Island Air sets sights on Big Isle, Molokai

The new owners of Island Air, the state’s second-largest carrier, indicated Monday that the company might eventually add service to Hawaii island and Molokai, offering interisland travelers more options.

The U.S. Department of Transportation approved last week the sale of a controlling interest in Island Air to two investment groups managed by Honolulu venture capitalist Jeffrey Au. Last month the new owners announced that they will restart service between Oahu and Kauai on March 15 with six daily round-trip flights. Currently Island Air flies only between Oahu and Maui and Maui and Lanai.

“Longer term, we’re looking at the other markets where Island Air previously flew, but we don’t have a specific timetable because we want to take it one step at a time to make sure that we launch Kauai correctly,” Au said Monday in a telephone interview. “We want to keep our on-time performance, which in January was 93.8 percent with zero cancellations. Obviously, we want to grow at an appropriate rate where we can find the right balance with reliability and customer service as we enter first Kauai and then other markets.”

Island Air previously flew to Hawaii island and Molokai.

“There have been carriers (such as Mid Pacific Air, Discovery Airways, Mahalo Air, Pacific Wings and go!) that previously started up and haven’t had staying power. We’re very aware of that industry, so growth going forward is going to be very responsible growth so we can manage all the components for success,” said David Uchiyama, Island Air’s new chief commercial officer.

Two investment companies managed by Au — PaCap Aviation Finance LLC and Malama Investments LLC — announced Jan. 6 their plan to buy Ohana Airlines Holdings LLC, the parent of Island Air, which was owned by billionaire Larry Ellison.

The new owners also said Monday they are bringing back two of the airline’s former top executives as part of a new management team.

Former Island Air President Les Murashige, 60, who has retired twice from the airline, took over Monday as president and CEO for Dave Pflieger, who left the company to work directly for Ellison in an unspecified position. Murashige, who was president and chief operating officer from 2012-2013 and chief operating officer from 2004-2009, had been helping Pflieger, 53, and Au, 52, during the transition of the sale. Murashige initially joined Island Air after it was spun off from Aloha Air Group, the parent of Aloha Airlines.

Rob Mauracher, who was CEO of Island Air from 2004-2007, will become chief operating officer. He previously was president of the Summit Aviation Group, a regional passenger, cargo and helicopter entity serving northern Canada.

Uchiyama, who had been vice president of brand management for the Hawaii Tourism Authority and most recently vice president of sales and marketing for Hawaii Gas, took on the role of chief commercial officer. Uchiyama previously held positions early in his career at Continental Airlines and the short-lived interisland airline Mid Pacific Air.

“It has been a genuine pleasure to work with Dave (Pflieger) and the other members of the Ellison team to get this transaction approved and move the company forward,” Au said. “We are looking forward to continuing that partnership as we build a strong second airline for Hawaii. Our recent announcement to return to Kauai and restore service and create jobs at Lihue Airport is an indication of the great things we have in store for our airline and for the people of Hawaii.”

ISLAND AIR said restarting service to Kauai will add 32 jobs on Kauai and Oahu. The airline had ceased flights to the Garden Isle in June amid a company restructuring. Honolulu-Kauai service will become the third interisland route for Island Air, which also flies between Honolulu and Kahului, and Kahului and Lanai. It currently operates five 64-seat ATR 72 aircraft and is in negotiations to lease more of the same type of planes, Murashige said.

Au said Island Air, which has roughly 256 employees, wants to move gradually as it proceeds with its expansion. As of Oct. 31 Island Air had the second-largest market share among interisland carriers at 4 percent, far behind Hawaiian Airlines’ 91.8 percent, according to the latest data from the Hawaii Department of Transportation. Mokulele Airlines was third at 3.1 percent.

Murashige initially joined Island Air in 2004 after it was spun off from Aloha Air Group, the parent of Aloha Airlines. He served as chief operations officer before retiring in 2009 and then later came aboard in 2012 as president and chief operating officer before retiring again in 2013 shortly after Paul Casey was named CEO in April of that year. Murashige said he had been brought in by the previous owner, Charlie Willis, to either fix the airline, shut it down or find a buyer. The buyer turned out to be Ellison, who bought the airline in February 2013.

“Having grown up on Kauai and lived in Hawaii all my life, I have a great appreciation for the importance of having more access and options for interisland travel,” Murashige said. “It’s an honor to return to the helm of this storied airline, and l look forward to working together with our new owners, our board and the terrific men and women of Island Air to ensure we remain Hawaii’s local alternative for interisland travel.”

Murashige said he has made a commitment to Au and the rest of the group that he is “here for the long haul” as Island Air seeks to carve out its share of the interisland market.

“We don’t view ourselves as a competitor” to Hawaiian Airlines, he said. “We’re looking for a niche market. We want to provide a viable alternative for both locals and visitors alike. We need to have frequency. We need to have on-time performance, and we need to have reliability and do it on a consistent basis. We truly believe there is a demand for a second carrier here, and we don’t have illusions of taking over the whole interisland market here. We just believe there’s a smaller percentage of market share we can capture.”

OHANA AIRLINES Holdings will retain a noncontrolling interest in Island Air where Paul Marinelli, who manages Ellison’s investments, is chairman of the board. Au said he has never met Ellison and has been dealing primarily with Marinelli.

“This was very important in what the Ellison group wanted in terms of having a local partner,” Au said of the new management team. “Larry Ellison is still a shareholder and still involved. He realized the value of having local partners who understand the local tourism industry and had contacts with various business partners in the industry as well as understanding the needs of the local guests and travelers.”