Airlines totter amid tough competition


POSTED: Monday, February 23, 2009

THE financial struggles of interisland airline companies make plain the effects of Hawaii's economic downturn and the difficulties of competition in such a stark environment.

Mokulele Airlines, while managing to fend off takeover of its operations by its partners for the time being, remains on the margins.

Hawaiian, the largest of the airlines, posted a net loss for the fourth quarter of 2008 compared to a $3.3 million profit in the same period in 2007.

Meanwhile, go! reported a profitable quarter, but it was its first since it began flying island skies in 2006.

Mokulele, which ramped up flights after the shutdown of Aloha Airlines last March, came close to defaulting on a loan this week, but a decision by its employees—most of whom worked for Aloha—to delay receiving paychecks gave the company some breathing room. Mokulele still has a ways to go toward stability as more payments come due and the airline scrambles to secure additional investors.

Hawaiian's losses came as tourism saw a sharp slowdown, likely to continue through this year, if not longer. For all of 2008, however, Hawaiian recorded profits and appears to be weathering the economic challenges.

Go!, whose entry into Hawaii triggered record-low fare cuts by all the airlines, also has been able to withstand the fluctuations in the market.

Nonetheless, the decline in the economy has put even more pressure on the airline companies already strained by the restrictions of a tight market. Whether all can survive is uncertain.