Billionaire Larry Ellison is relinquishing control of Island Air to an investor group headed by Hawaii venture capitalist Jeffrey Au.

Two affiliates of PacifiCap, a Honolulu-based investment firm, are acquiring a controlling interest in the state’s third-largest airline, Island Air announced today. The purchase by PaCap Aviation Finance LLC and Malama Investments LLC is subject to approval by the U.S. Department of Transportation. Au is the founder and managing director of PacifiCap.

Neither a purchase price nor the percentage of the controlling interest was disclosed.

Ellison’s Ohana Airline Holdings LLC, which bought Island Air from Charlie Willis of San Francisco-based Gavarnie Holding LLC in February 2013, will retain a non-controlling interest and will continue to partner with the new local owner as the airline moves forward with its expansion plans.

Island Air CEO Dave Pflieger and former Island Air executive Les Murashige will aid in the transition. Spokesman Russell Pang said “for the time being” that Pflieger will remain as CEO.

“We are thrilled with the opportunity to partner with Mr. Ellison and his team to create a strong second airline for Hawaii,” Au said. “Like Hawaii itself, we may not be big, but we can be great. We believe that having local owners and managers will allow us to provide the kind of reliability, seat availability and service that our fellow kamaaina deserve.”

Ellison bought the airline in February 2013 less than a year after buying about 98 percent of the island of Lanai, which Island Air serves, from Castle & Cooke owner David Murdock for a reported $300 million.

Last April, Island Air announced it was cutting 20 percent of its workforce, reducing service and indefinitely postponing a decision to bring in a new fleet, It has just two routes remaining: Honolulu-Maui and Maui-Lanai. The airline has lost money for 10 straight quarters and as of Sept. 30 was in the red by $45.9 million since Ellison bought the carrier. The airline’s market share has now dropped to 3 percent to rank the airline third behind Hawaiian Airlines (92 percent) and Mokulele Airlines (4 percent), according to the latest data from the state Department of Transportation.

Passenger traffic and revenue also have dropped sharply. The 19,946 passengers that Island Air carried in September — the latest data available from the DOT — were the fewest in a month since the carrier transported 14,261 in April 2013. The $5.5 million in third-quarter revenue was the lowest in any quarter since Ellison purchased the airline for an undisclosed price.

Pflieger said Island Air, which operates with five 64-seat ATR-72 turboprop aircraft, plans to add additional ATR-72 to its fleet.

“We recognized that committed local ownership would serve Island Air’s best interests in the long term, and are very pleased that such a well-regarded investor group as PacifiCap, with deep roots in Hawaii, is now taking the helm,” said Island Air Chairman Paul Marinelli.