How Hawaiian Airlines is Redefining Itself

You’ve probably heard of Hawaiian Airlines (HA).  But have you noticed their steady growth and new route structure over the last few years?  The airline is doing an excellent job of turning its operating base – Hawaii – from a disadvantage to an advantage.

Originally founded as Inter-Island Airways in 1929, and operating Sikorsky flying boats, the airline spent much of its early years flying exclusively within the Hawaiian islands.  Back then, planes didn’t have the convenient range to operate all the way from Hawaii to the US mainland or other Pacific rim countries.

But with the coming of jet planes and the longer ranges they were capable of, not only did long distance travel in general start to grow, but so too did Hawaiian Airlines’ interest in taking a share of such traffic.  From 1984 it dallied in an on-again, off-again way with flights to the South Pacific, and a year later started operating scheduled service from Hawaii over to major west coast cities.

For much of the airline’s life it battled for local market share with Aloha Airlines, which operated from 1946 – 2008; indeed some might say Aloha was sometimes the better of the two airlines, but after both airlines went through severe financial struggles, it was Aloha that closed in 2008, leaving the island market primarily to Hawaiian Airlines.

Hawaiian Airlines these days is a generally excellent airline, and with an unbroken safety record – no passenger fatalities or hull losses in now 83 years of operation.

At first blush, it would seem that Hawaiian Airways has a problem, being at the ‘end’ of the route network it serves.  There’s no further state for people to fly to.

Its occasionally forays into other Pacific rim countries have been primarily to bring (primarily leisure) traffic from those countries to Hawaii.

But are we starting to see a shift in Hawaiian’s mission and route strategy?  The last few years have seen an increasing number of Pacific rim destinations added (most recently an announcement yesterday about new service to Brisbane Australia), as well as more and more cities on the US West Coast (currently ten).

New planes are also enabling HA to now fly nonstop all the way to the East coast (with service to New York’s JFK airport having started earlier this month, making JFK the eleventh mainland city served by HA), allowing the airline now to serve pretty much any city it wishes on the mainland, nonstop, from its Honolulu hub.

Latest published results show that passenger traffic is up 12.5% for the first five months of this year compared to the first five months of last year, and its first quarter 2012 result showed net income of $7.3 million, massively up on the slim $855,000 profit for the first three months of 2011, and more than cancelling out the full year 2011 loss of $2.6 million (caused in part by the Japanese earthquake/tsunami and in part by fuel prices).

Interestingly, the airline remains unaligned with any of the three major international airline groupings, and has frequent flier reciprocity with a wide range of other US carriers.

The airline has an ambitious program of buying new jets underway with Airbus (a mix of A330s and, after they come out, A350 planes too) giving it a lot of new capacity coming on stream over the next eight years.  This year it took delivery of four more A330s, almost doubling its A330 fleet from five to nine, next year it will add another five, and another five in 2014 and three more in 2015.  In 2017 it will start to get A350 deliveries, two a year for two years then one each for 2019 and 2020).

That is a huge growth in planes with 23 new widebodies being received between 2012-2020, even though some of them will be replacing six of the older and smaller 767s the airline also operates and plans to return as their leases expire between now and 2016.

Is Hawaiian Airlines Redefining Itself

All this major expansion brings us to the magic part of the puzzle.  Is Hawaiian now seeking to become an airline conveying people between countries on the Pacific rim and cities in the US mainland?  Is it redefining itself as a carrier that no longer simply takes people to/from and within Hawaii, and now becoming a carrier that transports people between the US and other Pacific rim countries via Hawaii?

Instead of being a carrier at the end of the line, both for US and Pacific rim people wishing to travel just to Hawaii, is it now putting itself in the middle of a route system connecting the Pacific rim countries and US mainland cities?

There is a great deal of sense in this strategy.  Many itineraries between cities in the US and cities in other Asian/South Pacific countries require at least one stop en route.  As long as there is a convenient reliable connection being offered, why not have the stop in Honolulu instead of at LAX or somewhere else in the US, or at a gateway/hub city somewhere in Asia.

We wish the airline good fortune in what promises to be an exciting future ahead.