Hawaiian trying to stop go!

Hawaiian Air is seeking court action to keep its new rival from selling tickets for one year

Hawaiian Airlines is seeking a preliminary injunction that would prevent Mesa Air Group Inc.'s startup interisland airline go! from selling new tickets for one year.

The motion filed in federal Bankruptcy Court yesterday is the latest salvo in a cutthroat, three-way battle that has escalated between those carriers and Aloha Airlines since Phoenix-based Mesa announced in September that it was entering the Hawaii market.

A hearing on the preliminary injunction is scheduled for Aug. 4, and a trial on Hawaiian's claims against Mesa for damages is set for April.

"Hawaiian is more than ready to compete on a level playing field," said Mark Dunkerley, president and chief executive of Hawaiian. "However, the documents we filed (yesterday) describe evidence collected from Mesa demonstrating beyond any doubt that Mesa misused Hawaiian's confidential information."

The motion claims Mesa plagiarized Hawaiian's proprietary data more than a year after Mesa said the information was destroyed in the wake of its rejection as a potential investor during Hawaiian's bankruptcy.

Hawaiian, which sued Mesa in February, said in yesterday's motion it has evidence that shows Mesa's chief financial officer, George Murnane, copied text and charts verbatim from a Hawaiian document for potential investors and used the information in a Mesa document. In the motion, Hawaiian said Mesa was "caught with their hand in the cookie jar."

Hawaiian said Mesa benefited from the proprietary information because it was able to use Hawaiian's data and analysis as a shortcut to avoid much of the cost and risk of entering the interisland market.

"The confidential information offered Mesa the equivalent of Hawaiian's user manual for the operation of its interisland business," the motion said. It also said the document made Mesa privy to Hawaiian's marketing methods and pricing strategies.

Sensitive corporate information in the motion was removed from public view.

Jonathan Ornstein, Mesa's chairman and CEO, said yesterday that Mesa's document was prepared for potential local investors in go! but was never used after Mesa decided not to bring in local investment. He also disputed the claim that Mesa used confidential information in planning for its Hawaii operation.

"That's their assertion, obviously, but we believe differently," he said.

If Hawaiian's preliminary injunction is granted, go! would not be forced to suspend operations, because people who already have booked tickets would be able to fly. But the injunction would prevent new purchases for a whole year, slashing go!'s passenger load.

"Hawaiian is clearly trying to deprive local people from visiting friends and family at affordable fares," Ornstein said. "There are about 100,000 people who already have booked on us who might not have been able to before. For (Hawaiian's) sake the strategy needs to work, because I think the backlash from the people of Hawaii who can see through this is something (Hawaiian) may never recover from."

Ornstein also questioned what Mesa could learn from Hawaiian's proprietary information.

"I'm not sure what inside information they think we garnered from these documents," Ornstein said. "They've been flying here for over 75 years without a lot of change in their service pattern, and I don't think they've discovered any new islands in that time."

MORE INFO What happened: Hawaiian Airlines is asking a court to stop Mesa Air Group's interisland airline, go!, from selling tickets. If Hawaiian prevails: Go! could carry passengers who already have tickets, but could not sell any more tickets for a year. If Mesa prevails: No changes When it will be decided: Sometime after Aug. 4, when the court will hear arguments

Hawaiian said it does not want to shut down Mesa's interisland operations because it does not want to strand passengers who already have purchased tickets on go!. Hawaiian said it is seeking a one-year suspension of new ticket sales because of a confidentiality agreement that prevents Mesa from using the information for two years. Hawaiian alleges that Mesa used the information after about one year and that declarations to the court by Murnane and airline consultant Mo Garfinkle that Mesa did not use the proprietary information were false and misleading.

Hawaiian's motion also asserts that Mesa's Murnane testified during discovery that Garfinkle, who assisted Hawaiian executives during its bankruptcy, helped prepare the Mesa document.

Ornstein dismissed Hawaiian's accusations.

"There are only four (main) city pairs (to fly interisland)," Ornstein said. "There really aren't a lot of secrets in terms of passengers and revenue. That's public information, and that's how our decision was made.

"It's not as if there's a new interisland destination that was revealed to us in these documents that we took advantage of. Given that we want to charge low fares and be successful, we certainly wouldn't want to copy their business plan."

Mesa, which has countersued Hawaiian, claiming it is violating antitrust law, said Hawaiian could raise ticket prices again after go! sparked a price war that dropped one-way interisland fares to as low as $39.

"Hawaiian says it wants to encourage competition -- as long as it's not competition like Mesa, which is financially capable and operationally capable," Ornstein said. "They know we'll be here for the long term and know we'll continue to offer low fares, and that's something they don't want to see happen. They want to charge $200 round trip, like they used to."