Hawaiian faces more competition
By Rick Daysog Advertiser library photo HAWAIIAN AIR SHAREHOLDERS APPROVE SEVEN NEW DIRECTORS
Advertiser Staff Writer
Mainland airlines plan to increase the passenger seat capacity on their Honolulu flights by 17 percent this summer as they rediscover the profitability of the Hawai'i market.
Hawaiian Airlines fears that Mainland-based carriers' plans to increase passenger seat capacity on flights to the Islands could dim growth prospects for Hawaiian, which just emerged from bankruptcy protection.
But the head of Hawaiian Airlines said the increased capacity could dim growth prospects for the state's largest airline, which emerged from bankruptcy protection last month.
Speaking at Hawaiian Airlines' annual shareholders meeting yesterday, Chief Executive Officer Mark Dunkerley said that an "explosion" in number of passenger seats on West Coast flights will keep fares low and make it difficult to pass on soaring fuel costs.
"It seems that our competitors, having missed the opportunity over the strong demand for Hawai'i vacations for the past couple of years, are bound and determined to make up for this twice over," Dunkerley said.
Dunkerley cited figures compiled in May by the state Department of Business, Economic Development and Tourism showing that for the three months ending Aug. 30, 2005, the number of passenger seats on flights from the West Coast to Honolulu will increase by 17 percent to 939,845 from the year-earlier period. DBEDT figures released yesterday show that the overall passenger seat capacity for the July-to-September period is expected to be up 13.1 percent.
"That's more growth than we would expect to see in our business over several years," said Dunkerley.
The increased capacity comes after Hawaiian Airlines — which filed for bankruptcy reorganization in 2003 — reported steady operating income growth in each of the past two years.
It also comes after many of the nation's largest airlines have restored their service to Hawai'i to pre-Sept. 11 levels.
Marsha Wienert, state tourism liaison, said that the state will need the additional seats with the arrival of the Pride of America cruise ship later this month.
She noted that the new ship will add the equivalent of 2,000 new hotel rooms to the local visitor accommodation inventory.
Frank Haas, vice president of tourism marketing for the Hawai'i Tourism Authority, said that many of Hawai'i's hotels are nearly filled this summer, so the airlines could face the prospect of empty seats on their flights.
Haas said tourism industry officials don't want to see a repeat of the mid-1990s, when the big carriers increased their capacity, were left with too many empty seats and had to cut prices.
"We're certainly happy that the airlines would want to fly here but we want them to fly here and make money," Haas said.
