Mokulele Airlines and Makani Kai Air announce merger

Hawaii’s only two commuter airlines supplying scheduled flights have decided to merge operations as they battle COVID-19 fears and tourism lockdowns amid an increasingly competitive interisland landscape.

Mokulele Airlines and Makani Kai Airlines announced today that they would begin merging operations this month.

Richard Schuman, the founder of Makani Kai Airlines, will join the team at Mokulele as executive vice president, where he will oversee all operations across the state.

The Schuman name has long been synonymous with transportation in Hawaii. Richard Schuman’s great-grandfather, who immigrated from Germany in 1893, founded Schuman Carriage Company, which was Hawaii’s largest automobile dealership for nearly 100 years.

In 1998, Richard Schuman founded Schuman Aviation Company, Makani Kai Air’s parent company. Schuman Aviation Company also includes Magnum Helicopters and Hawaii Aviation Services, which are not a part of the Mokulele merger.

Mokulele will be the surviving name following the merger, which is expected to take place over a four- to five-month period, said Keith Sisson, chief marketing officer of Southern Airways, which acquired Mokulele Airlines last year.

Southern, which began in 2013 by offering flights from Memphis, Tenn., to Destin, Fla., using a total of four pilots and three aircraft, was continuing a string of expansions and acquisitions in February 2019 when it bought Mokulele, which was founded in 1994 by Rebecca “Kawehi” Inaba, who was the first native Hawaiian woman to start an airline.

At the time of its Mokulele purchase, Southern was coming off a record-setting year for passenger growth in its Essential Air Service cities with some communities seeing 40% increases in traffic over the previous year, and many airports having had their best year for enplanements in more than a decade.

So much has changed.

“There’s not an airline in the country that is making money right now. When you look at the situation with the interisland quarantine it’s been extremely difficult,” Sisson said. “We felt we were stronger together. The commuter airlines in Hawaii need stability so that the people of Hawaii have good options when it comes to air travel.”

Sisson said the merger allows the two commuter airlines to capitalize on “the synergies that we have together.”

Both airlines have similar business values and fly Cessna Grand Caravan turboprop airplanes with seating for up to nine passengers.

“We know that in the age of COVID, people want to be on smaller aircraft, with less personal contact, and the ability to bypass crowded terminals and TSA lines. Truly, it is more important than ever to fly smaller, fly smarter, fly safer,” Schuman said in a statement.

Up until COVID-19, there had never been a more competitive number of interisland seats in the Hawaii market, Sisson said.

“We had to do something to combat Southwest’s entry, which with Hawaiian Airlines, has made for a very competitive landscape,” he said.

Sisson said Mokulele cut its Hawaii flights back by at least half during the pandemic. Travel demand dropped even more after April 1 when the state began a 14-day mandatory self-quarantine for interisland passengers.

“I was worried about the commuter industry not being there for the Hawaiian people once the COVID crisis ends,” Schuman said. “I reached out to Mokulele CEO Stan Little and suggested that maybe we can better serve the Hawaiian people if we team up and do it together.”

Little said Schuman’s proposal ensures that Mokulele can continue the service and programs that are critical to Hawaii’s people.

“In the last two months, we at Mokulele have provided uninterrupted transportation for essential workers, flown free medical supplies for hospitals and first responders, donated free shipping for almost 70,000 pounds of groceries to the people of Molokai, and catered a hot meal for the residents at Kalaupapa, who have been on lockdown longer than any of us,” Little said.

Sisson said it’s fortuitous that the merger coincides with the state’s decision to lift the interisland quarantine on June 16.

“After Gov. David Ige’s announcement, web traffic increased from 100% to 200% week over week, with Kona leading the routes,” he said. “We’ll be watching the trends on a daily basis and as we sell out, we’ll add service back.”

The combined airlines already have announced a new nonstop route between Honolulu and Lanai City, which Sisson said is “perhaps the first new U.S. airline route announced since the coronavirus lockdowns began in March.”

Sisson said both airlines will be operating flights during the integration period, which is expected to last through fall. During this period, Makani Kai’s flights will be sold exclusively through Mokulele’s distribution channels, which primarily includes the airline’s website, MokuleleAirlines.com, he said.