Hawaiian Air
had to retreat
on fare hikes

Hawaiian Airlines, looking to increase revenue, tried to boost fares for its mainland and interisland routes during the last three weeks but saw its bookings take large drops.

Eventually, the company lowered its prices to near or at the level they were before, said President and Chief Operating Officer Mark Dunkerley during testimony in the second day of the airline's labor contract showdown with its pilots.

The carrier wants to impose a contract on the pilots. Following a two-week break, hearings resumed yesterday at a snail's pace as the two sides questioned company witnesses. The Hawaiian Airlines' unit of the Air Line Pilots Association will put its witnesses on the stand today.

The hearing is expected to last until tomorrow, with Faris then faced with the choice of ruling from the bench or taking his decision under advisement and issuing a written ruling later.

He also could give the two sides one last chance to reach an agreement after the conclusion of the hearing.

"I feel at this point that the company really broke things off," said Jim Giddings, negotiating committee chairman for ALPA's Hawaiian Airlines unit. "But be that as it may, we're always open to further discussions."

Hawaiian trustee Joshua Gotbaum said the company needs to get out of bankruptcy and that "one way or another, this process will do that."

Faris, who has displayed a sense of humor throughout the 25-month bankruptcy process, provided the only levity in yesterday's detail-oriented hearing following several requests to examine court exhibits.

In reference to earlier questioning about disability claims, Faris said he was "getting chronic fatigue syndrome from lifting these volumes (of court documents)."

Dunkerley resumed testifying yesterday and said the airline attempted to raise fares over the last two to three weeks by $40 round-trip to the mainland and by $10 to $15 on interisland routes.

However, Dunkerley said the airline had to lower its fares again because of a 40 percent to 50 percent drop-off in customers in trans-Pacific bookings and a 10 percent decline over last year in interisland bookings. Dunkerley said trans-Pacific fares are now just $10 above where they were earlier while interisland fares have returned to where they were.

ALPA attorney Tom Ciantra said the company is in better condition than it portrays itself and doesn't need a pension freeze and work-rule changes that it is requesting.

But Dunkerley, who will become the airline's new CEO when it emerges from bankruptcy, said the company has "picked up the low-hanging fruit" through selecting profitable routes and adopting more efficient technologies. He said the airline can't expect to continue producing the same rate of improvement in those areas because of spiking fuel and maintenance costs.

He said the company is seeking to keep its labor costs flat with its unions so it can keep its expenses under control.