Spreading Its Wings

Will an invigorated independent Island Air reach a comfortable altitude in Hawaii's skies?

February, 2006

If he was trying to win friends among his new employees, new chief executive officer Rob Mauracher would have hit that mark in his first days at Island Air, when he gave everyone fat raises.

“We gave 30 percent raises to 200 employees,” says Mauracher.

Despite prevailing wisdom that escalating labor costs along with fuel costs were the soft underbelly of an airline industry rife with bankruptcies, Mauracher and Island Air’s new owners had a clear vision.

Island Air, with its fleet of eight, 37-seat turbo-prop planes, was gearing up to become Hawaii’s alternative to long lines in crowded airports, with the friendliest, most attentive service in the market. “So we needed to invest in our employees. We needed them to become part of our family,” Mauracher says.

That was just the beginning for Mauracher, who was hired by Gavarnie Holdings, a family-owned, San Francisco-based company that bought the airline from Aloha Airlines in 2004. Mauracher, who started in January 2005, says the airline invested in information technology (IT) to handle everything from payroll to Web check-ins and equipment upgrades. “We have made a significant investment dollar-wise, and we have done so, so we can now grow the airline without adding overhead cost,” Mauracher says.

Island Air’s revenue in 2005 jumped from $18 million to $43 million, though Mauracher declined to give the profit margin. Mauracher describes the fares for Island Air as competitive, but still maturing. A search of Internet prices found one-way tickets starting from the low $30 range up to roundtrip prices comparable with Aloha and Hawaiian. To grab business travelers, Island Air also offers a low $10 to $20 charge to change a flight, with no charge to change to standby. Island Air also offers charter service.In the past year, Mauracher says, Island Air has hired another 200 people, nearly doubled its flights per day to 88, and increased the number of passengers carried from 300,000 to 600,000. That was done in a large part by adding new routes: Island Air now flies to all major Hawaii airports and smaller airports, such as Molokai, Lanai and Kapalua in west Maui. It flies more Hawaii routes than any other airline.

This month, the first of three new, 78-seat turbo-prop planes arrives. The last should arrive by summer. Then Island Air plans to increase its routes even more.

When the first 78-seater comes online, Island Air plans a media blitz to dispel preconceptions about prop planes. “People have a vision of World War II bombers. In reality, [turbo-prop planes] are more advanced than anything Aloha and Hawaiian are flying today,” Maraucher says.

Speaking of Hawaiian and Aloha, Mauracher says he does see those airlines – or even a potential newcomer like Mesa Air – as competition for the expanding carrier. Island Air plans to fly around those bigger hitters, using its scheduling and routes. “Our business plan is not to go head to head,” says Mauracher. “We want to stay out of their way.”

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Scott Radway