Molokai and Lānaʻi Face Big Changes With the Demise of ʻOhana

There has been a massive surge in air service to the Hawaiian Islands in recent times with more frequency, bigger airplanes, fancier first class seats, and more airlines getting into the game. But while the tourist destinations on the four primary islands — Kauaʻi, Maui, Oʻahu, and the Big Island — have all benefited, the smaller islands have not. In fact, the other two islands with commercial air service — Molokai and Lānaʻi — have seen their options halved now that Hawaiian has discontinued its outsourced ʻOhana regional service. I had the chance to speak with both Hawaiian CEO Peter Ingram and Southern Air Express/Mokulele CEO Stan Little to get a better understanding of the situation.

Combined, these islands barely surpass 10,000 residents, and they have never seen large numbers of visitors compared to the other islands. They have, however, generally had choices for their lifelines to the rest of the islands and the world. Both Hawaiian and Mokulele took their obligations as lifelines seriously, but thanks to recent changes, Hawaiian felt it was able to bow out.

To understand how we got where we are today, we need to look at the history of air service on these islands. Long ago, Hawaiian served them both with Dash-7 props until mid-1994 when they were retired. It then used DC-9-30s until October 2001 followed by 717s until 2004 when it pulled out. The islands evolved differently, so let’s take a look at each one.

Molokai

Molokai had a brief flirtation with tourism when the Molokai Ranch Ltd — which owns about a third of the island — developed a complex that included a Sheraton on the western shore. There was a company town over there called Maunaloa that had shops and even a movie theater. Molokai Ranch had tried to do many things to develop it further, but there is a fierce anti-outsider streak in the residents of Molokai. They fought every effort. In 2001, the hotel shut down, and in 2008, Molokai Ranch Ltd announced it was giving up on the island completely and stopping operations. It would try to sell the land, but it has yet to find a buyer.

The end result is that Maunaloa is a ghost town. I understand its last store shut this year, so it’s now just some houses. There are a few condos and luxury homes along the coast, but it’s mostly unspoiled. The island’s population has stagnated over the last 20 years, hovering around 7,500.

By 2012, Island Air, Mokulele, and Pacific Wings were the only airlines to serve the island. Here’s a look at how it has evolved since then using Cirium data.

Molokai Scheduled Flights and Passengers

Pacific Wings left in mid-2013 and Makani Kai came in. (When I say Molokai, I’m talking about the Hoʻolehua airport on topside Molokai and not Kalaupapa which was built for those patients with Hansen’s Disease.) Makani Kai, however, doesn’t show up reliably in the data, so you won’t see it here. Island Air was pulling back service dramatically before its inevitable demise, and Mokulele was still small. Hawaiian was able to come in and at first just maintain the number of seats that had been there in the past. That grew as Hawaiian tried to create a commercially viable schedule to compete with all the 9-seaters, but it was never very successful. The airline usually filled about half its seats on the 48-seat ATR-42.

By 2018, Hawaiian had cut back its service and passenger numbers didn’t dip much. Instead, Hawaiian was able to fill closer to two-thirds of its seats, but it still wasn’t prospering.

Lānaʻi

The story on Lānaʻi is somewhat different. The island is less than half the size of Molokai with just over 3,000 people. It does, however, have significant upscale tourist demand thanks to the two Four Seasons resorts on the island that became the major commercial activity after Dole shut down its pineapple operations. Here’s how the chart looks there.

Lana’i Scheduled Flights and Passengers

This market was almost entirely served by Island Air, because Larry Ellison, the Oracle founder who owns nearly all of Lānaʻi, also owned Island Air for a time. But it suffered, the resorts closed for renovations, and Island Air pulled out of Lānaʻi before failing completely.

ʻOhana had stepped in before Island Air failed, but it quickly became the only airline in the market once Mokulele pulled out. Despite being the only airline, Hawaiian still only filled about half its seats.

Meanwhile, in 2019, Mokulele went back into Lānaʻi after a several year absence. It has now built up mightily with well more than double the seats it used to have in the market.

The Pandemic Hits

Hawaiian may not have been planning on shutting down ʻOhana prior to the pandemic, but it ended up having no choice but to suspend operations. In order to start ʻOhana, Hawaiian made a deal with its pilots that if 717 flying declined too much, Hawaiian would shut down ʻOhana until it returned. The pilots were just protecting themselves from having their jobs farmed out to cheaper options. When Hawaiian pulled back flying during the pandemic, ʻOhana became a casualty.

While this happened, Mokulele was on the move. It agreed to take over Makani Kai’s commercial operations, and it started adding flights at a rapid pace. You can see that in both the charts above. On these small airplanes, Mokulele could operate as a shuttle service for the locals. It was not subject to standard TSA security, and it operated from commuter terminals at Kahului and Honolulu which made for an easy in and out for travelers.

When ʻOhana suspended operations, Mokulele jumped into action. According to both Peter and Stan, Hawaiian has decided to indefinitely lend its wheelchair ramps on the islands to Mokulele so it can better accommodate those who aren’t able to walk up the wobbly Grand Caravan built-in stairs.

For Mokulele’s part, Stan outlined a variety of other things the airline did to serve the local populations. It will be refitting the interiors on the whole Grand Caravan fleet. With these new interiors, Mokulele will now be able to replace an individual seat with a bus-style bench with 24 hour’s notice at no extra cost. That means it can accommodate even the largest of passengers that might not have been able to fit in the smaller individual seats previously. (The Makani Kai aircraft already have this seat permanently installed, so the airline can handle it to some extent now.) Mokulele has also committed to allowing those who cannot physically fly alone to bring along a caretaker at no extra cost.

The last hurdle facing Mokulele was the discomfort apparently experienced by the elderly when they fly on the unpressurized 9-seaters. Stan has now committed to bringing pressurized 18-seat Beech 1900 aircraft to the islands. The first should be in service in September with the second by the end of the year. These airplanes will be flown from Honolulu to both Molokai and Lānaʻi with a morning and afternoon roundtrip to supplement existing flying. Though these are larger airplanes, they can still fly outside TSA security by utilizing Part 380, the same thing JSX does on the mainland.

I asked Peter how important the obligation to the local community was in Hawaiian’s decision to shutter ʻOhana, and he said it was of enormous importance. I would go out on a limb and say that the service might have ended much earlier had it not been for that sense of obligation. It’s hard to see how this could have been a money-maker for the airline.

Peter did say that seeing how Mokulele had stepped up in the market to be able to serve more of the population did help make the decision easier, though it was never a simple one. Further, the continued increase in Mokulele’s frequency made it even harder for ʻOhana to compete. Mokulele this summer has more than a dozen daily flights to both Honolulu and Kahului from Molokai as well as 8 from Lānaʻi to Honolulu and 3 to Kahului. It even has infrequent flights between the two islands.

With these changes, the only target market that can’t be best-served are those connecting beyond to and from the mainland. Yes, Mokulele has an interline agreement with American and Alaska, but it still requires leaving security to go to a commuter terminal in Kahului and Honolulu. Hawaiian’s set up with ʻOhana was better, but it wasn’t enough to bring the flying back. The costs of restarting the operation were going to be significant, so Peter had the team do a deep dive. The result was the end of the line for ʻOhana.

The Future

Will we see Hawaiian return? According to Peter, the 717 can’t regularly, safely be flown on these routes especially on a wet runway. Besides, if the ATR had too much capacity, the 717 is just a non-starter in that respect. He remains open to future opportunities, but I don’t imagine we’ll see a resurrection.

The obvious play here is for Mokulele to start an interline agreement with Hawaiian that would allow through fares and checked baggage to be transferred. Stan straight up said he was hopeful that they could develop an interline agreement. Peter was a bit more coy in saying that they haven’t been able to have those discussions because they were competing against each other, but now that Hawaiian is out of those islands, it’s something to consider.

This would make it easier for connections, and Stan even indicated that they could consider running some connecting flights from behind security, but he didn’t love the idea. After all, Molokai and Lānaʻi don’t need a TSA presence at all today now that ʻOhana is gone. Bringing it all back hardly seems worth it.

Instead, the kamaʻaina (locals) should be happy to have an airline that’s at least trying to be responsive to its needs. And while locals always like having competition, it’s hard to imagine there being much demand for that to exist in the near future.