Mesa Air leads new round of fare cuts

Hawaiian matches the $59 interisland round-trip offering

Mesa Air Group Inc., whose interisland startup carrier go! sparked a $39 one-way fare war, has struck again by lowering its ticket prices even more.

The Phoenix-based regional carrier announced yesterday a "Midweek Madness Sale" in which it is offering $59 round-trip tickets, or the equivalent of $29.50 each way, for travel Monday through Friday between Honolulu and Hilo and Kona on the Big Island; Lihue, Kauai; and Kahului, Maui.

Hawaiian Airlines matched the new fare, and Aloha Airlines said it could make a decision as early as today.

Greg Stephens, chief operating officer for go!, said the $39 fares that dramatically lowered the price of flying interisland could be here to stay.

"We feel our cost structure allows for this," Stephens said. "We feel we will have the ridership to maintain this, and we want people to try our service. We think once they begin flying our flights on June 9, we'll be able to maintain the traffic levels to maintain these fares."

But Mark Dunkerley, president and chief executive officer of Hawaiian, said on a conference call earlier this week that he does not think adding seating capacity in a market that is shrinking is "a sensible thing to do."

"Clearly, when you have fares coming down the way they've come down, that's going to have an impact on our prices and what we can sell tickets for," he said. "But equally clearly, we are working pretty hard in our revenue management department to limit the effects of that."

Dunkerley said that while the lower fares are creating a bump in the interisland market, he does not think the additional capacity will stimulate the market in the medium to long term. He said that not only are more mainland-based carriers adding direct flights to the neighbor islands, but the improved infrastructure on those islands, such as the arrival of big-box retailers such as Home Depot and the building of additional medical facilities, is making it less necessary for residents to fly to Oahu.

Mesa, which kicked off the fare war in March at a press conference heralding its arrival into the Hawaii market, has extended the $39 fares four times since its initial expiration date, with May 31 the latest deadline to purchase a $39 one-way fare for travel between June 9 and Sept. 30.

Its latest salvo came yesterday with the unveiling of the $59 round-trip fare. Tickets must be purchased as a round trip by May 22, and, like the $39 fares, they are for travel between June 9 and Sept. 30. The tickets are nonrefundable and nontransferable and do not include applicable fees and taxes. Seats are limited and might not be available on all flights. They can be booked online at www.iflygo.com or by calling 888-IFLYGO2.

Stephens said the response to the $39 fares has been "overwhelming" and has exceeded Mesa's expectations.

"We want to people to try our product," Stephens said. "We feel that they're going to be very pleased with what we have to offer."

Hawaiian, which did not have any comment on Mesa's latest fare reduction, said Hawaiian's $59 fare can be purchased only on its Web site at www.HawaiianAirlines.com. Hawaiian said that while a round-trip purchase is required, if the special fare is available in one direction but not the other, customers can mix and match the $29.50 fare with other one-way fares.

Stephens said he did not immediately know if Mesa's $59 round-trip deal was combinable in that fashion.

Aloha, which said it was studying the new fare, previously matched Mesa and Hawaiian on the $39 fares.

"We're focusing a great deal of energy on the interisland market," said David Banmiller, Aloha president and CEO.

Island Air President Rob Mauracher said he does not think the $39 fares are sustainable, but that "anybody who comes into a market that is served by existing carriers and drops the fares dramatically has made an impact."