului, with its sights set on Molokai, Lanai, and Kapalua and Hana on Maui for future expansion.
"We’ve seen a lot of innovation here in Hawaii after go! left (on March 31)," Forman said. "Go! was a bit of a spoiler because a lot of people thought that go! could always re-introduce the very low fares (that previously shook up the market) and do a lot of damage to any business plan.
"With go! gone you’ve seen Island Air purchasing the Q400 turboprop — a very advanced airplane — and you’ve seen Mokulele introducing Kalaeloa-to-Kahului service."
Until Hansen acquired the airline, Mokulele seemed like a stepchild trying to gain acceptance.
It was a small charter and sightseeing airline when it was purchased in October 2005 by Bill Boyer Jr., a former Alaska Airlines baggage handler and entrepreneur. A year later when go! came into the market, Boyer signed an agreement with Mesa that would allow go! passengers to fly into smaller airports using Mokulele’s re-branded airplanes called go!Express.
Mesa’s involvement with Mokulele eventually led to Mesa owning 75 percent of Mokulele, which at one point was renamed go! Mokulele.
Then in November 2011, Mesa sold Mokulele to Hansen of Scottsdale, Ariz.-based Transpac Aviation Inc., which dropped "go!" from the name in 2012.
Hansen, 73, who had practiced "touch-and-gos" at Barbers Point Naval Air Station when he was a pilot at Hickam Air Force Base more than 50 years ago, said he never dreamed when he bought Mokulele that he would someday return to the Kalaeloa site with the airline.
"I didn’t have this on the horizon at that time when I bought it, but I always knew this field existed," Hansen said. "I knew it had been deactivated and was no longer being used. … I’ve seen these kinds of airports become very successful on the mainland where military fields have been converted to civilian operations and offer alternatives to the large metropolitan area. So the more we got into increasing interisland air flights and understanding the traffic congestions for Honolulu for automobiles, I thought this could be a real possibility."
Forman, the aviation historian, said Mokulele may have uncovered a golden opportunity by offering air service from West Oahu.
"A lot of airlines have tried the idea of operating from secondary airports such as Southwest and JetBlue, and it’s been successful in many locations on the mainland so I think it can be successful on Oahu as well," Forman said. "The main advantage of operating from Kalaeloa is reduced hassles and easier access from many parts of the island."
Forman said Mokulele should have the airport all to itself for a while, but said other airlines may be watching to see how the experiment goes. Last year Kalaeloa Airport had a combined 138,788 takeoffs and landings by civilian, military and other types of aircraft.
"If the numbers of passengers carried becomes significant enough, other airlines would likely follow up," Forman said. "So it’s up to Mokulele to prove that this is a viable concept for others to take a look at. Remember, most other airlines have airplanes that are at least five times bigger, so it’s going to take a while before this market would make sense for other airlines."
Mokulele has an introductory promotional fare of $99 round trip between Kalaeloa and Kahului.
"We’ll see what it stabilizes at, but because of the reduced costs of operating from this airport, you may see some pretty nice fares out of here," Forman said. "You need to get enough flights a day to make it convenient enough for people to consider this, and with three round trips a day, I think that will be sufficient. So I think they will have their critical mass. It’s a matter of seeing if the passengers are there, but I think they’ll find them."
Hansen is confident Mokulele has found the right niche for it to be successful with its interisland service.
"At this point we don’t have competition," he said. "Nobody’s doing exactly what we do. The competition is supposed to be Island Air and ‘Ohana (Hawaiian Airlines’ new turboprop operator), but they’ve got 40-some seats to fill and we have only have nine, and we only need six (to break even on regular fare pricing). We can fly with a very light load factor. These markets are not that strong."
He said that even though Mokulele plans to offer other route connections and expand overall service, he has no desire to shift to larger aircraft.
"We’re going to continue to fill a need between the islands," he said. "We’re not planning to fly long hauls from here (Kalaeloa) to Kona or anything like that. Mokulele means island hopper. That’s what we’ll do."
So far his plan is working. Hansen has more than tripled the number of employees to 165 from 50 and the airline has been profitable every month since he purchased it in 2011. Revenue has grown as the fleet size has increased to nine new Caravans from four old Caravans that were replaced. And the number of passengers carried a month has grown from about 7,000 a month nearly three years ago to 22,000 last month.
"We’re utilizing our planes very heavily," he said. "We have about 120 flights a day and carry about 800 to 900 passengers a day."
Hansen, who has flown everything from prop airplanes to a Boeing 747 for now-defunct Braniff Airways, said he has no desire to think big. Rather, he’s thinking small.
"I’ve flown the biggest airplanes in the world," he said. "I don’t need to have a big airplane to complete this. I just want to continue with the success we’ve had with the small planes, with the Caravans, providing good customer service and dependable flights and also low costs. We’ll try to maintain that."
Mokulele Airlines
Aircraft: 9 Cessna Grand Caravan turboprops
Capacity: 9 seats
Flights: 120 per day
Employees: 165
Passengers: 22,000 per month
Airports served: Kalaeloa, Honolulu, Molokai, Lanai, Kapalua, Kahului, Hana, Waimea, Kona
Meaning of name: “Airplane”
Fares: Start at $39 one way from Lanai to Kahului up to $119 one way from Honolulu to Kona
Source: Mokulele Airlines
