Last week, I was supposed to be with some friends hiking around Molokai, but Mother Nature had other plans. The abnormal deluge that soaked Molokai and the western islands killed our plans, so we postponed the trip. Unfortunately, that meant I wasn’t able to make the interviews I had lined up in Honolulu before heading back home. But don’t worry, video calls saved the day.
Peter Ingram (left) during the Hawaiian Long Beach inaugural. That’s Brent Overbeek, now Chief Revenue Officer, at right.
My goal was to check in with both Hawaiian and Alaska as the merger slowly churns toward a result. I started with Hawaiian CEO Peter Ingram.
It’s been a busy year for Hawaiian with big projects like inducting the 787 into the fleet and installing Starlink internet. Throw the communications/government relations work around the merger into the mix and you end up with a full plate. Through all this, I was wondering how Peter was managing to keep Hawaiian focused. We’ve seen airlines drop the ball while they wait for a merger to come through… and then it falls apart. (I think you know what I’m talking about.)
There’s no silver bullet, because people are expecting a merger to happen, so it does preoccupy them. But here’s how Peter explained it to his team.
…last fall when we were in discussions but hadn’t come to final terms with Alaska on the combination, one of the things I kept saying to our team was look, Plan A is running our standalone business, operating a stand-alone plan. [Plan] B is going forward with the combination…. When we signed the final paperwork in early December and announced the deal. I said, okay, now Plan A is combining the business with Alaska, but we still have to keep Plan B in mind.
As for the merger itself, there wasn’t much to discuss. The Department of Justice (DOJ) came back with a second round of questions as expected, and the airlines submitted responses in early May. Now it’s time to just wait to see if DOJ opts to challenge it or not. In the meantime, Hawaiian has plenty of work to do.
The Japan Problem
Japan continues to be a real problem. The yen is so weak compared to the dollar that it makes it hard for Japanese travelers to opt to vacation in Hawaiʻi. It’s not just that, however. Peter said that inflation, especially hotel costs, have “changed the equation.” Until those things change, demand will stay low in the Japanese point-of-sale.
To counter that, Hawaiian has reduced some Japan flying, but it is also shifting its mix. Pre-pandemic, Peter says that Japan point-of-sale made up about 85 to 90 percent of the people on the airplane. Now, it’s closer to 50 to 60 percent. That’s an enormous shift. Even more surprising, in some months like March, it tips in favor of more than half the people on the plane not coming from Japan.
Where are they coming from? It’s a mix of people beyond Japan connecting over Tokyo to get to Hawaiʻi along with locals in Hawaiʻi and yes, people coming from the mainland US to Japan. I think it goes without saying that this traffic is not as lucrative to the airline as is Japan origin, but it’s certainly better than nothing until the economic situation changes.
The A321neo
As we all know by now, any airline operating A321neos powered by Pratt & Whitney are in a world of hurt. The engine issues have kept many airplanes grounded while they wait their turn to get fixed up. I experienced this first-hand on Hawaiian last October when my return from Kahului to Long Beach was canceled due to aircraft availability.
We’ve heard airlines like Spirit say this will go on for a long time. Some airlines haven’t even seen their troubles peak yet. But Hawaiian? It is expecting to be back at full strength imminently.
How did this even happen? Hawaiian had some of the earliest models and had other issues that allowed it to get to the front of the line. Now, the airline is over the hump, and even better, all the neos have Starlink installed so wifi is super fast and good.
I asked Peter if there was hope for a lot more flying for the 321s or if it had been tapped out, and he said there wasn’t a ton more they could do. They did recently start Salt Lake, but that is really pushing the boundaries of that airplane. It will have to take a weight restriction westbound during some parts of the year. But how’s that flight doing? “We’re we’re pleased with how it’s going. Demand has been pretty good.”
The South Pacific
Opportunities for the 321 led me into the South Pacific. Hawaiian flies bigger airplanes to Papeete and Pago Pago, but it runs the 321 to Raratonga. Is there more that they can do in the region?
It’s not going to be an area where you see seven or eight airplanes worth of growth potential, but there are opportunities.
I couldn’t get him to tell me more than that, but there are only so many islands with a big enough runway.
As for that Raratonga flight, Peter says “we had a little bit of a slow start,” but once they got the selling infrastructure in place it started to improve and is now in-line with expectations. Of course, the Cook Islands pays a fair bit to support that flight, replacing the old Air New Zealand one to LA, so it’ll be just fine.
Maui
The wildfires that tore through Lahaina caused tremendous destruction and displaced thousands of people, but as a secondary issue, that has made it tougher for airlines. The number of short-term rentals and hotel rooms has declined since they are still housing displaced folks, and that means there’s less demand to go between Maui and the mainland for leisure.
For Hawaiian, this hasn’t been as challenging as you might expect. So many other airlines have pulled down flying to Kahului for the same reason that Hawaiian has been able to keep its load factors relatively steady. But it is an ongoing concern.
So now, Hawaiian continues to sit and wait to see where its future will lie. It isn’t sitting still, however.
The first install of Starlink on the A330 fleet is supposed to happen next month, and then the airline can work on FAA approvals. There are some A330 lease returns coming up that may or may not end leaving the fleet. And the Amazon cargo business is about to get its third airplane with seven in the fleet by year-end.
Still, the acquisition by Alaska hangs over it all. Later this week, I’m hoping to put live a post about my interview with the Alaska team.
24 comments on “Checking in on Hawaiian Airlines with CEO Peter Ingram”
Hawaiian really got hit with the quadruple whamy of COVID, yen weakness, Pratt issues, and wildfires. They’ve done well just keeping things together, but this feels like a case where Alaska got to buy low and integrate higher after two or three of those issues have passed.
Brett, do you know the seasonality or the respective HA and AS networks? I wonder if we’d see some of those NEOs migrate to the continent part time should AS high season coincide at all with HA low.
Is there enough red-eye demand to give the HA fleet a round trip during what would have been their west coast layover? There’s a new opportunity for utilization post merger, but not sure if there’s demand for it. Curious, too, how the HA network would do with the AS hard product (eg, premium economy). One imagines HA don’t think they’re leaving revenue on the table, but AS would likely synchronize offerings anyway.
Eric – I know that California – Hawai?i peaks in the summer, so it’s the opposite of what you’d expect to see from cold weather places. The neo mostly flies west coast, so I don’t think there’s likely to be a lot of seasonal opportunity in the Alaska network during the winter. Maybe it could be pressed into some bigger Mexico routes? I’m sure they’ll look at options.
I would think that redeyes would be a real option in several stations. It could even press A330s into service to do that work, flying LAX-JFK or something like that with flat beds.
Not sure AS would want to re enter a market (LAX-JFK) they left as a distant #5 carrier. Especially since one of the reasons they left was AS couldn’t secure slot at the proper times to to serve the market. Seems like a receipe for losing money. That is something AS is allergic to. There might be other west coast cities where that might work though.
It would be very interesting to see the A330 on one-stop options to the east coast, something like HNL-SEA-JFK or HNL-LAX-JFK or JFK-HNL-[Asia]. Some of these Alaska already runs with their narrowbodies. AS+HA could position itself as a great transcon + Pacific operator.
AS even has their JFK lounge ready to go in JFK T7 and presumably capacity for HA to move in there, for however long T7 lasts. I don’t think these are particularly likely but one can dream!
While we’re dreaming, I’ll request a JFK A330 base with late morning departures to HNL, SEA, PDX, LAX, SFO, and SJC, all with red-eye inbounds from the west. May as well toss SAN and OGG in there, too.
I hope that if the merger is approved that AS doesn’t for HA to fly the 737. In my opinion the A321 is more comfortable and roomier.
I very much agree; the A321 is a vastly superior product to the 737MAX and that would be true even if Boeing wasn’t building aircraft with the same level of quality as a 1976 Chevette. Not to mention that HA’s interiors totally outclass what AS is offering up. Basically, making HA into AS would be a significant downgrade of product. Like how they ran Virgin America into the ground.
Stogieguy7, that sent chills up my spine. Don’t forget the Boeing, I mean Vega
Any update about the cargo operation or what they’re going to do to make the 78 worthwhile?
emac – The standalone cargo operation died with the end of the ATR operation. Other than that, they do a lot of belly cargo but we didn’t really talk about that. And the 787s, Peter mentioned that things are coming, but it was just a tease and he had nothing to announce now. I still scratch my head over that one.
Yeah, it seems like a plane with legs too long for Hawaii. A330-900 seems like a better fit. But is AS succeeds in their acquisition, I bet move 787’s move to Seattle.
The Amazon cargo operation. Wikipedia says they have three A330-300P2Fs with another seven coming.
emac – OH, sorry. Yes, the Amazon operation is A330-300s, they will have 7 by year-end. Crews are Cincinnati-based and currently flying Cincinnati – San Bernardino – New York/JFK. It’s doing fine. I asked if the A330-200s might move into that side of the business, but it sounds unlikely. As Peter explained, Amazon isn’t concerned about weight capability but it just needs a lot of physical space since that’s most of the stuff they ship. So the -300 is much better for that.
Hawaiian needs to do much more to capitalize on “premium leisure” customers with a true premium economy offering.
I can’t think of another market in the world that would have more demand for premium leisure given the time and distance involved in reaching Hawaii.
Case in point – I’m trying to go to Hawaii around New Years. No longer any status or points on any airline. Plenty of options between 1200-1500k round-trip. Business or first? 5-6 grand. I’d be happy to pay 2,500 to 3k for a premium product just to get some space for a 15 hour journey.
This trip probably won’t happen. I’m not spending that amount of time in 30 inch pitch (I’m 6’2 with a recently shattered tibia) and I’m not spending 10-12 grand to get my wife and I there. Pretty sure I’m not the only one, especially from the east coast.
Buy economy plus and an extra seat. This is even more economical as there are two of you and you get an entire three seat row. You basically now have the same width and pitch as a premium economy/domestic first. This is probably in your budget.
That’s an intriguing idea. Mine was to pay more to get on the IAD nonstop to HNL (ultimate destination LIH) and E+ one of 2 seat sides of the 767 even though it’s a lot cheaper to connect over LAX/SFO but then it’s a 737 to LIH. Barf.
That’s not bad. Eh there is no easy way to get to LIH from the east coast, however hard we try.
Might be worth looking into the annual Economy Plus subscriptions that UA sells. The cost may be similar to the RT E+ cost for 2 to IAD-HNL, and you have E+ for the rest of the year too. As you don’t have any status this could be a good deal for you. Hope you make your trip!
Upon further review… The United 767-400 from IAD to HNL has a Premium Plus premium economy section (as does the 787-10 from ORD) but it’s not offering it to meas an option on IAD-LIH connecting on Hawaiian over HNL (or on any other connecting itinerary for that matter).
It prices it for IAD-HNL so I have an idea of the general cost but it won’t offer it on any through ticket even when I specify premium economy.
I’ve finally discovered something to get me to engage Cranky Concierge! I’m so excited; here I come Brett!!!
My guess is that it’s not offering premium economy for the options to LIH since Hawaiian doesn’t offer it. The 717s have only first class and main cabin; the rest of the HA fleet does offer “Extra Comfort” which is an extra-legroom product comparable to United Economy Plus. Unfortunately the site isn’t smart enough to offer Premium Plus for the long flights and either downgrading to main cabin or upgrading to first class for the short interisland flight.
Bill, I took the IAD-HNL flight when I lived in DC. The 763 in coach was surprisingly comfortable for me and I’m 6’0.” I’m sure you’ll be plenty comfortable in Economy+. That flight is the way to go, versus connecting before Hawaii!
Our Hawaiian leg of the trip was really quick (OGG), so I didn’t mind the back. I’m sure Cranky could get you into a first class seat for that leg!
On a completely unrelated note Vasu Raja is leaving American Airlines in June.
https://news.aa.com/news/news-details/2024/Vasu-Raja-to-leave-American-Airlines-in-June-CORP-EXEC-05/default.aspx
That’s, uh, very confusing.
Looking forward to Cranky’s write-up tomorrow!!
I remain skeptical that HNL-RAR will ever stand on it’s own. Aloha couldn’t make it work with an airplane that was 50 seats smaller but then they had no support from the Cook Islands. I wouldn’t be surprised to see RAR become a tag to the HNL-PPG service. Or another possibility might be HNL-RAR-CHC.