Transport Airlines

The Businesses That Depend on Hawaii’s Struggling Island Air

Feb 24, 2014 4:00 am

Skift Take

Ellison typically doesn’t lose. If he backs down on Island it will appear to be a case of the billionaire being bored with his Hawaiian folly.

— Jason Clampet

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wbaiv  / Flickr

An Island Air plane on the tarmac. wbaiv / Flickr


Kanemitsu Bakery, whose bread and other goods make it one of the most popular gathering spots on Molokai, has been shipping about 8,000 pounds of its products to Oahu each year on Island Air.

But the interisland carrier’s unexpected announcement Tuesday that it is discontinuing service to the Friendly Isle after April 1 left bakery owner George Kanemitsu feeling not so friendly.

“I really don’t know what we’re going to do,” he said. “Most of my products fly through Island Air to the Made in Hawaii Festival and various food shows. We send our products to Honolulu maybe 20 times a year.”

Island Air, which was on the brink of collapse when it was purchased Feb. 26 by billionaire Larry Ellison, still appears to be struggling as it approaches its first anniversary Wednesday under Ellison’s ownership.

It has been beset by flight delays, a situation that new Chief Executive Officer Paul Casey who started May 1 has vowed to improve.

Casey’s promise to his employees that he would bring in a different type of aircraft to replace the airline’s five aging 64-seat ATR-72 turboprops has yet to materialize even though the pilots recently approved a new aircraft letter of agreement that covers pay and work rules for both the ATR-72 and 78-seat Bombardier Q400.

The airline lost money in each of its first two full quarters under Ellison, totaling $3.7 million from April through September, according to the latest available data the airline reported to the U.S. Department of Transportation.

Casey has said the airline is undergoing a restructuring but, other than unveiling a new logo last month featuring the native iiwi bird, has declined to talk about the company’s plans or operations. The new logo “symbolizes a revitalized company with deep roots in Hawaii and a strong commitment to the community and our customers,” Casey said in a previous statement.

David Uchiyama, vice president of brand management for the Hawaii Tourism Authority, said he is expecting to see more changes at Island Air.

“I understand that Island Air is going through a redevelopment plan of their product,” he said. “I thought we were going to see some growth from them going forward, and I’m sure we still will. I have not talked with them recently and will be trying to connect with them so we can get updated on their plans.”

Uchiyama said he remains optimistic, especially in light of the major hotel renovations that Ellison is undertaking on Lanai, the island of which he purchased almost 98 percent in 2012.

“I’m sure they are building a strategy in the market,” Uchiyama said. “They are making substantial investment, most recently in the lounge at the airport. I think there’s still more to come. We just need to wait and be patient. There’s a big picture why he’s making those investments.”

Earlier this month Four Seasons Resorts Lanai, which is owned by Ellison, opened a luxury lounge in Honolulu Airport’s commuter terminal to serve Lanai guests.

Casey, who rarely responds to the media, said in an email last week that the pending arrival of Hawaiian Airlines‘ turboprop service, Ohana by Hawaiian, into the Molokai market next month made it possible for Island Air to stop service without causing a major disruption.

“Based on Ohana’s seat capacity to Molokai, we feel that the island will have adequate air service to meet its needs,” he said in a statement. “We have decided to redeploy our aircraft to another route that needs more capacity. We are currently doing an analysis and will make an announcement when any decision on routes is made.”

Ohana by Hawaiian will use 48-seat ATR-42 aircraft to offer three daily flights to Molokai beginning March 11 and twice-daily service to Lanai starting March 18.

Island Air has been flying two daily flights between Honolulu and Molokai on its 64-seat planes. So the change means Molokai will see a net gain of 16 seats per day.

Mokulele Airlines CEO Ron Hansen said he was surprised to hear that Island Air was dropping service to Molokai, but said he doesn’t anticipate adding flights to the island to supplement the six to 11 daily round trips the airline offers now between Honolulu and Molokai.

“There are not any routes we would consider reducing to add flights to Molokai,” he said. “It might be a possibility, but we would have to add more airplanes to our fleet to do that.”

Makani Kai Air offers five round trips flights a day between Molokai and Honolulu.

Both Kona-based Mokulele and Honolulu-based Makani Kai fly nine-seat Cessna Beach Caravan turboprops.

Kanemitsu said one thing he won’t miss about Island Air is its frequent delays.

“Island Air has a bad track record of delays, and I’m a frequent flier for Island Air but the flight is always delayed,” he said. “So I’ve changed to Mokulele.”

Hadden Watt, managing director of Ohana, said the new carrier won’t offer cargo service.

Without Island Air, Kanemitsu’s options will be limited.

Mokulele and Makani Kai don’t take freight, and Honolulu-based Kamaka Air doesn’t take freight on the weekend, he said. Aloha Air Cargo doesn’t serve Molokai.

“When you get one less major carrier, it’s bad,” he said. “It would be good if Island Air and Hawaiian could work together and come up with some kind of deal that would be better for the residents of Molokai.”

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