Hawaiian to end wholesale discounts

By Kelly Yamanouchi
Advertiser Staff Writer

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Tour packages to cost more The starting price for a typical interisland package is $168 per person based on double occupancy for Hawai'i residents, including airfare on Hawaiian Airlines, one hotel room night and rental car. For some packages, prices will go up by at least $25 to $193 per person on April 1 as Hawaiian Air ends wholesaler discounts. Package rates will likely remain lower than purchasing airfare, hotel and rental car separately.

Package deals including airfare, hotel and rental car often are bargains because tour operators or travel agencies selling the package get discounts from the airlines, hoteliers and car rental agencies. The discounts also allow travel agencies in some cases to offer better deals on plane tickets than the airlines.

Aloha Airlines has not yet matched Hawaiian's move.

The vacation and weekend packages are attractive to local consumers and also play an instrumental role in selling Hawai'i trips to tourists. About 2.9 million visitors came to Hawai'i on tour packages last year out of nearly 6.4 million visitors, according to preliminary state figures.

Hawaiian's decision to eliminate wholesalers' discounts is part of its effort to cut costs in the continuing post-Sept. 11 slump in air travel.

The move, however, is making business more difficult for tour operators, travel agencies and the broader tourism industry, all of which have been trying to cut prices to attract visitors.

Hawaiian said all discounts on interisland and trans-Pacific fares to wholesalers will end by April 1. Spokesman Keoni Wagner said Hawaiian is making the change to better control inventory. The change allows Hawaiian more control over the sales and prices of tickets.

Hawai'i Tourism Authority executive director Rex Johnson said higher prices on vacation packages will hurt demand for travel to Hawai'i.

"It's a very tough situation. It's going to be hard on those of us that are in the tourism business," Johnson said. But he added "if (airlines) don't maintain their financial health then we're in a lot bigger trouble."

Panda Travel Inc., which resells airline tickets to other travel agencies and to the public, will soon raise the prices of some airline tickets and Hawai'i vacation packages that include Hawaiian Airlines fares.

"Our interisland prices will be going up on our packages," said Anna Doell, manager of Panda Travel in Kapahulu. Prices on packages are estimated to increase by at least $25 per person for interisland trips, for example, according to Panda.

Aloha Airlines still offers discounts to wholesalers, said spokesman Stu Glauberman. However, some wholesalers are in continuing negotiations with Aloha over discounts.

Panda will soon sell Hawaiian and Aloha airline tickets and packages with airfares matching the airlines' published rates instead of at a discount, Doell said. Panda currently sells packages including Hawaiian airlines tickets and coupons purchased before both airlines stopped issuing them in January.

Because travel agencies still get discounts on rental car and hotel rates, the new package prices as of April 1 "are still attractive," Doell said.

On vacation packages including Hawaiian Airlines flights, "the consumer will be saving a little, not a whole lot because they won't be saving on air anymore," said Gerri Yoshida, manager of Carefree Tours & Travel.

Some wholesalers, including Pleasant Holidays, have already lost the discount with Hawaiian and increased prices on some packages. Pleasant, which uses a number of different airlines, is offering Hawai'i airfare starting at $339 and vacation packages starting at $443 including airfare, hotel and airport transfers.

Hawaiian's discount move is part of a broad cost-saving effort by airlines to eliminate middle men in ticket sales and instead sell directly to customers through a Web site or telephone reservations. The move is similar to decisions by many airlines to stop paying commissions to travel agents for selling tickets.

"The major carriers are trying to wring any costs out of the system that they can, and that includes contracts with vendors," said Brian Smith, an airline analyst for RedChip Review, which analyzes small-cap companies.

Travel agencies and tour wholesalers, however, have argued that they help sell more tickets for airlines.

"It makes it harder to do business with Hawaiian Airlines," said Michael Carr, president of Polynesian Adventure Tours, which has shifted more of its business to Aloha since Hawaiian raised rates. "People that use them for one-day tours have had to raise (prices) substantially."

But the strongest competition for wholesalers remain the direct sales through Internet travel booking sites and airlines' Web sites, which put some control in consumers' hands to find the best prices.

The more people that book through airlines' Web sites, the less the carriers may need to depend on travel agents and wholesalers.

Small travel agencies "are being crushed by the market power of the big airlines," the American Society of Travel Agents said in congressional testimony last year. Airlines "are clearly committed to diverting as much of the agency customer base as possible to their Web sites."

Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.