Island Air held a Hawaiian blessing for its new aircraft Wednesday at its Honolulu Airport hangar, and then took the plane for a spin at 7,000 feet around Lanai with airline, travel industry and government representatives on board.
The Bombardier Q400 marks a new beginning for the state’s second-largest carrier, which is planning to bring in six more similar turboprops before the end of the year as it phases out its existing fleet of five ATR-72s. The new planes seat 78 passengers — 14 more than the ATRs — and are faster, quieter and more fuel efficient than the outgoing fleet, which has an average age of 24 years.
Island Air is leasing the never- used planes from Dublin, Ireland- based Elix Aviation Capital Ltd. for $204,000 a month, which means it will cost the money-losing carrier $2.45 million a year per plane, or $17.14 million a year, once it has seven Q400s in its fleet, according to David Uchiyama, president and chief executive officer of Island Air. The number of new planes that Island Air plans to bring in marks an increase from what the airline announced last month, when it said it was leasing three planes with an option for two more. Uchiyama said the airline will return an ATR-72 each time a Q400 joins the fleet, starting when the third Q400 arrives.
“This plane behind me represents a lot of hard work and a lot of time invested in revitalizing Island Air,” Uchiyama told more than 100 community and business leaders gathered in the Island Air hangar.
Island Air, which plans to put the Q400 into service this morning on a flight from Honolulu to Kahului, is increasing flight frequency on two of its routes. Honolulu-Kahului daily round trips will go to seven from six and Honolulu-Kona daily round trips will go to six from five. Honolulu-Lihue daily round trips will remain at six for the time being. Uchiyama also said the airline is exploring the possibility of adding service to Hilo later this year.
“Because of the speed of the aircraft, we’ll be able to get a whole other round trip in during the course of the day,” said Uchiyama, noting as an example that the plane can fly 12 minutes faster to Hawaii island from Honolulu than the ATR-72. “We’re increasing seat inventory by about 162 seats for one aircraft, so you multiply that by the Qs that come in and we’ve grown seat capacity considerably.”
This is the first aircraft acquisition for the new ownership group consisting of Honolulu venture capitalist Jeffrey Au and other investors. They purchased the airline in early February from billionaire Larry Ellison, who remains a “significant” minority investor, according to Au.
“Overall, it’s been great over the past year,” Au said. “We’re on track. There have been different challenges we’ve had to meet, but in any airline or any business for that matter, sometimes you expect the unexpected and you just have to deal with it. … Overall we’re very happy. We’re still not profitable but our revenues are up and I think we’re on target.”
Since taking over 11 months ago, Island Air has restarted service to Lihue and Kona, dropped Lanai flights, and reached contracts with each of its four unions. The airline also has increased its number of employees to 368 from 256, and boosted its weekly flights to the four major islands to 266 from 154.
The airline also has been cutting its losses. Despite low fuel prices, Island Air lost money for 14 straight quarters through Sept. 30 totaling $61.8 million under Au and, previously, Ellison. The company’s $2.1 million loss in the third quarter, though, was the smallest of 2016 while revenue during the quarter nearly doubled to $10.6 million from $5.5 million.
In the fourth quarter, numbers for which haven’t been officially announced yet, Island Air lost money again because of expenses related to the transition to the Q400 and the training of its pilots on the new aircraft, Uchiyama said.
“It’s going to be a little bit higher loss than the third quarter,” Uchiyama said. “But as we go through the first quarter and going into the second quarter, we’re going to start to see things shift. It’s possible we could have a profitable quarter this year.”
Uchiyama said there will be no fare increases at this time because of the new aircraft.
“Island Air will continue to offer fares that are affordable, competitive and attractive to local residents and visitors,” he said.
Uchiyama also said the airline is trying to expedite the delivery of the Q400 to meet the peak traveling periods.
“On the existing lease we have right now, we have a lease for three aircraft with an option for two more,” he said. “The second one comes in Saturday and the third one comes in April. Right now, we’re trying to work out a deal to bring in another aircraft in March, and we’re hoping the option we have on that (initial) deal we can exercise earlier in May and June. Right now, Bombardier is saying they have potential delivery dates in August and September. We’re telling them it’s too late because we want to transition the ATRs out and bring the Q400s in. We’re also looking for another aircraft later in the year in November to help us lead in to the Thanksgiving and Christmas period. Our operating certificate allows us to carry seven aircraft.”
Uchiyama said Island Air is in a position to become a large partner to trans-Pacific carriers that are looking for a local airline to transport their customers within the islands.
“We’ll become the regional carrier for them in the islands,” Uchiyama said.
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Bigger and better
Island Air’s new Bombardier Q400 turboprops have several advantages over the company’s outgoing ATR-72aircraft.
>> Seats: 78, up from 64.
>> Fuel: Burns 30 percent less than similar-capacity jets.
>> Speed: Reaches Hawaii island from Honolulu 12 minutes faster.
>> Cabin: Quieter, reclining leather seats, more space in overhead bins and under seats, improved viewing fromwindows due to location of wings, LED lighting providing more brightness, front aircraft entry.
