Island Air may expand to Vegas

The interisland carrier has signed a letter of intent to begin short-haul flights on the mainland

Island Air, seeking to reduce its risk in the crowded interisland market, has signed a letter of intent to conduct mainland operations with an undisclosed party using the 78-seat Bombardier Q400 airplane that Island Air recently took out of service and two other Q400s ordered but not yet delivered.

Chief Executive Robert Mauracher confirmed the deal yesterday but said final contract negotiations were still being worked out, and he wasn't prepared yet to disclose the location of the operations or the routes that will be served.

However, a person familiar with the situation said Island Air was going to be operating out of Las Vegas, possibly from a regional airport, to other cities in the U.S. West.

Mauracher said he could neither confirm nor deny the hub city. He said Island Air will be flying on behalf of another company.

"It will be very similar to what we do here, except that we'll do it on the mainland," he said. "It won't be Island Air, but our contract will be an outsourcing of services to a different party. The name will be different, but it will be operated under an Island Air certificate using Island Air employees. If things materialize like we assume, we hope to be operating by the end of the first quarter of next year."

Mauracher said Island Air still plans to remain in the Hawaii market. The regional carrier operates 103 daily interisland flights with eight 37-seat Bombardier Dash-8s. Island Air had planned to bring the three Q400s to Hawaii, but later reconsidered that move after the new interisland carrier go! stormed the market with low ticket prices.

"This is our market," Mauracher said. "This is our community. Right now, it doesn't make much sense to operate the other aircraft here because of the pricing. We see this fight continuing between go!, Hawaiian and Aloha and we're not prepared to get caught up in this mess. They're prepared to lose millions and millions of dollars and we're not prepared to do that. This deal allows us to spread our overhead costs over a bigger revenue basis."

Mauracher said Island Air hasn't applied yet for ticketing space or gate space at the airports it will be serving.

Chris Jones, public information administrator for the Clark County Department of Aviation in southern Nevada, said the agency hasn't been contacted by Island Air or an affiliated party regarding gate space, ticket space or any type of business plan at McCarran International Airport or two nearby smaller airports, North Las Vegas Airport, which is 15 minutes north of McCarran, and Henderson Airport, which is five minutes south.

Jones noted that the federal government offers economic incentives to persuade smaller carriers to use regional airports rather than tie up the runways at McCarran with smaller aircraft.

Island Air, a former sister carrier of Aloha Airlines, was acquired by San Francisco-based Gavarnie Holding LLC in 2004. Last month, Island Air announced it was taking its lone Q400 out of service and postponing the delivery of two other ones for six months. Mauracher attributed that move to added seat capacity that Mesa's go! has brought to the market, high fuel prices and fare wars of as low as $19 one way that have drastically pulled down ticket prices.