A New Era of Interisland Travel
Higher prices, fewer seats and electronic ticketing take flying to new heights
Oahu resident Dee Perez was supposed to spend President’s Day weekend in Kihei, Maui, but wound up being pampered at a day spa and salon in Tucson, Ariz., instead. “I looked at flights, and the interisland rates had gotten so high that it was a better deal for me to just fly to the Mainland,” she says. That was her attitude before Hawaiian Airlines and Aloha Airlines introduced further rate hikes in March, bringing the cost of a one-way ticket to $85 during peak flying times. Both airlines offer discounted tickets for $67 and $75, but passengers need to be extremely flexible and book at least a week in advance.
The demand-based fares came quickly on the heels of the announcement that the carriers would stop selling paper coupons and convert to electronic-ticketing systems. The changes are the first of several that passengers – who, since the inception of paper coupons in the early ’80s, have been spoiled with single-rate fares and spur-of-the-moment travel – will simply have to get used to as the airlines struggle with efficiency and profitability issues.
Despite the moderate success of Hawaiian Air’s restructuring program that began post-Sept. 11, the company filed for Chapter 11 bankruptcy in late March. Keoni Wagner, vice president of public affairs for Hawaiian Airlines, says a few fundamental changes in recent years have drastically changed the economics of operations for the local carriers: More efficient aircrafts that can fly longer distances mean more nonstop service from the Mainland to the Neighbor Islands; operating costs, such as fuel, have risen at staggering rates; and U.S. economic trends and worldwide events have faltered the public’s traveling sentiment.
Another longtime challenge for both Hawaiian and Aloha is managing seat capacity. When coupons were introduced, they generated cash flow for the carriers, but they also fostered ineffective reservation systems, by which indecisive passengers could phone in reservations for multiple flights, leaving the airlines with many empty seats on supposedly overbooked flights. In October 2002, Hawaiian and Aloha airlines were granted a one-year antitrust exemption, allowing the carriers to share projected passenger numbers to accommodate demand. Since then, consumers, including Gov. Linda Lingle, have raised concerns about the inadequate number of available seats. The airlines responded by transitioning to e-ticketing systems. “We knew this would be a big adjustment in the marketplace after 20 years of using a different system, but we simply have to have better control of our product and inventory,” Wagner says.
Glenn Zander, president and chief executive officer of Aloha Airlines, says the changes being made will bring the carriers in line with procedures adopted by other airlines worldwide over the past several years. Danny Casey, president of the Hawaii Chapter of the American Society of Travel Agents, says, “The airlines have brought these problems on themselves. Even though they try to blame consumers for [double-booking flights], the use of coupons led to inadequate management of their inventories. Because they weren’t at the forefront of e-ticketing, they’ve created a system with inherent problems that has perpetuated itself.
“The combination of the exemption and the e-ticketing should result in the airlines being able to more effectively manage their inventory to move toward profitability,” he continues. “But there’s still a significant inventory of coupons in the marketplace, and there are other areas they need to increase efficiency in as well.”
Both airlines say there’s plenty in the pipes, including upgraded self-check-in terminals, enhanced Web site features and remote check-in capabilities via the Web. Hopefully, the adjustments will suffice for the traveling public. Otherwise, we’ll continue to see people skipping Maui for the Mainland.
Do you like what you read? Subscribe to Hawaii Business Magazine »