Unpaid Lease Rents for
Q400 Kills Island Air

Flying Inter-island in Hawaii banner

I have never flown on Island Air and never will.

Island Air announced that they would cease operations at the end of today, November 10. 

The shutdown comes nearly a month after the airline filed for Chapter 11 bankruptcy protection. It tried to find major investors to prop themselves up. In the end that did not happen. The company that they leased their recently acquired 78-passenger Q400 turboprop planes forced Island Air to close after the airline did not meet lease rent payments for the aircraft.

As a result, more than 400 people will be out of work and passengers will be stuck with worthless tickets that they may be able to get refunds from through their credit card companies.

Island Air was in business for 37 years, starting in 1980 as Princeville Airlines. Back then the airline flew deHavilland Twin Otter prop planes between Honolulu and the privately owned Princeville Airport on Kauai.

In the 1980s Princeville Airlines was acquired by Aloha Airlines which renamed the commuter carrier Aloha Island Air. They continued to operate the small, 18 passenger Twin Otter planes. In time the fleet was upgraded to the deHavilland Dash 8 turbo-prop that carried a little more than 30 passengers.

Island Air N943WP

The airline was successful with the Dash 8’s and continued for many years under a few ownership changes through the 21st century. In the 2000s, Island Air started flying the ATR 72 (photo above) turboprop which carried about 68 passengers. They briefly had a Q400 in their fleet for a short time in 2006.

This year, with some fanfare, Island Air decided to retire their ATR 72’s and acquired 5 78-passenger Bombardier Q400 turboprops which are based on the earlier versions of the Dash 8. The new planes were supposed to offer better passenger comfort and cost savings.

Never happened. Unpaid lease rents for the new aircraft, no profitability in the past 4.5 years, and the bankruptcy filing all caught up with Island Air as it died from a lack of cash.

Sad story for the local airline.

The inter-island market is now stuck with Hawaiian Airlines (and its subsidiary Ohana by Hawaiian) as the only major player in the market. Expect ticket prices to hike again.

The demise of Island Air opens the door wider for the possible entry of Southwest Airlines into the inter-island market since their service announcement was made in early October.

Inter-island air travel will be an interesting topic to continually watch.

Aircraft that Island Air operated

Video Report – KHON TV

Flying Inter-Island in Hawaii

Flying Inter-island in Hawaii banner

Southwest Airlines // Boeing 737-8 MAX // N8711Q (cn 36979, ln 6272) // KCMH 10/1/17
Southwest Boeing 737-MAX jets will be flying to Hawaii from the U.S. mainland sometime next year. Photo by Micheal Wass.

The anticipated arrival of Southwest Airlines to Hawaii’s skies has created a possible scenario that grows larger every day with the recent Chapter 11 bankruptcy filing by local carrier, Island Air.

First off, Southwest announced earlier this month that they will be starting up West Coast USA to Hawaii service using their new Boeing 737 MAX jets. The airline is in the process of getting ETOPS certification and securing gate space at Hawaii airports. The airline has not announced their Hawaii – U.S. mainland destinations, but it can be assumed that the airline will at least be flying to Honolulu and Kahului, Maui with Lihue and Kona being fairly good bets too.

What is most interesting about Southwest’s entry into the Hawaii market is the possibility that the airline will start “limited” inter-island service. 

Southwest Airlines is popular with many mainland flyers as they are known for being a low-cost carrier and do not charge fees for checked baggage or flight changes.

The announcement comes at a precarious time for Island Air, the state’s second largest inter-island carrier. They filed for Chapter 11 bankruptcy a week ago after a dispute concerning lease rents for three of their Q400 aircraft surfaced. The lessor wants to repossess the aircraft. They filed a lawsuit in bankruptcy court to force the airline to give up the planes. Should the lessor prevail in the lawsuit, Island Air which is down to those three planes after two other Q400s were taken away will be forced to go out of business leaving 400 people unemployed.

Island Air N943WPOne of Island Air’s ATR 72s, which were just retired, passes by the Hawaiian Airlines maintenance hanger in this photo shot in 2015.

Island Air recently retired their fleet of ATR 72s hoping that the Q400s would help bring costs down.

Should Island Air close, longtime incumbent, Hawaiian Airlines will more than likely increase their inter-island ticket prices (which are high already) as they reign in their near-monopoly position in the inter-island market.

COMMENTARY

  1. It will be a sad day in the local airline industry if Island Air goes out of business. In 2008 Aloha Airlines went out of business after being in the market for more than 60 years. Mesa’s Go! airlines which disrupted the inter-island market in 2006 contributing to Aloha’s demise, went out of business in 2014.
  2. The possible entry of Southwest into the inter-island market will be a great option for local residents who have been negatively impacted by Hawaiian Airlines’ high ticket prices and baggage/change fees.
  3. There will definitely be room for Southwest should Island Air go out of business.

What do you think? Send us a comment.

 

United Airlines to Increase Hawaii Service

United Airlines 777 by Mel
United Airlines 777 by Mel

It comes as no surprise to me that United Airlines is increasing its schedule with additional flights to Hawaii starting late this year. Airlines are in some sort of scramble to either increase their service to Hawaii or start new service, like it has been mentioned in recent months by Southwest Airlines.

I think the airlines are scrambling this year on the fact that island based Hawaiian Airlines will be expanding their fleet and reach into the U.S. mainland and beyond with an influx of new aircraft. Hawaiian have 18 new Airbus A321neo‘s and 6 new A330-800neo jets on order. The A321’s will start to arrive later this year. There will be more flights in an out of the major neighbor island airports with the inclusion of the newer, smaller planes replacing Hawaiian’s Boeing 767s.

Southwest Boeing 737-700
Southwest Boeing 737-700 by Aero Icarus

Southwest is on the way to acquiring more than 200 new Boeing 737 jets, many being the advanced Max 7 and 8 series which will more than likely be ETOPS certified to fly to and from Hawaii.

United is the largest airline flying to and from the islands. As part of their 70 years of offering service to Hawaii, the airline has issued a press release announcing increased flights from their major hubs to all of Hawaii’s large airports: Honolulu (HNL), Maui (OGG), Kauai (LIH), Kona (KOA) and Hilo (ITO).

More flights to Hawaii is good for tourism as more visitors bring increased spending, more tax revenue, business growth and jobs to the islands. Whether or not increased frequency of flights to and from Hawaii will have an impact on air fares remain to be seen.

Hawaiian_A330_by_Mel
Hawaiian Airlines A330 by Mel

Short Takes on Hawaii News, Events and Announcements

Congresswoman Colleen Hanabusa’s Town Meeting

Public Meeting with Congresswoman Hanabusa
U.S. Representative Colleen Hanabusa held a town meeting yesterday (May 9) at McKinley High School in Honolulu where she answered mostly partisan questions regarding issues effecting Hawaii and the nation. During the Q & A Rep. Hanabusa addressed a number of issues including federal budgeting items for the military, social services, rail and more. She also touched upon the Hawaii marine preserve, Hawaiian governance, sanctuary cities, education and the firing of FBI Director James Comey. Approximately 60 people attended the meeting.

Photo: Congresswoman Colleen Hanabusa poses for pictures with two of her supporters.

More @ The Hawaii Political Platter Blog

Honolulu International Airport Renamed The Daniel K.  Inouye International Airport

Take Off The Honolulu International Airport has recently undergone a name change. The airport is now called the Daniel K. Inouye International Airport. The State of Hawaii airport website for the airport has changed to reflect the new name, as well as the signage on the premises. The airport will retain the PHNL and HNL airline codes.

Daniel K. Inouye was Hawaii’s longtime Senator serving in Washington DC from 1963 to 2012. While naming the airport is an honor for the Senator, it certainly does not say “Hawaii” as the old name, Honolulu International Airport.

Photo: Airliner taking off from airport’s reef runway.

Additional News Links

The Hawaii Republican Party will be holding its annual convention this weekend, May 12 and 13 on the island of Kauai at the Aqua Kauai Beach Resort. New state officers are to be elected and party rules updated.

Actor Dwayne “The Rock” Johnson may run for President of the United States. At this early stage nothing can be discounted, though it would seem that Hollywood Celebrities such as Donald Trump, Ronald Reagan, Clint Eastwood, Arnold Schwarzenegger and Sonny Bono turned their celebrity status and name recognition into political success. It certainly takes a lot of money and name recognition to be elected. Hawaii connection for Mr. Johnson? He lived in Hawaii when he was a teenager.

The Small Business Administration (SBA) in Hawaii is having two “resource day” events on May 11 and 17. The May 11 event will be at the Ewa Beach Location of American Savings Bank. The one on May 17 will be at the Kaimuki Branch of The Bank of Hawaii. More details and registration at this link: SBA – Hawaii.

Hawaiian Airlines is having another one of their monthly ticket sales for inter-island flights for as low as $68 each way (depending on distance to destination). The deadline for reservations is tomorrow, May 11. The price for inter-island tickets have certainly rose in recent years when most flights sell for nearly $100 each way.

Mother’s Day is this coming Sunday, May 14. Don’t forget to honor your Mom with gifts and love. For unique gift suggestions visit this link: A Greener Daily Life. While it may be too late for some gifts, just remember that it is for “Mom” and that every day is “Mother’s Day”.