Expert: All-turboprop
airlines aren’t viable
in Hawaii

Mahalo is the latest
in a string of interisland carriers
that failed

By Russ Lynch
Star-Bulletin

A national aviation expert said today that the failure of Mahalo Air shows that there is no room for a third interisland airline, unless it uses jets similar to those of the two big carriers, Aloha and Hawaiian airlines.

A bankruptcy court judge yesterday allowed Mahalo Air Inc. to exist just long enough to check if there is a market for its operating certificate.

The purpose is only to see if some money can be recovered for creditors, not to try to keep the airline alive, and Mahalo will be forced to liquidate after the next hearing, set for Nov. 10.

Its failure was not unexpected, said Jim Beyer, newsletter editor at AVMARK Inc., an aviation consulting company which also issues several publications that comment on aviation issues.

"In my experience, you've had Mid-Pacific, you've had Discovery, you've had Mahalo. In two of those cases (Mid Pacific Airlines Inc. and Mahalo Air) they put turboprops against jets, which doesn't work," Beyer said.

Island Air successfully runs turboprops between the islands but as an affiliate of Aloha Airlines it has the Aloha name behind it, he said.

Aloha, Island Air and Hawaiian all also have feeds of passengers from the mainland through marketing arrangements with bigger airlines, he said.

Lacking jets and those arrangements a third carrier won't succeed, Beyer said.

Hawaiian Airlines Inc.'s senior vice president of marketing, Peter Jenkins, said Mahalo got as much as a 7 percent share of the interisland market, but it was done largely by creating a new market outside the base market of the bigger carriers.

"We think they grew the market to some extent," Jenkins said, by using low fares to attract local people who didn't travel before or traveled only occasionally.

It wasn't a threat to Hawaiian, he said. "If you had another operator come in with comparable jet equipment, it would be a real threat," Jenkins said.

Mid Pacific Airlines cut into the market of the big two for seven years with lower fares, but went broke and shut down in 1988.

Discovery Air operated jet aircraft about half the size of the others' but operated only for three months in 1990. It didn't have a chance to show if it could make it financially before it was ordered closed because it had more foreign ownership than U.S. law allows.

Mahalo began flying in October 1993 and ran more than 100 flights a day, but filed in July for a Chapter 11 bankruptcy. It stopped flying Sept. 2 and no longer has any aircraft.

At yesterday's hearing, Mahalo attorney Jerrold Guben said the airline was still looking for financing but did not oppose a move to Chapter 7 liquidation next month.