Isle air wars intensify

Newcomer go! strikes a deal with Mokulele for flights to Molokai, Lanai and Kapalua

MESA Air Group's go!, which shook up the interisland market with its low-priced fares, was expected to announce today it is expanding its reach in Hawaii under a code-share agreement with Mokulele Airlines that will allow go! passengers to fly into smaller airports.

Mokulele, founded in 1998 in Kona on the Big Island, is replacing its entire fleet of five Piper Chieftains with as many as nine Cessna Grand Caravan 208-B turboprop aircraft that will operate under the go!Express brand.

Mokulele, which operates Big Island tours and charter services between the islands, plans to increase its number of employees from 28 to between 80 and 100, according to William Boyer, president and chief executive of Mokulele.

The turbine-engine Caravans, which cost $1.5 million to $2 million apiece, will seat nine passengers and be used for service from Honolulu to Kapalua, Maui; Lanai; and Molokai. Service between some neighbor island cities is expected to be added later. The piston-operated Chieftains were sold to Express One, a Florida-based freight and charter company, for an undisclosed amount. Limited service of go!Express is expected to begin in mid- December.

HIGH-FLYING DEAL Go! is planning to enter a code-share agreement with Kona-based Mokulele Airlines to provide service to smaller airports. Name: go!Express Routes: Honolulu to Kapalua, Maui; Lanai and Molokai Fleet: Up to nine Cessna Grand Caravan 208B turboprop aircraft that will each seat nine passengers Expected starting date: Mid-December Expected fares: $39 to $79

Go!'s foray into the smaller interisland markets will apply more pressure on Island Air, which already flies into those cities, as well as Maui-based Pacific Wings, which uses the same type of aircraft that is being acquired by Mokulele and also flies those routes.

Go!, which has signed a memorandum of understanding with Mokulele, already has created havoc for larger carriers Hawaiian Airlines and Aloha Airlines because of its $29 and $39 one-way fares from Honolulu to Lihue, Kauai; Kahului, Maui; and Hilo and Kona on the Big Island.

"By doing this with a local Hawaii carrier and serving the other communities in Hawaii, we want to send a message to the public that we're serious," said Jonathan Ornstein, chairman and chief executive of go!'s corporate parent. "By operating smaller aircraft, (Mokulele) can fly to a number of the cities we can't fly to with our jets and gives us a bigger presence."

Ornstein said the fares will be similar to go!'s current fare structure with its "trademark" $39 one-way fare and the top fare being about $79.

"We get a lot of requests in reservations for flights to those other cities, and it doesn't make any sense to turn those folks away when we have a name brand and people want to fly these places," Ornstein said. "We felt Mokulele will fill a nice niche. We're not going to operate these type of aircraft, and having a partnership is the best way to serve those markets."

Ornstein said the partnership with Mokulele will allow go! to cut down on its overhead through shared marketing and reservation expenses.

Boyer said partnering with go! will give a big boost to Mokulele. The small carrier recently received approval from the U.S. Department of Transportation to provide scheduled service and is awaiting operating specification from the Federal Aviation Administration. The new planes will be painted in go!'s ocean blue and white colors.

"Jonathan has basically given us all the passengers who want to go to the other destinations he doesn't service right now," Boyer said. "For us, a small Hawaii company, it's tremendous for employees, the communities and morale."

Go! will get paid a fee by Mokulele for each passenger, Ornstein said. Passengers will be able to apply mileage on go!Express flights to their go! frequent-flier miles.

Just as go! affected Hawaiian, Aloha and Island Air in the larger interisland markets, Ornstein acknowledged Island Air and Pacific Wings could see some of their operations affected as well.

"Bill's concept, like ours, is to provide high-quality service at the lowest possible price and, to the fact that we'll lower fares in some markets, that will impact some of the existing carriers," Ornstein said. "Clearly, there will be some increased capacity in the market."

Ornstein said today's announcement was not a strategic move to coincide with tomorrow's Bankruptcy Court hearing, in which Hawaiian is seeking a preliminary injunction that would prevent go! from selling new tickets for one year. In fact, Ornstein said he has been talking to Boyer about such an arrangement even before go! began interisland service on June 9.

Hawaiian is seeking the injunction because it claims Phoenix-based Mesa used information from Hawaiian's proprietary data -- which Mesa had been allowed to see while it was a potential investor during Hawaiian's bankruptcy -- more than a year after the information was supposed to have been destroyed.

Ornstein, who has talked about replacing the 50-seat Bombardier CRJ-200s flown by go!, said he expects to sign documents within the next few days for 90-seat CRJ-900 aircraft. He said he would like to have those aircraft in place by the beginning of next summer.

Boyer said Mokulele will phase out two of its Chieftains next week and that the first Caravan is scheduled to arrive in early December, with service to begin in mid-December. He said a second Caravan is due in late December with Mokulele holding options to buy seven more aircraft in 2007.

The interior of the Caravans will have leather reclining seats with 34 inches of legroom, as well as in-flight entertainment.