OK, let me try and follow my own advice and try and keep on topic.
I really don't know the economics of running an airline. Interisland fares seem overpriced to me, I don't know why it should be more than $75-$100 or so round trip.
Certainly, operating B717 and (really, really old) 732s is not the most cost efficient means of running an airline. But, it seems the business model for both HA/AQ's interisland operations is to operate as a passenger and cargo operation flying a single type of a/c between the islands.
I think people who opine that Dash 8/CRJ flights are the way to go have some points - yes, less empty seats, cheaper to operate, etc. But then I look at Mahalo, Discovery, Air Pacfic, Royal Hawaiian, etc., all who tried to be a third player with smaller equipment and failed. And, really, the only difference is that they failed using equipment that was smaller than the jets being flown by HA/AQ.
It seems to me that Hawai`i is different than the markets WN or any LCC serve - there are no transportation alternatives for people AND cargo. Yes, you can freight items interisland via barge, but that takes days to load, transit, and unload. There are always going to be perishable and time sensative (mail, newspapers, animals, etc.) items that have to be air flown between the islands. And there has to be a pretty penny paid for this service. So, if this market is not going to be served by HA/AQ, then who?
And again, why would HA and AQ want to mix up their interisland fleets with different types of a/c, just to make sure they had the perfect sized equipment? HA ditched their DASH 7/8 fleet, AQ spun off Island Air and also got rid of their 733s a while back.
AQ is going to have to replace their fleet within the next 5-10 years. What current airframe is out there that they should go to?