UA, HA Worry Hawaii

Bankrupt airlines carry almost half of mainland lift to Islands

By: Jerry Chandler

Hawaii tourism officials have reason to be concerned: Almost half the airlift between the islands and the Mainland is provided by carriers in Chapter 11 bankruptcy.

The prognosis is guarded for United, which provides 28 percent of the lift. But the other airline, Hawaiian, has emerged from bankruptcy before -- in 1994 and is expected to recover this time too. It handles 17 percent of mainland travel.

“They definitely have clearer targets lined up than does United,” said Brian Streeval, an analyst with the Boyd Group, an airline consulting firm in Colorado.

He noted that Hawaiian intends to emerge from bankruptcy in the fall, while United has projected “a much longer window, which makes me a bit more skeptical.”

Streeval said Hawaiian could mirror US Airways, which appeared on target to emerge from Chapter 11 at press time. Hawaiian “has been talking to some of its aircraft lessors. And I think they’ll continue those negotiations. I think there will be a much better outcome there than with United,” he added.

The airline still plans to start service from San Diego to Maui on June 1.

“The United Airlines situation is very serious,” said Les Enderton, executive director of the Oáhu Visitors Bureau. “United is extremely important to us.”

And Hawaii is important to UA. Enderton, a former executive with American Airlines, said mainland-Hawaii routes have been among the most profitable for United, largely because leisure travel has become more important as business travel has declined.

Enderton is hopeful United will pull through but Aaron Gellman, a professor at The Transportation Center at Northwestern University and at the Kellogg School of Management, is not so sure.

If United goes into Chapter 7, or liquidation, it would “hurt Hawaii tourism quite, quite seriously,” said Gellman.

Gellman believes Hawaii’s secret weapon is Aloha Airlines: “You have this tremendous apparent success of Aloha, which is using 737-700s to fly to a number of mainland points nonstop from Honolulu every single day. That’s additional capacity that just wasn’t there before.”

Aloha provided 5 percent of the lift last year.

“They may not have huge percentages of absolute share, but these are significant routes,” said Chris Kam, the HCVB’s director of market trends.

“They’re tapping regional markets on the West Coast,” which Kam noted continues to be Hawaii’s strongest market.