go! to Cease Service April 1, 2014 in Hawaii
Mar 19, 2014, 11:10 am
#31
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What's particularly odd to me is HA's pricing structure. I would think the elasticity of demand for interisland flights would be HUGE. Like you'd spend a weekend in Kauai if it wasn't going to cost you an arm and a leg. Yet, they don't seem to do much (if any) promotional advance purchase pricing these days like almost all other airlines do. Weird.
I haven't recently studied the economics of jet vs. non-jet, although I do recall the small plane makers claiming that turboprops are much cheaper to operate on short hauls.
I haven't recently studied the economics of jet vs. non-jet, although I do recall the small plane makers claiming that turboprops are much cheaper to operate on short hauls.
Do you have a Hawaiian Miles account - I was getting promo airfares pretty much every month until very recently (Spring Break) - I doubt we will see much in terms of sales with high season around the corner starting in June.
It costs $45 to take a taxi from the Airport to Waikiki, $80 to Maui doesn't seem to bad to me.
Mar 19, 2014, 1:17 pm
#34
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The short version:
Before !go even entered the Hawaiian Market, they had confidential access to the Hawaii market based on bankruptcy by Hawaiian and Aloha. Eventually !go paid Hawaiian $52 million for the misuse of this confidential information. Basicially, they knew the market before they even got here.
!go/mesa entered the Hawaiian interisland market with aggressive pricing igniting a fare war between Aloha, Hawaiian, and go! Prices were not sustainable, seats were being sold at a loss - and they eventually got as low as $1/ticket.
Eventually Aloha Airlines filed for bankruptcy (again) and their were no takers to bail them out - with the aggresive fare war essentially forcing them out.
Before !go even entered the Hawaiian Market, they had confidential access to the Hawaii market based on bankruptcy by Hawaiian and Aloha. Eventually !go paid Hawaiian $52 million for the misuse of this confidential information. Basicially, they knew the market before they even got here.
!go/mesa entered the Hawaiian interisland market with aggressive pricing igniting a fare war between Aloha, Hawaiian, and go! Prices were not sustainable, seats were being sold at a loss - and they eventually got as low as $1/ticket.
Eventually Aloha Airlines filed for bankruptcy (again) and their were no takers to bail them out - with the aggresive fare war essentially forcing them out.
Mar 19, 2014, 1:48 pm
#35
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What's particularly odd to me is HA's pricing structure. I would think the elasticity of demand for interisland flights would be HUGE. Like you'd spend a weekend in Kauai if it wasn't going to cost you an arm and a leg. Yet, they don't seem to do much (if any) promotional advance purchase pricing these days like almost all other airlines do. Weird.
I do think Hawaii is ripe for an efficient start-up airline to offer a no-frills air shuttle between major airports. I haven't recently studied the economics of jet vs. non-jet, although I do recall the small plane makers claiming that turboprops are much cheaper to operate on short hauls. Planes like the ATR72. Of course, you're going to get some modest book-away from props. That said, regardless of which aircraft you used, a relatively high frequency no-frills "shuttle" between, say, HNL and OGG, would undoubtedly stimulate demand and be profitable at fares well below 87 cents/mile.
I think there's a place for props, but if I'm headed to HNL for a connection, I want to be on a HA 717, because they're more likely to run like clockwork.
There might be space for something like the E-170/175/190/195 family, though. When Embraer launched them some years back, they were seen as a possible option for pretty much every airline in Hawaii at the time. I don't know what their CASM looks like with current fuel prices, and I don't know whether they'd be as reliable in bad weather as the 717s, but I can't think of anything that'd be a closer competitor to the 717s.
Mar 19, 2014, 2:41 pm
#36
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There might be space for something like the E-170/175/190/195 family, though. When Embraer launched them some years back, they were seen as a possible option for pretty much every airline in Hawaii at the time. I don't know what their CASM looks like with current fuel prices, and I don't know whether they'd be as reliable in bad weather as the 717s, but I can't think of anything that'd be a closer competitor to the 717s.
Mar 19, 2014, 4:05 pm
#37
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Never got the chance to fly one on MW, but I've been aboard them on other airlines and they're nice.
Mar 19, 2014, 4:30 pm
#38
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What's particularly odd to me is HA's pricing structure. I would think the elasticity of demand for interisland flights would be HUGE. Like you'd spend a weekend in Kauai if it wasn't going to cost you an arm and a leg. Yet, they don't seem to do much (if any) promotional advance purchase pricing these days like almost all other airlines do. Weird.
If interisland ticket prices go down 20%, does the amount of passengers carried increase at least 20%? Nope, not even close...even if HA had the assets to throw that much additional capacity into the market to support the extra flyers.
As was experienced during the fare wars of 2006-2008, the 50%+ drop in airfare from all three carriers only resulted in at best a 10% increase in total interisland passengers carried. So yes, decreasing fares will result in a few more additional passengers (at the margins), but the overall net effect was bad for all involved.
Originally Posted by DanTravels
But there are plenty of people who aren't price-constrained like me, or who are being sent there for work, or going home for the weekend from work, or whatever, so HA's load factors last year were 87% - even higher than the year before. When I fly inter-island, it's common for every seat to be full - so there's not much motivation for them to charge less to fill up more seats (except maybe early morning or late at night).
Mar 19, 2014, 6:50 pm
#39
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Seems to me HAL must be leaving a lot of money on the table, just a search on 3/21 shows every HNL-ITO flight sold out after 12pm in coach, and at 10 of the flights to OGG are sold out in coach.....
Mar 19, 2014, 7:06 pm
#40
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Actually the demand for interisland flights is relatively inelastic.
If interisland ticket prices go down 20%, does the amount of passengers carried increase at least 20%? Nope, not even close...even if HA had the assets to throw that much additional capacity into the market to support the extra flyers.
As was experienced during the fare wars of 2006-2008, the 50%+ drop in airfare from all three carriers only resulted in at best a 10% increase in total interisland passengers carried. So yes, decreasing fares will result in a few more additional passengers (at the margins), but the overall net effect was bad for all involved.
If interisland ticket prices go down 20%, does the amount of passengers carried increase at least 20%? Nope, not even close...even if HA had the assets to throw that much additional capacity into the market to support the extra flyers.
As was experienced during the fare wars of 2006-2008, the 50%+ drop in airfare from all three carriers only resulted in at best a 10% increase in total interisland passengers carried. So yes, decreasing fares will result in a few more additional passengers (at the margins), but the overall net effect was bad for all involved.
But I'd be surprised if the market is inelastic. Look at mainland short haul. Almost every route has very elastic demand which, of course, is completely logical. Heck, Southwest airlines built a whole business (initially at least) competing against the car.
I find it hard to believe that Hawaiian locals (and tourists, too!) wouldn't travel more if the price was lower. I would think the market would be EXTREMELY price elastic, since there's no other transport option.
Mar 19, 2014, 7:56 pm
#41
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Mar 19, 2014, 8:34 pm
#42
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Mar 19, 2014, 10:25 pm
#43
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Mar 19, 2014, 10:32 pm
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Mar 20, 2014, 4:16 am
#45
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