Hawaii’s inter-island carriers go! and Mokulele Airlines merge

Wednesday, October 21, 2009, 8:27 by Jose Philip

Two of the 3 major airlines operating on inter-island routes in Hawaii, the United States, have merged.

Mokulele Airlines, a commuter airline based in Kalaoa, Hawaii, and go!, headquartered in Honolulu, Hawaii, and the regional carrier of Mesa Airlines, based in Phoenix, Arizona, the United States, have formed a joint venture.

This combined entity, the two companies said in a joint statement, will create the Hawaii state’s only low-fare airline carrier that can offer a “strong competitive presence” in the inter-island aviation which, in turn, “would benefit the passengers.”

The new company will continue to operate under both the brand names – Mokulele Airlines and go!

Aviation analysts are of the opinion that the merger of the two carriers is likely to eat into the market share of Hawaiian Airlines, the biggest airline based in Hawaii.

And, on its part, Hawaiian Airlines issued a press release in which it said that the airline “remains focused on its own operations” as well as on offering its customers “the most competitive service and fares” in the state of Hawaii.

Under the merger agreement, Mesa Air Group, based in Phoenix, Arizona, the United States, which operates go!, is to own 75%  of the new company. Mokulele Flight Service Incorporated and its shareholders are to own the rest 25%.

Passengers, the joint statement added, can continue to book travel on both go! and Mokulele Airlines and that the new company will honour the existing reservations.

In a separate statement, Jonathan Ornstein, chairman and chief executive of Mesa Airlines, said that the “strategic partnership” is bound to result in creating opportunities for the growth of both the Mokulele and go! brands.

According to Scott Durgin, chief executive of Mokulele Airlines, his company aims at providing “affordable and dependable” inter-island flights to Hawaii’s residents as well as visiting tourists.

However, the two companies are no yet clear about how the merger is going to affect the employees. The two companies, according to Scott Durgin, are jointly considering as to how to create “greater efficiencies” in the combined operation and deploy the workforce “in ways that make for a viable second airline.” Also, both airlines are striving to preserve all existing jobs, he added.

In Hawaii’s inter-island air services, while the relatively new carriers Mokulele Airlines and go! have been performing well, the Honolulu-based Aloha Airlines abruptly ended its operations on March 31, 2008.

It was in June 2006 that Mesa Airlines launched go!, while Mokulele Airlines started operations in 2007, serving smaller airports in Hawaii.

Till one year ago, go! and Mokulele Airlines had been rivals when Mokulele entered into an alliance with Republic Airways, based in Indianapolis, Indiana, the United States, to fly Embraer 170 jet planes. Republic Airways has invested over $11 million in Mokulele Airlines, besides holding 50% shares in the airline.

Mesa Airlines had then sued Mokulele Airlines for allegedly having failed to pay about $400,000 in fuel costs.

On its part, Mokulele Airlines also sued Mesa Airlines, arguing that Mesa Airlines had engaged in “anti-competitive behavior.” In addition, Mokulele Airlines charged Mesa Airlines with “threatening to drive Mokulele out of business” by blocking revenues that Mesa Airlines owed as per a code-share agreement between two the airlines.

Inter-island airlines are crucial to Hawaii, especially in the areas of commerce and tourism, and the inter-island air services act as more or less like highways that connect the islands.

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