Mark Dunkerley

Don’t look for Mark Dunkerley in a posh corner office. Instead you’ll find Hawaiian Airlines’ president and chief executive officer amid the employees he leads, comfortable at a table-style desk in the open floor plan that is a hallmark of the airline’s Honolulu headquarters.

A decade after leading Hawaiian Airlines out of bankruptcy and into an era of international expansion, Dunkerley is upbeat about the airline’s future and the future of Hawaii’s broader tourism industry, which he says needs to do a better job communicating its vital role in the state’s economic well-being.

“We have 200,000-plus people employed in tourism, and you don’t need many degrees of separation in this community before anyone can say ‘This $1 I’m holding in my hand was generated at least in part by tourism,’” said Dunkerley, emphasizing the need for a “community conversation” focused not only on what the tourism industry needs to thrive, but on how a thriving tourism industry benefits the people of Hawaii.

“What’s important here is not the tourism industry for the tourism industry’s sake. The reason this is all important is because it is through the economic activity generated by tourism that we have the prospect of paying for all the things that are so needed in our community,” said Dunkerley, 51, who after nearly 13 years here has lived in Hawaii longer than any other place in his life.

He joined the airline in late 2002 as president and chief operating officer and became CEO when Hawaiian emerged from Chapter 11 bankruptcy reorganization in June 2005.

With a bachelor’s degree in economics and a master’s in aeronautics, Dunkerley’s previous experience includes more than a decade at British Airways.

He has immersed himself in island life with wife Marilia, who is from Brazil, even taking up surfing.

“Hawaii absolutely feels like home.”

QUESTION: Last year you were honored by Airline Business for transforming Hawaiian from, as they described, “a bankrupt niche U.S. carrier to a strong and growing global player.” … Could you talk about your role, personally, in that transformation, and … also about the staff, the employees of Hawaiian Airlines?

ANSWER: Frankly, I think most … really all, of the credit goes to the employees of the company. Not only our wonderful employees who serve our customers day in and day out, but also my colleagues on the management team who really helped sculpt a strategy.

My contribution as such I think has really been around the strategy and hopefully also helping our employees believe in a brighter and better future and moving forward and developing the way that we have.

Q: So part of the strategy, I know, is international expansion and we’ll get to that, but I wanted to ask: I found a 2010 profile of you in The New York Times in which you talked about a boss at British Airways who told you that you didn’t have the temperament to run a large company with a lot of union employees. Is it fair to say that you’ve spent your career proving him wrong? …

A: I think there’s a lot a truth to that. We all respond to challenges and that was a comment that was made that I thought was pretty unreasonable and unfair and I desperately wanted to prove him wrong. And that has helped shape the rest of my career. Perhaps somewhat to even my own surprise, I’ve discovered that I like nothing better than managing employees, really sharing a vision for the future, encouraging people to do their best. In fact, I find that is the most fulfilling part of my job.

Q: So now you have over 5,400 employees … compared to 3,300 roughly when you emerged from bankruptcy 10 years ago. … How many employees are in Hawaii versus how many are elsewhere?

A: I can get you the exact number, but it’s going to be well over 90 percent are here in Hawaii. I think this is a point of differentiation about Hawaiian Airlines and frankly any of the other carriers that we compete against. When you see the headlines that a new service is being started, if it’s being operated by Hawaiian, that new flight is going to employ dozens of people here in the community.

Q: Even if it’s an international flight?

A: Even if it’s an international flight. … Some of those employees are on the ground to handle the flight, and many of them are in the air. Pilots are locally based. Flight attendants are locally based. When we … fly to a new country, we need legal advice and things like that, so … that all builds in work in the legal department and HR and so on (here in Hawaii). … Our view is that our brand is indivisible from Hawaii and our community, the culture and the sense of place.

Q: … You talked about Hawaiian being indivisible from this place and that’s something — the mix of business and culture — that has become more fraught in some quarters. When does that verge from support … and providing jobs to exploitation or cultural appropriation? The kind of arguments we’ve seen with Mauna Kea? … Where does Hawaiian figure in that whole kind of conversation?

A: I’d make a couple of points.

First of all we reflect the values of our employees, over 90 percent of whom come from this community. So I don’t think that we can separate ourselves from the issues in the community. … The things that employees care about are by extension the things that we care about.

The second thing that I’d say, is I don’t think that there are many institutions, perhaps no institution, that does as much to promote Hawaiian culture, not only in the islands, but also on the broader stage, than we do. And we do so in a way in which authenticity is terribly, terribly important to us. … So much of what we associate with the values of Hawaiian I think position Hawaii well for the future. I think aspects of Hawaiian culture just resonate very, very well in an increasingly global world. … Sustainability, interdependence, a sense of community. I think these are all very, very important things. We’re not trying to run from these things. We’re trying to embrace them. And we’re certainly not trying to appropriate them in a way that would leave people feeling that we have debased the things that are really important. …

Q: (Shifting to) the passenger’s point of view … we had a story … that Hawaiian made $18.2 million the first quarter on baggage fees. Do you foresee a day when even a carryon won’t be free for passengers? Or is there anything that is sort of sacrosanct in terms of the passenger experience and you’ll never have a fee for that?

A: What has happened is the industry has woken up to the fact that when consumers purchase airline tickets, the headline price is terribly, terribly important. They care far more about being at the top of that web page when you go online and you see the price and it’s listed from the lowest prices to the highest price. … So the math that says that you put the bag fee into the fare just doesn’t work, I’m afraid. … Secondly, I would point out that our margins are very thin. Last year, we made $97 million, which sounds like a very large number. But we’re an over $2 billion business. So we made about 4 percent. Or to put it another way, on a typical neighbor island flight, our profit at 4 percent is roughly five passengers. … If you took bag fees out of that, you’d be down to 1 passenger. Last year, bag fees were slightly over 75 percent of our total profits. The year before they were 100 percent, I seem to recall. So what has happened is that fares have remained very, very affordable and customers have been given the choice of what ancillary services they want to have.

Q: So the carryon though? Do you think it will stay free? Passengers are trying to cram more into their carryon and avoid the bag fee.

A: I think that there’s a competitive dynamic. … If an airline has the initiative to try and do that, then it will either succeed, in which case there will be a lot of competitive pressure to match. Or it won’t succeed, in which case there won’t be a lot of competitive pressure to match. So I think the consumer is going to determine whether that’s going to be the case.

Q: You talked a little bit about the interisland market. … You spoke about how thin the margins are. Do you think that Hawaii can sustain a healthy competition between two interisland airlines and that Hawaiian would still do well in that scenario? What do you think of the future of the interisland market?

A: First of all, and this is always difficult to communicate here in our community, but if you look at what fares are traveling within the state of Hawaii and you make comparisons to what fares are to travel similar distances (elsewhere), our fares are much lower than you get on the mainland. There are not many aspects of life in Hawaii where you can say there are things that cost less in Hawaii than they do on the mainland, but that’s perfectly true. I was traveling between Washington and New York the other day and the walk-up fare was about $450. The reality is that we have very competitive fares today.

Q: Looking at miles traveled?

A: Right. Short flights are necessarily less efficient than long flights. Because you have the same number of takeoff and landings as a long flight, you get a lot of the costs associated with the landings and the takeoffs and the airport fees and charges.

The other thing, by the way, that has happened is that there has been an explosion in (federal) taxes. As the budget deficit has become more difficult, and there’s a desire not to increase income taxes, aviation and certain other areas have received a lot of taxes. When you buy a ticket today, 20 to 25 percent … of what you pay actually goes to the federal government; it does not actually stop with us. …

In terms of neighbor island competition, I think we have a competitor here (Island Air) and we’ve had that competitor for many years now and it’s obviously backed by somebody of almost limitless financial means. …

Q: The interisland market is about 50-50 (locals and tourists)?

A: It’s a bit more local than tourist these days, which is one of the reasons why it’s become harder for the airlines operating in the neighbor island marketplace. Back in the day, before there were nonstops to the neighbor islands, there was much more connecting tourist travel and that helped defray the costs to make it cheaper for locals to fly. That’s going away.

Q: I don’t want to scrimp on the international expansion. In 2008, you were quoted … as saying that all empires arise and recede and the U.S. at that point was beginning to recede. … I wondered if that belief helped fuel your strategy to expand internationally, particularly to Asia …

A: I think it is absolutely the case that in the next couple of generations the sort of economic center of the globe is going to shift out of North American and Western Europe increasingly into Asia. And I think we can look at this as sort of a tremendous threat to our way of life, or we can actually embrace the fact that as a community we have deep ties into the very part of the world that is growing and developing. We can seek to improve those ties and benefit, frankly, from this change, which is going to happen regardless of what we are going to do.

Q: It is happening.

A: It is happening. And you see that reflected in all sorts of policy decisions; the pivot to Asia on the military side. You can see it happening in all sorts of different ways. Hawaii and Hawaiian are well situated to develop and grow because of that global shift. And that formed the core reason why we thought of expanding into Asia, as opposed to further expansion into North America, which was one of the alternatives.

Q: And you’re satisfied with how that’s gone? You’ve had some routes that have been successful, others that you’ve called back. In general, you’re happy with that strategy?

A: Yeah, I think we’re very happy with the strategy. I would also point out that it’s a long-term strategy. The nature of our business, you have to put your network together over a period of time. And when I look particularly at China I think the future of global tourism is a Chinese future. I think Hawaii’s potentially in a very good position to be able to benefit from that. I think that moment is not quite upon us yet, but I think it is definitely coming. And Hawaiian is already in the market. We’re looking forward to that market developing. We’re looking foward to Hawaii becoming a travel aspiration of Chinese consumers, which it isn’t yet, and we think we’re going to be well positioned to enjoy the benefits of what I think is going to be a global movement.

Q: Hawaiian’s Beijing flight started in April 2014. … Is it meeting your expectations?

A: It’s meeting our expectations for the short term. For the long term, we would expect the amount of Chinese travel and tourism to the islands to get to the size and overtake, for example, the size of Japanese tourism to the islands. How long that will take and how it will grow is unknown to us. But we are in the front door and we’re looking forward to that growing.