A new fare war for local flights
|Reader poll: How was your experience booking on go! airlines?|
Interisland air passengers began benefiting from an old-fashioned fare war yesterday when the Islands' newest airline — go! — announced temporary, one-way ticket prices of $19 in time for the busy, summer travel season.
Just three summers ago, interisland rates were running at or above $200 for roundtrip tickets.
Even before its maiden flight tomorrow, go!'s arrival in the Hawai'i market has forced its larger competitors, Aloha and Hawaiian airlines, to match some of go!'s reduced fares.
Hawaiian immediately matched the $19 fare with the same restrictions as go!, and Aloha left the door open to do the same.
While $19 fares will not last long, one-way tickets to Neighbor Islands likely will stay below $70 and possibly less than $60 for as long as jet fuel prices remain stable and Aloha, Hawaiian and go! battle for passengers, according to industry executives.
"I think it's definitely permanent," said Jonathan Ornstein, chairman and CEO of go!'s parent company, Mesa Air Group Inc., when asked about the low fares. "I think our high fare will be lower than the lowest fare in the past," he said, referring to the $80 to $90 one-way fares of a year ago.
That prediction was echoed by Scott Hamilton, an aviation consultant based in Washington state, who said no airline can be profitable selling interisland tickets for $19 or even $39, which go! previously offered and was matched by Hawaiian and Aloha.
"He (Ornstein) can't be profitable at $39," Hamilton said. "I think he'll do $59 and $69 fares. Hawaiian and Aloha will match."
Passengers coming in and out of Honolulu International Airport's commuter terminal yesterday said the cheaper ticket prices can't come soon enough.
"Why couldn't we get them today?" asked Lydia Zabala of Laredo, Texas, who just stepped off a flight from Maui.
Becs Vierra of Lahaina, Maui, spent $630 for five roundtrip tickets to fly her family from Maui to Honolulu yesterday.
"I hope the prices go down, absolutely," she said. "With five of us, it's not easy. We definitely go for the lowest rate."
'THOUSANDS' OF TICKETS
Ornstein said at a press conference yesterday that go! would offer "thousands" of one-way, $19 fares between noon yesterday and midnight tomorrow — or until the tickets are sold out.
The $19 seats were available for travel between Honolulu and Lihu'e, Kaua'i; Kahului, Maui; or Kona, Hawai'i, from tomorrow through July 9, and between Honolulu and Hilo, Hawai'i, from June 30 through July 9.
Go! officials did not specify how many $19 tickets are available and said $19 seats may not be available on all flights.
Tickets will be nonrefundable and no changes will be allowed. Fares can be booked online at www.iflygo.com or by calling toll-free (888) IFLYGO2.
Ornstein said he has heard from Island residents who said high ticket prices for years have prevented them from traveling between islands.
With $19 one-way ticket prices, he said, "We'll help bring family and friends together. ... No one has any excuses not to visit their mother-in-law."
Aloha, which earlier met go!'s announced $39 fares, had yet to match the $19 ticket prices as of yesterday afternoon.
"It doesn't mean we will or we won't," said Aloha spokesman Stu Glauberman. "Tomorrow's another day."
FOUR 50-SEAT JETLINERS
Go! will rely on a fleet of four 50-seat Canadair CRJ 200 jets.
Hamilton, the aviation consultant, called the small jets "a miserable airplane." The CRJ 200 offers small seats with "not much padding," Hamilton said. "But for (interisland flights of) 30 or 40 minutes, who cares?"
Go!'s entry into the interisland market, Hamilton said, puts the most pressure on Aloha, which emerged from federal bankruptcy protection in February with limited cash reserves.
"Put Aloha on your Titanic watcher," Hamilton said. "When you get into a fare war, cash is king. ... It's going to be a battle of attrition between the three airlines, and Aloha is playing the weakest hand."
Thom Nulty, Aloha's senior vice president of marketing and sales, said in a statement yesterday: "Over the years, we've seen many startups come and go with goofy fares designed to steal passengers away from Hawai'i's homegrown airlines. While Aloha will always be competitive, we will also act responsibly to ensure that Hawai'i's people have the high-quality, reliable, full-size jet service they expect from us."
Mark Dunkerley, president and CEO of Hawai'i's largest airline, Hawaiian, said in a statement: "We know that people will shop and compare and we're confident they'll appreciate Hawaiian's high quality of service, proven track record of reliability and our commitment to the community. We're ready to compete."
STARTING OUT WITH 8%
Go! will command only about 8 percent of the interisland market when it begins service tomorrow, Hamilton said. But Ornstein is betting on increasing go!'s market share through cut-rate ticket prices, Hamilton said.
"With a 50-seat airplane, he can't make up on volume. ... At some point Ornstein will try to put in bigger aircraft than the 50-seat planes," possibly a 90-seat CRJ or the Embry Air 195, which holds about 100 passengers.
The maneuvering at the corporate level yesterday held no interest for Lynn Fragas, who flew into Honolulu International Airport's commuter terminal yesterday from Waimea on the Big Island. Even if one of Hawai'i's perennial airlines goes under from the added pressure, Fragas was happy with go!'s new presence in the market.
"Competition's definitely good — it's healthy," Fragas said. "Competition stimulates everything."