Hawaii-based Airlines - HA Fares Way Up

Not particularly surprising, but 2009 HA mainland to HI fares are way up over the last two weeks. During offpeak periods, HA often had a base fare from the westcoast at or below $400 roundtrip. The closest to that is now around $480 and only LAX to HNL. Many of the other former west coast to HI fares that used to hover near $400 are now at $600 and up.

Can't blame HA too much as they are now a monopoly player in most of those markets (LAX to HNL being the exception). But, it looks like we may cut back to once per year in the islands and explore the lower 48 more. I suspect others will make a similar choice. But, with the missing inventory, I also suspect it won't make much of a difference until one or two additional players enter the market.

One annoying HA move is to put only one seat per aircraft available at the lowest fare (dollars or miles). Once you move above 1 seat, the fare jumps another $100 or an extra 10,000 miles each way. Anyone ever found any way around this move? I wonder whether another seat at the lower fare would appear if I buy just one seat for example.

A lot of the Hawaii fare drama has yet to play out. Although we should expect fares in general to increase given ecomomic trends, just how far they go remains to be seen. HA, like most airlines, does have a history of getting as much as they can get away with for as long as they can get it.

The Aloha and ATA liquidations (and the DL/NW merger to a lesser extent) have the Hawaii tourism establishment worried bigtime. They will bring whatever pressure they can on HA and the others to keep things reasonable and/or open up new flights to replace those lost. Their ability to influence things might be limited, though. Unfortunately, the Hawaii market is by far one of the most leisure dominated in the USA. I have a friend who works in DL middle management who says that they have maintained the level of flights they have to Hawaii more to keep their FFers happy and because it is a "prestige" destination than because they can make any money on it. (Given the number of complaints on the DL forum about the lack of "saver" seats, one has to wonder just how successful they have been at keeping those FFers happy.) HA obviously makes money on flying people here from the mainland, though. They certainly haven't been paying the bills with their interisland service lately.

It will all be very interesting. Decisions will like be made on a more strictly dollars and cents basis rather than sentimentality.

I figure $400-$500 is the break-even price to fly the seat, filled or not, to/from the west coast. This was using data before the recent explosion in fuel cost.

The last several trips I've taken on HA have always been competitively priced, and I know they've lost money on me; I am not trying to be too much of a cheerleader but those fares seem pretty reasonable, actually.

I figure $400-$500 is the break-even price to fly the seat, filled or not, to/from the west coast. This was using data before the recent explosion in fuel cost.

The last several trips I've taken on HA have always been competitively priced, and I know they've lost money on me; I am not trying to be too much of a cheerleader but those fares seem pretty reasonable, actually.

Well said.

HA does tend to hold out on dropping fares and this works well for them. At some point they will meet... when the low fares on other airlines are sold out seems to be when HA will lower their fares to compete with the market. During the busy period this is still a month or more in advance.

Oh... and HA will rarely be the ones to drop their fares and start a price war.

I figure $400-$500 is the break-even price to fly the seat, filled or not, to/from the west coast. This was using data before the recent explosion in fuel cost.

The last several trips I've taken on HA have always been competitively priced, and I know they've lost money on me; I am not trying to be too much of a cheerleader but those fares seem pretty reasonable, actually.

What data are you using to come up with a $500 break-even price? Without knowing the data, I don't think it would be anywhere near $500 or even $400. Reason: HA was obviously losing money on its inter-island routes for the last year or so with Go and Aloha discounting. However, HA was posting profits. The mainland and similar routes are the only place those profits could be coming from. And, HA was selling their seats for less than $400 often. I almost couldn't resist the temptation to take a trip in January when I could fly from SAN to OGG for $250 roundtrip. I know many seats were higher than $400, but many were at or below $400 and they were making profits.

What data are you using to come up with a $500 break-even price? .

Hawaiian/s cost-per-seat-mile (CASM) for the quarter is published in their quarterly filings (10.6something cents as of end of December, and roughly 25% of that was fuel); this is a the starting point. Quite obviously, CASM is higher the shorter the trip given the overhead of operating any given flight, regardless of duration, making mainland flights less expensive per mile than interisland.

You could then also look at the CASM of other carriers that do more of a mix of long-haul flying and shorter trips (United and US airways, for example, are pretty close to 11 cents as I recall.. not too far off). The legacy carriers on the mainland come to mind given their mix of shorter and international routes (most of the short hops are covered by separate entities; regional airlines). While I cannot speculate on their entire cost structure (labor), certain things (pilot salaries) are widely published as well; from all of this you can build an educated guess, and that is exactly what I did.

This stuff neglects load factor/RPM, and a whole lot of other things... and I very well could be off on this. But I'd bet good a small sum that their cost falls within my guestimated range.

I'm no expert on airline costs or the industry in general. And, I know some industries sell things as a loss leader. But, I'm having a hard time with the concept that Hawaiian would keep selling large numbers of tickets on mainland routes that were less than their cost of doing business. I know that happened in the interisland market, but I think that is a totally different case.

And, I keep coming back to two facts: 1. HA routinely sold tickets for $400 (and often much less than $400). 2. HA showed a profit when we know they were losing money in the interisland market.

Finally, I suspect that costs for a 5.5 hour trip are much less than average costs for any airline. United et al. have many routes much shorter than cross-country so I suspect they aren't comparable.

But, other than HA's reported profits, I have no data to support my guesses.