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Will Southwest's entry into the inter-island market lower fares?

Will Southwest's entry into the inter-island market lower fares?

Old Jan 8, 2019, 2:23 pm
  #16  
 
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Originally Posted by 747FC
@CRJ200flyer : Thanks for sharing these data. Just one question: What constitutes the 7% tax. Our GET is 4.5 in Honolulu County, and 4% throughout the rest of the State.
I actually got it wrong ... it's now up to a 7.5% tax. Federally standard on all commercial airline tickets, regardless of inter- or intra-state. Again, in another quirk of federal regulations, local taxes do not apply to air transportation. So only the 7.5% federal tax would be charged.

Airlines For America | U.S. Government-Imposed Taxes on Air Transportation
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Old Jan 8, 2019, 2:28 pm
  #17  
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Originally Posted by CRJ200flyer
I actually got it wrong ... it's now up to a 7.5% tax. Federally standard on all commercial airline tickets, regardless of inter- or intra-state. Again, in another quirk of federal regulations, local taxes do not apply to air transportation. So only the 7.5% federal tax would be charged.

Airlines For America U.S. Government-Imposed Taxes on Air Transportation
Yes, but I believe that all inter-island flights within Hawaii are exempt from PFCs.
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Old Jan 8, 2019, 2:31 pm
  #18  
 
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Originally Posted by guv1976
Yes, but I believe that all inter-island flights within Hawaii are exempt from PFCs.
Yes, I believe you're right. The $4.20 in my above post is the segment tax. Edited my original post!
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Old Jan 8, 2019, 4:31 pm
  #19  
 
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HA is a pretty responsible monopolist. I'm sure they're making solid money on interisland flying, but when I've compared interisland flights to similarly short routes elesewhere, they don't look out of line. If anything, they may be relatively higher for advance purchase and lower for close in, which makes a certain amount of sense with HA's mix of local business, local personal, and tourists. Southwest may skim off some traffic in the mid-day tourist bulge with interisland legs sandwiched between mainland legs, but I'll be pretty surprised if they try to compete seriously with HA's schedule.
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Old Jan 8, 2019, 6:33 pm
  #20  
 
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2018 saw an absolute record number of seats/capacity between Hawai‘i/Mainland with the major players in the market like HA & AS reporting soft demand/depressed yields in the last quarter.

It will be interesting to see how SW prices & markets their fares to Hawai‘i since they do not offer "un bundled" pricing or distribute through the OTA's.

My 2 cents & YMMV is that I think SW will at best affect prices at the margins and the real story will be who cries uncle and reduces capacity first during 2019/20 as the economy and demand retreat from record levels. As most mainland companies learn ... (successfully) entering any market sector in Hawai‘i requires much more patience, capital and long term commitment/horizon than they first anticipated.

For those that are "data" hungry for Hawai‘i Travel Market statistics check out:
https://www.hawaiitourismauthority.o...or-statistics/
Data | UHERO

Other factors affecting SW ability to put a lot of capacity into inter-island routes are:
Engine cooling issues - short inter island high frequency flights. A good thread at: https://www.airliners.net/forum/viewtopic.php?t=1408499
Available Gates can be in short supply during peak travel times.
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Old Jan 8, 2019, 7:52 pm
  #21  
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Originally Posted by CRJ200flyer
Regardless of elasticity data, fares are actually much lower than "$100 each way". .
You took the fares on the LOWEST priced route. But in the interest of clarity, I will amend my statement and say "Inter-Island fares average about $90 each way."

That's expensive for 150 mile flights.
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Old Jan 8, 2019, 7:57 pm
  #22  
 
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Originally Posted by iahphx
That's expensive for 150 mile flights.
By what metric are you making this claim?
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Old Jan 8, 2019, 8:46 pm
  #23  
 
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Originally Posted by iahphx
That's expensive for 150 mile flights.
The data does not support that claim. Let's take the same public data source, and look at all 45 domestic U.S. market-carrier combinations with significant traffic (>50 daily pax), <200 mile stage length, and marketed and/or operated by a major U.S. carrier. If we look at the 15 with the LOWEST fares, we find that all 7 markets that HA serves <200 miles are among the cheapest 10 of 45 similar markets nationwide, YE2Q18.

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Old Jan 8, 2019, 8:50 pm
  #24  
 
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I may need to go to Maui for the day on Friday. Depending on exact flights, that will cost around $160. Randomly searching Google Flights for short routes elsewhere on the same day and taking the first result I see, without regard to whether the schedule makes sense, I see a range from $91 for LAX-SFO (basic economy) to $322 for ORD-IND, with more fares higher than HNL-OGG than lower. Pricing on <500 mile routes appears to vary primarily based on market conditions, not distance, although Hawaii is generally an exception to that (Big Island routes from HNL are consistently higher than OGG and LIH).
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Old Jan 13, 2019, 9:52 am
  #25  
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Originally Posted by CRJ200flyer
The data does not support that claim. Let's take the same public data source, and look at all 45 domestic U.S. market-carrier combinations with significant traffic (>50 daily pax), <200 mile stage length, and marketed and/or operated by a major U.S. carrier. If we look at the 15 with the LOWEST fares, we find that all 7 markets that HA serves <200 miles are among the cheapest 10 of 45 similar markets nationwide, YE2Q18.

Well, the reality on the mainland is that ultra short haul flights are dumb for most folks. It is unimaginable to me that I'd buy a ticket for a sub-200 mile flight if I had ANY land option available. So those flights will be unpopular and priced for a few biz travellers. The Hawaiian situation is totally different.

I also wonder about the data. I was actually looking to buy a HNL-MKK flight the other day. The cheapest HA fare for this 54 mile flight is $69. If you exclude the taxes, that's $1/mile. Ouch.

Originally Posted by msp3
I can see it now, with WN style scum class non-reserved seating, locals will abuse it just like how unpleasant old Chinese and Filipino women sit on the outside seats of Da Bus (city bus) and block the inside seat with the garbage theyre lugging around and unless you stare them down they wont move out of the way no matter how crowded
Well, if Frontier entered the market with $19 fares, maybe you'd have a few annoying pax. But I guarantee you that the WN crowd would be as kind and courteous as on any other US flight.
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Last edited by FlyinHawaiian; Jan 13, 2019 at 6:29 pm Reason: consecutive posts merged
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Old Jan 13, 2019, 10:01 am
  #26  
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Originally Posted by iahphx
Well, the reality on the mainland is that ultra short haul flights are dumb for most folks. It is unimaginable to me that I'd buy a ticket for a sub-200 mile flight if I had ANY land option available. So those flights will be unpopular and priced for a few biz travellers. The Hawaiian situation is totally different.

I also wonder about the data. I was actually looking to buy a HNL-MKK flight the other day. The cheapest HA fare for this 54 mile flight is $69. If you exclude the taxes, that's $1/mile. Ouch.
I've done SAN-LAX a few times to catch connecting flights as part of award tickets and I'm always surprised as to how many are actually on said flights. United even flies a 737 on that route (granted, the vast majority of the flights are still on regional jets). That said, it's likely that most other passengers were connecting in LAX and not originating from there.
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Old Jan 13, 2019, 1:42 pm
  #27  
 
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Originally Posted by iahphx
Well, the reality on the mainland is that ultra short haul flights are dumb for most folks. It is unimaginable to me that I'd buy a ticket for a sub-200 mile flight if I had ANY land option available. So those flights will be unpopular and priced for a few biz travellers. The Hawaiian situation is totally different.

I also wonder about the data. I was actually looking to buy a HNL-MKK flight the other day. The cheapest HA fare for this 54 mile flight is $69. If you exclude the taxes, that's $1/mile. Ouch.
So market prices elsewhere are irrelevant and HA should price interisland at whatever your gut says is reasonable. Got it.
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Old Mar 2, 2019, 11:30 am
  #28  
 
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Coverage yesterday of comments from Southwest that they intend to go after HA interisland: https://www.staradvertiser.com/2019/...xecutive-says/

I’m surprised to see that, although what they seem to be describing still is a long way short of HA’s schedule. Can’t be good for HA’s stock price, and will be interesting to see if HA becomes a takeover target. They have a good business but hard to figure how another carrier could absorb them without abandoning a lot of brand equity.
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Old Mar 2, 2019, 7:28 pm
  #29  
 
 
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Originally Posted by tmiw
How much demand is there for inter-island flying anyway?
Pick a random date and look at the schedule. www.hawaiianair.com

March 15, 26 non-stop flights on Hawaiian from OGG to HNL. Midday low fares are $199 r/t, some are higher.

There's only 18 flights from LIH to HNL on March 15.

20 nonstops from HNL to KOA.

Most flights are full when I take them.

It will be interesting to see if SWA can disrupt the market. I don't think they are interested in lower fares, the premise is that they can make money at it given the current fare structure. In the beginning I expect we'll see some short term disruption to the fares given the extra capacity they are bringing to the 4 (?) mainland cities they said they would serve.

It's hard to see that anybody would want to set up the infrastructure necessary to support an island based interisland flight operation here. I guess we'll find out eventually what they intend to do. Certainly in the short term, they aren't setting up anything like that. We would know it if they were. There's been some speculation that they will serve multiple islands with a single mainland flight. Not sure how that will work out for anybody not using a companion pass flying to the mainland.

-David

Last edited by LIH Prem; Mar 2, 2019 at 7:53 pm
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Old Mar 2, 2019, 7:32 pm
  #30  
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I wish WN well in trying to serve the inter-island market but will be curious to see if they encounter the same engine problems with the CFM-56 that Aloha had (which is why they ended up going back to the older 737-200 aircraft and rarely used the 737-700 on the short hops.
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