Aloha Airlines shuts down

by billso on Sunday, 30 March 2008

The Honolulu Star-Bullletin just posted this article:

Aloha Airlines will be shutting down its interisland and transpacific passenger flights beginning tomorrow, ending its 61-year service in Hawaii.

In a news release today, the company said United Airlines and other airlines will help accommodate passengers who have flights scheduled on Aloha after tomorrow. Aloha has stopped selling tickets for future flights.

I wonder if this will spur the state legislature into action? Last Thursday, Minnesota congressman James Oberstar implored Hawaii’s lawmakers to save Aloha Airlines, according to this Star-Bulletin article:

“The islands are so dependent on air travel. This is your taxi. This is your bus line. You essentially have to maintain this carrier for its competitive service and for the economic impact it means for Honolulu and the whole state.”

News coverage

These are articles that appeared later in the day, after I posted my article.

The Honolulu Advertiser posted a shorter article here and a Q&A section later in the day. Ticket holders for flights on and after April 1 can sue in bankruptcy court for their refund, or check with their travel agent. One interesting note: all Aloha Airlines frequent flyer miles expire tomorrow, 31 March 2008, when the airline shuts down its AlohaPass program.
Business Week
Bloomberg
Here’s KGMB’s article from its web site.
CNN from the Associated Press
The Huffington Post
Los Angeles Times
Washington Post from the Associated Press

The day after

Even Wired Magazine has mentioned the shutdown.

Both Honolulu newspapers had extensive coverage.

Honolulu Star-Bulletin
The Honolulu Advertiser redesigned its web site last week, and I cannot find the old archive feature. Here’s a link to today’s lead story.

Tagged as: airlines, Aloha, congress, Hawaii, Honolulu

http://www.techhui.com dleuck

> This is your taxi. This is your bus line.
> You essentially have to maintain this
> carrier for its competitive service

James Oberstar — MYOB. I know this isn’t a popular question, but if Aloha is so essential and competitive, why is it going out of business? Its sad to see Aloha go given its history, and I know a lot of great people work at the company, but this is part of the natural Darwinism of free markets that is essential to their efficiency. Every time they talk about bailing out private businesses with tax dollars it makes my blood boil. Am I working to subsidize airlines? Ikayzo had a rough fourth quarter in 2007 because of the banking crisis. Should I write my congressman for a bailout? Why do we provide charity for large corporations?
http://billso.com billso

Good comment, Dan.

Keep in mind that Oberstar got Federal help for Northwest Airlines, which is a major employer in the Twin Cities.

I do agree with Oberstar on one point. The state of Hawaii depends upon its interisland airlines. A dozen Superferries couldn’t match what Hawaiian Airlines and its smaller competitors haul in its planes every day.

I don’t agree with the way Hawaiian Airlines does business, especially its outsourcing of IT and call center operations. I’ll discuss that in a future article.
http://billso.com billso

Lee Cataluna had a good point in her 1 April column in the Honolulu Advertiser.

The local market in Hawaii is less supportive for local companies now than ever before. That’s how go! managed to get a toehold in the market.

I don’t think the state should be expected to step in and save Aloha Airlines when customers were more than willing to switch to other carriers. Local customers saved a few bucks at the time, but fares will creep up in the future without Aloha’s passenger business to put pressure on go! and Hawaiian.

A state bailout means that every taxpayer would pay the costs of the fare war, and that’s not right.

Aloha’s cargo business will survive, because it was run separately and carries the bulk of the mail, bread, and other items that are sent via air among the islands. This Advertiser article has more details.
http://www.techhui.com dleuck

> Keep in mind that Oberstar got Federal help
> for Northwest Airlines

I read about this, and I am not sure I agree with that move either although I have not studied it closely. Only in very extreme cases do I favor our tax dollars being used in this manner.

I found Oberstar’s comments to the legislature to be arrogant and presumptuous. Why is a guy living 4000 miles away telling the Hawaii legislature what is and isn’t important in Hawaii?

I believe the only proper role of the government in this area is to ensure the larger carriers are not engaging in illegal anticompetitive practices such as selling tickets under cost to drive smaller carriers out of business. Beyond that, businesses must survive on their own.
http://billso.com billso

I kinda miss the regulated days, myself. Can Hawaiian Telcom survive without regulatory help from the state? I doubt it.

There are calls from Hawaii’s DC delegation for Federal regulation of interisland service in Hawaii. Alaska’s intrastate air service has remained under Federal regulation, and is doing OK. Mirono has already spoken to Oberstar, and Dan Inouye may hold his own Senate hearing on Aloha. See today’s Advertiser.

I still prefer the big buses to trains. I’ll have more to say about the transit issue in a post later today.

Northwest’s Federal salvation may have doomed Delta, you know. When the two airlines decided to merge, NWA used its Federal pull to save its own interests first. This Wall Street Journal article has more details.