Aviation
Aloha Rising
A Hawaii Regional Airline Is Becoming A Trans-Pacific Player
Remarkably over the past year, Pacific commercial aviation hasn’t been badly buffeted by the turbulence that has rocked air service in most other markets. While it is true that the major long-haul carriers that serve the region have been put under extreme financial pressure, for the most past routes and levels of service in the insular Pacific have remained stable. In some cases, air service has actually expanded in the past year.
One of the fastest-growing players in the region has been Hawaii-based Aloha Airlines, which has been slowly and quietly building its experience in the Pacific Islands. Aloha first tested the Pacific waters back in the mid-1980s, with an ill-conceived effort to serve Guam and Taiwan from Hawaii using a wide-body DC-10.
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It wasn’t until 1998 that Aloha Airlines again offered scheduled service to Pacific Islands destinations from Hawaii. Aloha began flying scheduled service from Honolulu to Majuro and Kwajalein in the Marshall Islands. This month, Aloha is scheduled to launch twice-weekly non-stop service from Honolulu to Rarotonga in the Cook Islands.
In all of this, Aloha President and Chief Executive Officer Glenn R. Zander has had to deal with a failed merger with Hawaiian Airlines, then the rush to launch expanded U.S. mainland service to head off a primed Hawaiian Airlines, and above it all, questions about Aloha’s financial strength. On the final point, many of the doubts were removed last month when the U.S. government approved federal loan guarantees amounting to $40 million of the $45 million Aloha needs to borrow to keep flying.
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Zander is no stranger to tough times. He joined Aloha Airlines in 1994 from Trans World Airlines, where he rose from accounting clerk to Co-CEO during a 25-year career with that carrier. Now 56, Zander is trying to keep Aloha flying through these tough times.
Zander recently shared with Pacific Magazine his airline’s Pacific strategy, and what might be next.
Q: What standard does Aloha Airlines use to determine the feasibility of new routes in the Pacific Islands?
A: What we are looking for in the South Pacific are routes that are currently under-served and are not likely to attract big airline-big airplane competition anytime soon. Beyond that, we are looking for destinations that have a promising amount of traffic, both from tourism and from their own people traveling to and from the South Pacific. Ideally we are looking to serve places that have good potential for growth as a tourism destination, even if it is “off-the-beaten track” tourism.
Q: What is the nature of Aloha’s relationship with Palau Rock Island Air?
A: We have signed a Letter of Intent to provide management services. This could lead to Aloha’s assisting them with identifying the best aircraft for their routes, and locating pilots and flight attendants for them to hire. This may also include some training, of flight attendants for example, and some help with setting up systems, for revenue accounting, for example. I do not foresee Aloha actually providing them with staff.
Q: What did Aloha Airlines learn from the experience of flying to Guam?
A: Aloha Pacific was formed to provide DC-10 service to Guam and Taiwan in the spring of 1984. The service was discontinued after six months and the DC-10 was sold, at a profit.
Aloha learned a few good lessons. One was how not to launch a new service and by extension of that, what it takes to enter a new market. Aloha also learned that flying wide-bodies was not its forte. We learned to stick with what we know best.
We did a much better job of launching our service to the U.S. mainland in February 2000. We did our homework regarding the market, and we got the right plane (the Boeing 737-700).
Q: How do margins and load factors on Pacific Islands routes compare with interisland Hawaii and North American routes?
A: There’s all sorts of apples and oranges in this kind of comparison but we can simplify this in general terms.
The interisland routes are very low margin routes. They are high-density, low-fare routes.
Flying to the Pacific is just the opposite. These are very low-density, long haul services where costs are high and fares are high, and margins are a little better. You expect small loads except during peak travel times.
The transpacific service to North America falls between them. They are higher density, medium yield.
Q: Does Aloha Airlines plan to help promote the destinations it flies to in the Pacific?
A: We like to think we are helping them by flying to them. Our main role is to provide dependable, high-quality air service. To some degree, our marketing efforts will help them attract attention as a travel destination. But for the most part, we will do the flying and leave the destination marketing to them.
