Hawaiian and Aloha airlines' tail art stand out at the Honolulu Airport commuter terminal. The two carriers say they now will let market forces decide their seating capacity for interisland flights.

Hawaiian, Aloha stress
efficiencies with end
of interisland exemption

The 10-month, seat-capacity deal
that ended Monday had brought
complaints over flight availability

Hawaii's two big interisland airlines say 10 months of being allowed to work together to control capacity has worked well for them but has brought complaints.

Hawaiian Airlines and Aloha Airlines said the antitrust exemption that started Dec. 1, 2002, and expired at midnight Monday did what it was intended to do, keeping the interisland business alive through a major decline in traffic that followed the Sept. 11, 2001, terrorist attacks.

Both airlines said business is better and losses have been trimmed, but the capacity agreement was only part of the picture.

For Hawaiian, the capacity agreement worked "very well, especially when taken in concert with other technology-based, customer-oriented initiatives that Hawaiian has introduced," said Mark Dunkerley, the airline's president and chief operating officer.

He was referring to Internet booking, automated check-ins and other advances the airline has recently put in place.

The exemption allowed Hawaiian to increase the occupancy of its planes and the other changes the airline made increased its efficiency, he said.

Hawaiian said it has cut about 20 percent of its interisland flights.

"But it is important to understand that interisland air traffic had been in a steady decline for the past few years," Dunkerley said.

"Even if the exemption never existed, both carriers would have been forced to reduce flights because of the changing market conditions," he said. The law enacted by Congress "provided an orderly way for this flight reduction to take place," he said.

Aloha said it cut some flights, mostly early in the morning or late at night "because there were not enough people," but still maintains a similar schedule to what it had before the capacity-sharing arrangement.

It enabled Hawaii's two interisland carriers to eliminate excess capacity, meaning empty seats, which was essential if the two were to survive, said Aloha spokesman Stu Glauberman.

It brought the supply of seats more in line with demand, he said.

People have learned they have to book in advance and can't just grab a ticket and walk on to an aircraft, but there have been complaints, Glauberman said.

In the Honolulu-Hilo market, Hawaiian cut flights but Aloha didn't and Aloha is getting complaints from its customers who can't always get the flights they want because of demand carrying over from Hawaiian, he said.

An important factor was that while the interisland carriers were allowed to talk about total combined capacity, the exemption did not allow them to talk about specific routes and schedules. It continued to be illegal, for example, for one to say to the other something like: "You take the first flight to Kahului and we'll drop ours and you let us have the last flight from Hilo and drop yours."

The airlines sat down together to negotiate how many interisland seats would be needed in the coming month. Once they agreed, each got half and independently arranged schedules accordingly.

Now that they are without the capacity umbrella, both airlines said they learned a lot and will be more efficient than they had been.

Still, market conditions will have more to say about how they operate than anything else, they said.


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