Will 'Predatory' Pricing Win The Day In Hawaiian Skies?
Sometimes, the airline industry reminds us of the old "Wild
Kingdom" TV series... complete with graphic images of prides of
lions jumping over themselves to devour the carcasses of slain
prey. Hot on the heels of Aloha Airlines' discontinuation of
service, on Monday rival Mesa Airlines announced its
go! Airlines subsidiary will increase the number of flights it
operates in the region, from an average of 54 flights per day to 94
flights beginning Tuesday.
With its new service, go! will step up its daily round trip
flights from Honolulu, to Maui, Lihue, Hilo and Kona. The Mesa
subsidiary will also offer all seats at $49 through Monday April
7.
"In response to demand, we have significantly increased the
number of flights in all markets providing high frequency service
throughout the business day," said Mesa Air Group Chairman and CEO
Jonathan Ornstein. "We will continue to adjust our schedule to
satisfy demand and work hard to provide the highest quality, lowest
cost service to the people of Hawai'i."
Mesa finalized plans to launch service in Hawaii in 2005... and
promptly shook up what had been relatively stable (some would say
"noncompetitive") market dominated by two airlines -- Aloha, and
Hawaiian Airlines. Offering much lower fares than its rivals -- to
the point of operating routes at steep losses -- go! promptly
commanded a large share of the market, eating into its rivals
profits.
As ANN reported, in November
2007 a US Bankruptcy Court judge ruled go! illegally used
confidential information obtained from Hawaiian while under
bankruptcy proceedings to launch the interisland airline... and
ordered Mesa to cough up $80 million in damages, determining Mesa
used information it obtained while a bankrupt Hawaiian Airlines
courted Mesa as a possible investor -- including profitability
figures for local and Hawaii-US mainland routes, and passenger
profiles -- to turn around and launch its own airline.
In its announcement of filing for Chapter
11 bankruptcy last week, Aloha called the predatory pricing
strategy employed by go! "illegal," a claim go! officials
downplay.
"Since June 2006 when go! first entered the market, the people
of Hawai'i have given us tremendous support," said Frank Among,
go!'s Vice President e-Commerce. "Almost 1.5 million people have
flown on go! and more than 65,000 have joined our go!Miles frequent
flyer program. Today we renew our commitment to serving the people
and businesses of Hawai'i with friendly, reliable service and
affordable air fares."
Darwin would likely approve.