Have you had enough talk about Hawaiʻi lately? Too bad. I spent the last couple of days on Oʻahu where Hawaiian celebrated joining the oneworld alliance. It was a nice celebration, especially for the employees, but I was most interested in my sit down with Hawaiian CEO Diana Birkett Rakow. The Hawaiian brand is on solid ground, but it turns out, there will still be some Alaska flights to the islands. But first, let me back up.
[Disclosure: Hawaiian provided the air, hotel, transport, and meals for this event at no cost]
The event itself was a bit more muted than they had originally hoped. The oneworld-painted A330 was supposed to be unveiled, but there were delays in Singapore where the plane was being painted, so they had to sub a standard A330 instead. That being said, they did put renderings out of the new airplane, which will now likely arrive next week. I had no idea airlines had as much latitude with the livery to do as they please, but Hawaiian opted to put “Aloha a puni ka honua” under the oneworld name, which means “Aloha around the world.”
Rendering via Hawaiian Airlines
Itʻs a nice sentiment and also a reflection of the fact that Hawaiian and parent Alaska take the dual-brand and its importance very seriously. And it was on that topic that I spent a good chunk of my conversation with Diana that afternoon.
Hawaiian CEO Diana Birkett Rakow at oneworld joining ceremony
I have heard from many of you who are skeptical that the Hawaiian brand will stick around. Iʻm not in that group, but I pushed on the question. What is to stop Alaska from cutting costs and ditching the brand?
The Hawaiian Brand Is Staying.
She just couldn’t even fathom the idea of that happening. The plan is that “both brands exist in perpetuity as strong, distinct brands… and what you have to believe is what we believed going into this, which is each brand on its own has incredible value.”
But what if cost cuts become necessary? Is this not on the table? She didn’t flinch by sayng, “it’s just our new business model. It’s not like network decisions. We don’t redo our business model every season or every schedule or every year. It’s just who we have chosen to be, and we’re growing our way into it. But that’s the brand strategy, the business strategy.”
You may think this sounds like lip service, so I kept pushing. Couldn’t the Alaska brand still be well-respected and successful here? Isn’t it what you make of the brand?
The Alaska brand is one that’s respected here, and that’s fantastic. I think it is credit to Daniel [Chun, Alaska’s Managing Director, Hawai‘i Public Affairs & Sales from before the merger], and we have a board member from Hawaiʻi who still lives here. But that sort of reminded us and taught us the right way to do business in Hawaiʻi, that’s different than being local. Hawaiian is local.
Diana certainly believes this, as do I, but I know some of you still don’t. I think part of the reason people out there question the commitment to the brand is because the final plan hasn’t been fully determined. It is a work in progress. Diana admitted for the first time that not every flight that touches Hawaiʻi will be on Hawaiian. The operational complexity makes that too challenging. A “significant majority” of flights will be on Hawaiian, but there are seasonal variations, and they don’t want to completely isolate the fleets when the opportunity is there to get better utilization in the combined operation.
Fleet Decisions are Coming Soon
That brought me to the question about the fleet. Diana was tight-lipped on what would happen, saying a decision is coming. The one thing we do know is that the A330s will stay Honolulu-based, will be retrofitted with a new interior, and will be Hawaiian-branded. No decision has been made on the A321neo fleet yet, but she did make it clear that the overall fleet at Hawaiian will need to be bigger than pre-merger since most of those Alaska flights will become Hawaiian.
Though she wouldn’t confirm, my sense was that they either need to decide to keep the A321neos and grow that fleet, or they will decide to eventually retire those and create Hawaiian-branded B737s for mainland flying. Even though I came up empty-handed on that point, I was assured that a decision is coming soon.
What is clear, and what was echoed by the very senior flight attendants who flew me home, is that a lot of change has already hit the airline which moved at a very different pace prior to the merger. Nobody was complaining about this, but they are all trying to digest this rapid change while steeling themselves for more.
Why Healthcare Made Diana a Perfect Fit
With that background on the importance of the local brand, Diana may seem like a strange choice to run Hawaiian. After all, she has no prior connection to Hawaiʻi. Apparently Alaska CEO Ben Minicucci saw something in her and asked her to step in when Joe Sprague retired as planned. So what was it?
She jokingly said that her last role also followed Joe Sprague, so she just keeps following him. But in reality, her prior experience was directly relevant. Diana spent 20 years in healthcare at Group Health in the Pacific Northwest. According to her — and some of you locals can confirm in the comments — this company was very well-liked, but then they sold to Kaiser. She had to work through this merger which kept the brand going, similar to how Alaska came in to take over Hawaiian. In that case, she was on the other side, working at the company being acquired. That made her a good fit for Hawaiian.
Diana is not an avgeek, and she’s not an ops person, so she definitely had a steeper learning curve to take on this role. But when I asked her about the airline’s recent operational troubles, she was able to speak about it authoritatively. She understands the importance of a company that plays a critical role in the community, and she spoke about the emotional ties to the brand. She may not be from there, but she gets it. And she didn’t have to wait long for a big test.
The Interisland Operation: Trial by Fire
In the interisland market, Hawaiian has fallen from having near 90 percent of flights arriving within 14 minutes down under 80 percent since December. March was even below 70 percent. Diana said there have been several problems. First, in the winter, there was a series of Kona lows that brought a lot of rain and bad weather that snarled the operation. There also was some adjustment required when they switched over to using the single Alaska operating processes. That I understand, but why did the poor numbers continue through May?
The other two issues are tougher to fix. One, the B717s have really started to show their age over the last 3 years or so, needing more maintenance and downtime than they used to. On top of that, there was an additional aircraft down for maintenance that helped create something of a perfect storm.
I asked if the airline might consider acquiring some retiring Delta B717s as a temporary stopgap until there is a new fleet, but she made it sound like that was highly unlikely. More likely, they will press A321s into interisland service if needed, as they’ve done a little over the last few months. They will just need to do a better job of scheduling the fleet in the new reality, and those fixes are already in place. I’m sure it was a relief to many in the islands when June performance bounced back to about 84 percent, the best performance since November.
Though there are still big decisions to be made, I couldn’t help but get the feeling that things are moving at a rapid pace. It is a challenging time for everyone, but that doesn’t mean it’s bad. Everyone just keeps pushing ahead in the newfound quest to bring aloha a puni ka honua.
