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The Honolulu Advertiser
Posted on: Thursday, May 22, 2008

Hawaiian Air raises interisland fares again

By Rick Daysog
Advertiser Staff Writer

For the third time this year, Hawaiian Airlines is raising interisland airfares, increasing its standard ticket price by $10 to $64.

The state's largest carrier also will add a $35 fuel charge on all flights to and from the Mainland. The new fares will start Tuesday.

Interisland airline go!, Hawaiian's main local competitor following Aloha Airlines' collapse in March, did not immediately match the increase but said it is studying its options. The entry of go! into the market two years ago touched off a fare war, pushing the standard price down to $39.

"The only fare war now is who gets their prices up quicker," said Steve Danishek, a Seattle-based travel analyst. "There's no downward competitive pressure at all."

Hawaiian blamed the soaring cost of jet fuel. The price of jet fuel has doubled to about $4 a gallon, from $2 a year ago, and will likely continue to rise. The price of crude oil hit a record $135 a barrel yesterday.

In the past three weeks alone, jet fuel prices have risen by 70 cents per gallon, which will increase the airline's annual fuel costs by nearly $100 million, said Keoni Wagner, Hawaiian's vice president of public affairs.

"Fuel prices are now 100 percent higher than a year ago, so unfortunately, just like every other business that consumes oil, we must raise our fares to help offset some of this increase," Wagner said.

Danishek said the shutdown of Aloha Airlines is also a factor. The lack of a third major carrier has made it easier for Hawaiian and go! to pass on their fuel costs, he said.

Aloha was the state's second-largest airline before it terminated its passenger service on March 31 and laid off 1,900 workers. Aloha filed for bankruptcy on March 20 after losing more than $120 million in the past two years.

The higher fares could curtail interisland travel, which soared after the June 2006 start-up of go! At times, one-way fares dropped as low as $29 and $19 as Hawaiian, Aloha and go! battled over market share.

Hawaiian last raised fares on April 30, increasing interisland ticket prices by $5 to $54. In January, Hawaiian joined Aloha to match a $10 interisland fare hike announced by go!

The higher ticket prices come as the major domestic carriers are raising fees and cutting back service to cope with the soaring fuel prices.

American Airlines, the nation's largest airline, said yesterday that it will charge passengers $15 for their first checked bag starting June 15. American also said it will cut back its domestic flight capacity by 11 percent to 12 percent in the fourth quarter.

Rival United said it is considering a similar fee to check in a bag.

In its news release announcing the fare hikes, Hawaiian said it also will raise its fuel surcharges to overseas and international destinations. Flights to Sydney in Australia, Pago Pago in American Samoa and Papeete in Tahiti will see fare increases between $40 and $55, while fares on Hawaiian's new Philippines service will rise by $35.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.