Aloha sells
Island Air unit

The buyers hope to complement
bigger interisland carriers
while adding routes

Island Air, the four-plane smaller-airport affiliate of Aloha Airlines, is being sold to a veteran of Alaska Airlines and his son, who say they want to support the bigger interisland carriers rather than face them in direct competition.

At a glance

>> Owner Aloha Airgroup has agreed to sell the airline to Gavarnie Holding LLC.

>> 250 employees under Neil Takekawa, president.

>> Founded as Princeville Airways.

>> Acquired by Aloha Airgroup in 1987, when its name was changed to Aloha IslandAir Inc.

>> Operating name changed to Island Air in 1992.

>> Operates four 37-passenger de Havilland Dash-8 turboprop aircraft. Buyers plan to add five more of the same aircraft.

>> Serves Molokai, Lanai, Kapalua and Kahului from a Honolulu base with 46 flights a day.

Details of the deal were not disclosed.

"It is our intent to treat Aloha and Hawaiian essentially as partners and be complementary to their services rather than be confrontational as a third carrier," said Charlie Willis, head of partnership Gavarnie Holding LLC, which is buying Island Air.

Although Willis did not want to elaborate, his intent is shown in the route choices. An independent Island Air will add five aircraft in the coming months, boosting the fleet to nine 37-seat de Havilland Dash-8 aircraft.

Along the way it will add new destination pairs, such as Kona-Maui, Hilo-Maui, Honolulu-Hilo, Honolulu-Kona, Honolulu-Lihue and Maui-Lihue.

Island Air currently serves Molokai, Lanai and the Kapalua and Kahului airports on Maui from a Honolulu base.

Hawaiian Airlines did not have any objections. Noting that Willis and his partner and son Austin said they want to partner with other airlines, Hawaiian spokesman Keoni Wagner said that "if partnering with Island Air would benefit our customers, we would be inclined to pursue that."

Wagner added Hawaiian already has partnerships, code-sharing and other cooperative arrangements with a number of airlines, such as American Airlines, Northwest, Alaska, America West and Virgin Atlantic.

Charlie Willis started his aviation career with Alaska Airlines in 1965, holding various positions in operations, sales and marketing until he left in 1972.

In 1974 he started an aviation finance company, which he still operates.

Austin Willis is a professional aviation consultant who develops operating ideas to help airline ownership changes and start-ups.

They said Neil Takekawa will stay on as president of Island Air, and the company expects to hire an undisclosed number of employees as it expands.

Glenn Zander, president and chief executive officer of Aloha Airgroup, said his company had been looking for ways to expand Island Air's role in Hawaii and concluded that "an independent Island Air would be the best way to achieve that goal."

He said all of Island Air's management team and employees will be retained by the new owners when the deal closes. The airline employs 250 people. The transaction, which is subject to regulatory approvals, is scheduled to be completed by March 1.

In 1987, privately owned Aloha Airgroup purchased Princeville Airways and changed its name to Aloha IslandAir Inc. In 1992, the parent registered the subsidiary's name as Island Air to give it an identity of its own.

A third interisland airline has never survived in direct competition against the two big carriers, Aloha and Hawaiian. Two attempts were made, holding down interisland fares while they existed but ultimately going out of business.

Discovery Airways flew interisland jets in 1990-91 until it was forced out over questions of foreign ownership. Mahalo Airlines flew from September 1993 until October 1997 but went broke and closed.

Both had gone head to head with Hawaiian and Aloha on the most traveled interisland routes, something the new owners of Island Air say they have no intention of doing.

Greg Kahlstorf, president of Pacific Wings, which flies nine-seater planes among some of Hawaii's smaller airports, said the Willis plan makes sense because "a lot of people, I think, would prefer to go through smaller terminals with smaller aircraft."


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