Hawaiian Airlines said today that it is dismantling ‘Ohana by Hawaiian, including its all-cargo Neighbor Island service and flights to Molokai, Lanai, and Kapalua in West Maui.

Jon Snook, Hawaiian’s chief operating officer, said a pandemic-related drop in travel demand already had caused it to temporarily suspend service with ATR 72 aircraft in November 2020 and passenger service with ATR 42 aircraft halted Jan. 14. Service between Honolulu and Kapalua was suspended in March 2020.

The changes which become permanent today leave Mokulele Airlines the only airline flying to both Molokai and Lanai.

Snook told the Star-Advertiser today that the pandemic was the “final nail in the coffin” for ‘Ohana by Hawaiian, which has struggled to keep load factors and pricing in sync from its inception.

‘Ohana by Hawaiian flights with ATR-42 turboprop aircraft were launched in the spring of 2014, followed by all-cargo service with ATR-72 aircraft in the summer of 2018.

“This has been a business that has been a financial strain for us for a long time. It’s never been consistently profitable. It’s probably an outcome that would have occurred anyway. The current circumstances around the pandemic precipitated an earlier analysis of the longterm plan for this service,” Snook said.

Peter Ingram, president and CEO at Hawaiian Airlines, said in a statement that the decision not to reinstate service was weighed seriously.

“This is a heartbreaking decision, particularly for those of us who were involved in launching the business in 2014,” Ingram said. “We took a hard look at the service and could not identify a way to restart and sustainably operate.”

Snook said the Neighbor Island quarantine killed demand at a time when ‘Ohana by Hawaiian was already struggling to compete against a carrier that was flying smaller planes at a lower cost.

“Our aircraft it is much bigger and much more expensive to operate and so we couldn’t generate enough volume at those prices to be successful,” he said.

Then, came the Neighbor Island travel quarantine.

“It killed demand. It killed our ability to be able to operate the flying and once you’ve grounded a fleet like that for a year the cost of restarting again is substantial,” he said.

Snook said Hawaiian will watch the market, and is hopeful that the Neighbor Island quarantine will eventually be lifted. He said Hawaiian would love to be back in the market, but right now, with the planes at its disposal, he doesn’t currently see a “line of sight” for the return.

‘Ohana by Hawaiian was operated by Idaho-based Empire Airlines as a third-party feeder carrier. At the peak, Empire employed 82 pilots, flight attendants and maintenance personnel in Hawaii as well as 15 at its home base in Idaho. Contractor World Flight Services employed a staff of 28 to provide ground handling services.

Snook could not immediately say how the decision will impact Empire and contract employees. But he said Hawaiian employees, who were assigned to ‘Ohana by Hawaiian operations, avoided earlier furloughs due to federal relief. Snook said now Hawaiian will give them the opportunity to be reassigned to different areas of the company.

Hawaiian already has had a company-wide recall of most furloughed employees and currently employs 6,850 people, mostly in Hawaii.

The carrier announced Monday that it hoped to fill more than 400 positions ahead of the busy summer season. Positions are available in airport operations, which includes mostly part-time jobs as guest service agents, ramp agents, operations managers and aircraft mechanics in Honolulu, Maui, Hilo, Kona, Lihue and in select cities on the U.S. West Coast.

The company’s corporate office in Honolulu is searching for full-time employees for IT, marketing, human resources and sales.

Hawaiian’s need is most acute to fill jobs in Maui, which has rebounded faster than the rest of the state. The carrier is offering a $2,000 sign-on bonus to attract experienced applicants for most Maui jobs.

Travel demand is coming back. Hawaiian saw a first quarter rebound, and on Tuesday filed an 8K projecting that its revenue outlook for the second quarter of 2021 would now be done 42 to 46 % compared to the second quarter of 2019.

That’s an an improvement from Hawaiian’s prior estimate that it would be down 45 to 50%.

Still, Snook said Hawaiian said it has not recovered sufficiently enough from pandemic lows to avoid triggering a provision in the airline’s pilot contract restricting the carrier from providing ‘Ohana by Hawaiian service.

The contract provision prevents Hawaiian from offering ‘Ohana by Hawaiian flights – which are operated with turboprop aircraft by Empire Airlines as a third-party feeder carrier – when interisland Boeing 717 and Airbus A321neo jet flights operated by Hawaiian’s pilots are severely reduced.

Hawaiian said it has begun moving its ATR fleet to the mainland for storage and eventual sale.

Hawaiian said that it has lent some of its ground support equipment to Mokulele Airlines, which is providing service between Honolulu and Molokai and Lanai.

“We thank the communities of Molokai and Lanai for their support of ‘Ohana by Hawaiian,” said Ingram.“We will continue to explore opportunities to return to and to reconnect the islands as Hawaii’s carrier.”

Earlier this month, Southern Airways, the parent company of Mokulele Airline , announced that it’s planning to bring Beechcraft 1900 aircraft to offer cabin-class weekday service for travelers to Molokai and Lanai. The larger planes are able to carry up to 19 passengers.

Initial service plans call for two round trips to Honolulu from Molokai and Lanai most days of the week. Tickets are expected to go on sale this summer, pending Department of Transportation and Federal Aviation Administration approval.

Stan Little, chairman and CEO of Southern Airways and Mokulele, said in a statement.

“This is a logical next step for our airline as we continue to rebound from the COVID pandemic and continue to show our commitment to the people of Hawaii.

It will be a proud day in the 27-year history of Mokulele when this aircraft has its inaugural flight this Fall.”