Transport Airlines

Interview: Hawaiian Airlines CEO on New Routes and New Ancillary Revenues

@denschaal

Apr 22, 2014 6:30 am

Skift Take

With its emphasis on long-haul flights to Asia, and connections to the mainland U.S., it would be in Hawaiian Airlines’ best interest to make installation of Wi-Fi a higher priority. The airline may be under-estimating the desire for Wi-Fi among its core leisure travelers.

— Dennis Schaal

Register Now for Skift Global Forum

Aero Icarus  / Flickr

A Hawaiian Airlines A330. Aero Icarus / Flickr


Mark Dunkerley became the CEO of Hawaiian Airlines when it cleared its bankruptcy process in 2005, and today he believes that consolidation in the U.S. airline industry creates more of an opening for a niche and mostly leisure airline like Hawaiian as  American, Delta and United put much of their energies into wooing business travelers.

When you board a Hawaiian A330 it is immediately apparent that the carrier isn’t focusing on business travelers because there is no Wi-Fi — even on its long-haul routes.

Dunkerley argues that there is no viable over-the-ocean Wi-Fi product for now that would meet Hawaiian’s needs, and the airline’s leisure travel customer base isn’t demanding its introduction.

Hawaiian in recent years has branched out from the mainland and launched a bevy of new,  routes to Asia, including three weekly flights to Beijing, and the inaugural flight departed from Honolulu April 16.

Skift caught up with Dunkerley the next day in Beijing, and discussed the new routes, the airline’s new Extra Comfort seats, and some unorthodox policies for employees at the airline’s headquarters.

Skift: I was at your headquarters the other day. I saw your lavish desk (a nondescript desk in a corner near rank-and-file employees), and also I understand employees are encouraged not to eat at their desks and to go into the cafeteria to eat with other employees. What’s up with these sort of changes and the design of your headquarters?

Dunkerley: On the one hand, the design of the headquarters is just the consequence of running out of room and having to figure out a way to be more efficient about space. But I think it is much more profound than that. We chose this as an opportunity to really send a signal about the kind of company, not only what we are, but that we want to reinforce.

In our business, when things go wrong, it’s generally around lack of coordination between the departments, and so taking down the walls and making communication across departments as diverse as accounting and maintenance, marketing and engineering, for example, is really a very important aspect to it.

We have in the middle of our offices our training facilities so many of our employees work remotely. We don’t see them a great deal. By obliging them to come in and be trained right in the middle of our headquarters, coupled with an obligation to eat in the cafeteria along with all of us creates an opportunity for the whole company to come together in an informal setting, and helps people feel a part of our family or ohana, as we call it in our Hawaiian language. That is a culture value that we have within our company and one that we seek to reinforce.

Skift: How big a deal are the direct flights from Honolulu to Beijing and what do you hope to get out of them?

Dunkerley: For Hawaiian Airlines this is a tremendously big deal. We focus very much on selling Hawaii as a destination, and as we look around us we recognize that the largest potential market out there is the Chinese visitor. And our service that we started today represents the first step along a path that we believe will transform out business, and perhaps even more profoundly, Hawaiian tourism.

Skift: But there is so much competition for Chinese travelers. What does Hawaii and Hawaiian Airlines offer that some of the other destinations don’t?

Dunkerley: In the global travel and tourism industry there is a lot of destination competition out there. I think essentially everyone wants to be Hawaii and nobody is. Hawaii is a fantastic destination that really is the benchmark against which all other destinations try to measure themselves. We are very confident that Hawaii as a destination will be able to attract the Chinese visitor as it does visitors from elsewhere.

Within that, of course, Hawaiian Airlines is the company that best represents the destination, and the people who visit Hawaii we have found want an authentic Hawaiian experience. They want the sense of place, the sense of culture. They want the terrific service for which Hawaiian Airlines is well-known. That, along with our connections in the islands, and connections to 11 destinations on the U.S. mainland.

Skift: You’ve had many inaugural long-haul flights lately. In general, how have they been going? Is the strategy working?

Dunkerley: It has worked out extremely well for us. In Asia, we are going on 10 destinations in the last three years, which is a very helpful clip. The vast majority of the destinations are doing extremely well. We’ve had a couple that haven’t worked out but that was candidly to be expected. Of course, we didn’t know which ones wouldn’t work out until we started them. But, in general we are extremely pleased.

Skift: You recently ended your Tapei flights from Taiwan. Did that have anything to do with the launch of your Beijing flights? Was there a quid pro quo with the Chinese government where you had to discontinue the Taiwan flights?

Dunkerley: No, none whatsoever. Tapei was a pretty unique circumstance. We previously experienced the countries that came into the U.S. visa waiver program, and they saw a 50% to 100% increase in traffic. Taiwan was only 20% so it really fell outside the boundaries of what we’ve experienced elsewhere. That’s a very unique circumstance. Coming into China, the logic behind China is entirely different.

Skift: You are redesigning the interiors of your A330 fleet. What was the process like in coming up with the new décor and what will the Extra Comfort seats do for you?

Dunkerley: The Extra Comfort seats is a premium economy product . As we fly longer and longer hauls we recognize there is demand for a product that lies between economy and business class, and that’s why we moved to fill that void. We’ve done pretty exhaustive surveying, and again we are trying to capture the sense of place and our overall brand.

Skift: What about Wi-Fi? Those are some pretty long flights, and I guess it’s mostly leisure travelers. It is not a priority for you?

Dunkerley: We look at Wi-Fi. Today there is not a compelling product that provides Wi-Fi over the great stretches of ocean where we fly. The threshold issue is that there isn’t a product out there that meets our needs. The secondary issue is that with a largely leisure traveler base the nature of demand for Wi-Fi is going to be different. I would expect that we would get to a point where Wi-Fi is on every aircraft at some point in the future. We are just not yet at the point where there is a product there.

Skift: How does consolidation in the U.S. airline industry affect Hawaiian Airlines?

Dunkerley: Consolidation in the U.S. airline industry broadly speaking is positive for us for a couple of reasons. One is there is the big guys consolidate, and they have approached the marketplace in a slightly different way. They are very focused on the business traveler and the enormous range of connections that these airlines can deploy. This actually leaves room for us as a niche player specializing in Hawaii, specializing in destinations to really differentiate ourselves in a way that consumers increasingly understand. We see it as broadly positive.

Tags: , ,

Follow @denschaal

Next Up

More on Skift

Iberia Adds a Custom Scent in Bid to Appeal to All Five Senses
America Is Leading the World in Golf Tourism Growth
Travel CEOs Take On the Ice Bucket Challenge
Why You Should Consider Hotel Loyalty Programs