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The Honolulu Advertiser
Posted on: Friday, March 24, 2006

Mesa's airline to begin flying June 9

By Rick Daysog
Advertiser Staff Writer

Mesa Air Group's new interisland airline, named go!, will start out in June flying 50-passenger Bombardier CRJ 200 jets.

Mesa Air Group Inc.

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Mesa Air Group Inc., which plans to start its new interisland airline June 9, said its low fares are here to stay.

The new airline, called go!, sparked an interisland fare war Wednesday when it announced a $39 one-way special that was immediately matched by Aloha Airlines and Hawaiian Airlines.

The $39 special fare on go! is good only for tickets purchased by April 7 for travel between June 9 and Sept. 30. Aloha and Hawaiian have the same restrictions on their $39 fares. The fares are for a limited number of seats and none of the airlines would say how many seats are offered at that price.

Go! also will sell an undisclosed number of seats at $43, and that price will continue past Sept. 30, the company said.

"With these low fares, we can go a long time," said Jonathan Ornstein, chief executive officer of Phoenix-based Mesa. "Even if we fly empty, we could fly five years on the profits the rest of our company makes in one year."

During a meeting with The Advertiser's editorial board yesterday, Ornstein said that unlike past interisland startups such as Discovery Airways, Mahalo Air and Mid Pacific Airlines, Mesa's go! has the financial resources to compete head-on with Hawaiian Airlines and Aloha Airlines.

Mesa, with more than $1 billion in annual revenues and $300 million in cash, may lose money in the first year to build market share, he said.

Ornstein said that in its early days, go! will eventually have five to 10 50-passenger Bombardier CRJ 200 jets and several hundred employees. If all goes well, the airline will expand to larger 90-passenger CRJ-900 jets, he said.

The airline also is negotiating with the state Department of Transportation for office space and terminal facilities at the Honolulu and Neighbor Island airports.

"We didn't do it to trigger a fare war. We did it because this was a price that would trigger people to fly more frequently," Ornstein said during a news conference yesterday to announce the new airline's launch date.

"We think that this type of competition is good for everyone. We also think it will save consumers hundreds of millions of dollar, which then can be used to increase their travels, stay longer to do more business and see more friends or stay with their families longer."

Hawaiian and Aloha said they won't be undersold.

Yesterday, Aloha's Chief Executive Officer David Banmiller said the airline plans to protect its passenger base aggressively.

Banmiller said that since emerging from bankruptcy last month, Aloha has shed an enormous amount of cost and debt. The airline also has attracted capital from new owners, headed by California billionaire Ron Burke's Yucaipa Companies LLC.

"We clearly are going to be competitive as all airlines will be," Banmiller said.

Mesa's entry into the local market comes as Hawaiian has filed suit against the airline, seeking to bar the company from entering the market for two years.

In its suit, Hawaiian claimed Mesa used confidential information obtained during Hawaiian's bankruptcy. But Mesa, which countersued Hawaiian, said it relied on publicly available information to plan its new airline.

Founded in 1982, Phoenix-based Mesa is one of the nation's largest regional carriers, with about 5,000 employees.

The airline provides service to more than 165 cities in 44 states. Most of its flights are under contract with United Airlines and other larger domestic carriers.

Ornstein said go! will be a "test-tube case" since the company is essentially starting an airline that doesn't have to depend on the majors for its business.

"This is strategically the most important endeavor we've embarked on since I've been with the company," said Ornstein, who joined Mesa in 1988.

"Here's an opportunity for us to spread our wings and have our own logo, our own brand and be able to control our own destiny."

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.