With the interisland airline market going through consolidation, Hawaiian Airlines said it will decrease capacity even further by reducing its number of available seats by 5 percent to 8 percent beginning next month.

The announcement came less than a week after rivals go! and Mokulele Airlines formed a joint venture that removed 44 daily flights, or 3,080 seats, from the market on Mokulele's 70-seat jets. Go!'s addition of 10 flights, or 500 seats, on its 50-seat CRJ 200s made up only a fraction of the difference.

Hawaiian President and Chief Executive Officer Mark Dunkerley disclosed the seat reduction yesterday in conjunction with the release of the parent company's third-quarter earnings, which rose 408 percent.

However, about $20 million of Hawaiian Holdings Inc.'s $30.7 million net income, equating to 58 cents a share, came from a one-time tax benefit. The airline also benefited from a 47.9 percent decrease in fuel costs from the year-earlier period.

Excluding the adopting of various one-time tax-accounting changes, Hawaiian's net income would have been $10.7 million, or 20 cents a share. Analysts were looking for 28 cents a share, excluding one-time items. A year ago Hawaiian earned $6 million, or 12 cents a share.

Dunkerley said Hawaiian would still serve the same islands that it does now following the reduction but that the frequency of flights would be reduced. He said it hadn't been determined yet how many flights and seats would be affected.

“;Travel of all forms is down, so it shouldn't be a surprise to anyone in an economic recession there is less demand for air travel and less seats are needed to satisfy that demand,”; Dunkerley said.

He also said Hawaiian had added flights to remain competitive in time slots with Mokulele, which began jet service last November, and the combination of Mokulele and go! eliminated the need to offer flights in less desirable time slots.

Analyst Bob McAdoo of Avondale Partners LLC said he expects interisland airfares eventually to rise.

“;From a consumer's point of view, it's nice to have $49 fares, but realistically, it's important that the people there make money on short-haul flights or they won't have short-haul flights,”; he said. “;There's still competition; it's not like there's a monopoly.

“;With those three Embraer planes gone, the (remaining) planes will be fuller, and, from a financial point of view, go! and Hawaiian will be better off. It will make for a healthier set of airlines.”;

Dunkerley said interisland passenger revenue per seat-mile declined about 30 percent last quarter, with a yield decline of more than 26 percent and a decline in load factor, or percentage of seats filled, of about 4 percentage points.

On trans-Pacific flights to the West Coast, the situation remained “;generally stable”; over the last couple of quarters but not compared with a year ago, Dunkerley said. Load factors were up by 5.8 percentage points over a year ago, but yield fell 17 percent.

Overall, Hawaiian's revenue fell 10.1 percent to $305.6 million from $339.9 million.

The company's maintenance expenses also were higher than normal as they jumped 55 percent to $37.1 million from $24 million, partly due to higher engine overhaul expenses.

“;Our third-quarter results were remarkably similar to our results last year though for entirely different reasons,”; Dunkerley said. “;This year, while weathering a substantial slowdown in demand, we have at least benefited from lower fuel prices, and we have posted comparable profits.

“;As a result, Hawaiian has been able to continue to strengthen its balance sheet from operations in preparation for our coming fleet renewal program.”;

Hawaiian ended last quarter with unrestricted cash and equivalents of $302.9 million, up from $282.6 million at the end of the second quarter.

The company plans to bring in two Airbus 330s in June for previously announced expanded service, which will include an additional Los Angeles-Honolulu flight, as well as its first-ever Oakland-Maui flight and its first San Diego-Maui flight since the summer of 2008.

Hawaiian intends to bring in another A330 in February of 2011 but said yesterday it called off tentative plans to bring in a fourth A330—in 2011—until it can resolve its 2 1/2 -year labor negotiations with its pilots union. He also said a leased Boeing 767 will be returned in the third quarter of next year.