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The Honolulu Advertiser
Posted on: Thursday, March 17, 2005

FlyHawaii hoping to offer low-cost interisland travel

By Dan Nakaso
Advertiser Staff Writer

Hawai'i's latest hopeful airline plans to fly to every major island, but will begin more modestly with four or five turbo-prop planes shuttling only between Honolulu and Maui starting early next year, FlyHawaii Airlines officials said yesterday.

FlyHawaii Airlines plans to use Airbus ATR-72 turbo-prop airplanes. The company is in negotiations to buy the planes, but offered this illustration of what its painted planes would look like.

Photo illustration courtesy FlyHawaii Airlines

James Delano, FlyHawaii Airlines' chief executive, hopes to eventually expand to a fleet of a dozen or so Airbus ATR-72 turbo-props offering regular service from Honolulu to all of Hawai'i's major airports.

Each one-way ticket would cost about $50.

As the company's routes grow, Delano said, the number of employees will increase from the current 20 or so to about 700.

"Hawai'i has never seen an airline like we're going to have," Delano said. "... We are going to take care of people. We are going to thrill people. People will be amazed. People will be our friends."

The first flights will focus on Hawai'i's most popular Honolulu-to-Kahului route relying on three ATR-72s, which can carry 68 passengers and cruise at 300 mph, said Chris Parsons, FlyHawaii's vice president of administration.

A fourth plane would rotate in and out for maintenance and a possible fifth would be kept on standby, Parsons said.

A month or so later, Parsons said, FlyHawaii would open a Honolulu-to-Kaua'i route, followed by Honolulu to Kona and then Honolulu to Hilo.

Maybe a year later, Parsons said, FlyHawaii would offer Honolulu-to-Moloka'i and Honolulu-to-Lana'i flights.

FlyHawaii officials are negotiating to lease or buy new or newly refurbished ATR-72s. "We have several contracts on the table for aircraft," Delano said.

While most tickets would cost about $50, Parsons said the Moloka'i and Lana'i tickets could run as low as $35.

Getting from Kaua'i to Hilo, for example, would mean buying two separate tickets through Honolulu, Parsons said.

For the company, offering seats as low as $40 to $45 would still mean that FlyHawaii would "break even," Parsons said.

Because of lower fuel and maintenance costs for the ATR-72, Parsons said, "we can fly a seat for half of what it costs" Hawai'i's two major carriers, Hawaiian and Aloha.

Eventually, FlyHawaii will schedule 50 percent more flights than any other carrier in Hawai'i, according to the company.

FlyHawaii will "expand as we prove to ourselves and to you that we will provide reliable service," Delano said.

Before any flights begin, FlyHawaii first must raise $12 million to begin operations and another $20 million in cash and guarantees to meet the U.S. Department of Transportation's "financial fitness test."

FlyHawaii would need to prove that it has a sufficient reserve fund to repay ticket holders in case the company goes out of business, Delano said.

"We've had ongoing meetings with (potential Mainland and Hawai'i) investors and they understand that these are the financial requirements," Delano said.

FlyHawaii already has spent $1.5 million over the past two years, said Delano, who founded Lion Coffee in 1979 and sold it in 2000.

The DOT's financial fitness test will be "the biggest hurdle to get over," said Carl Christoffersen, FlyHawaii Airlines' vice president and chief financial officer. Then the company would face another six to nine months gaining Federal Aviation Administration approval, Christoffersen said.

Eventually, Delano foresees an airline whose passengers wait no longer than 30 minutes to board a flight.

Anita Carmichael, a former Omni Air International flight attendant, hopes to get hired by FlyHawaii after losing her job when Omni closed its Honolulu base in January.

"All the airlines have so many difficulties right now," Carmichael said.

With Hawaiian and Aloha in federal bankruptcy protection, "it's an iffy business right now," Carmichael said. "Both of our airlines have been in deep muck."

But Carmichael hopes to continue helping passengers and enjoying the travel benefits of the airline industry.

"The hours were miserable and the pay wasn't that great," she said. "But I got to see a great deal of the world."

FlyHawaii's announcement in Honolulu yesterday was attended by Marsha Weinert, the state's tourism liaison; Bruce Matsui, deputy director of the state Department of Transportation; and Lt. Gov. James "Duke" Aiona, who said that Gov. Linda Lingle's administration believes that part of making Hawai'i a business-friendly climate means "we need competition."

"We really admire your courage ... for what you're about to do," Aiona said.

Company officials then flew to Kaua'i, Maui and the Big Island to discuss their plans.

Delano developed his business model after studying low-cost carriers such as JetBlue Airways and Southwest Airlines and interisland flight operations in the Caribbean, Tahiti and Canary Islands, which use ATR-72s.

Staff writer Jan TenBruggencate contributed to this report. Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or at 525-8085.