Republic Airways may step into Hawaii interisland market
By Rick Daysog
Advertiser Staff Writer
Hoping to fill a void left by the demise of Aloha Airlines, a Mainland airline is exploring plans to enter the interisland market in partnership with a small, local carrier.
Indianapolis-based Republic Airways Holdings is considering interisland flights using 70-seat Embraer 170 jets under a code-share agreement, according to an Oct. 1 memo posted at Republic's Mainland offices.
The Republic memo, which was posted on Yahoo! Finance's Web site, did not identify the local partner, but people familiar with the deal said Republic is holding talks with Big Island commuter carrier Mokulele Airlines.
Republic's Shuttle America subsidiary, which plans to hire 22 flight attendants for the Hawai'i venture, will operate the flights under the Mokulele brand.
"Shuttle America has a potential opportunity for a new code-share agreement with additional flying beginning on or before Nov. 15, 2008," the memo said. "This bid is in anticipation of a possible code-share agreement in Hawai'i that will be announced within 10 days should it come together."
Republic spokesman Warren Wilkinson did not return several calls to his office. Gary Weatherlow, the Republic manager who wrote the memo, also did not return calls.
Bill Boyer, president of Mokulele, declined comment.
Founded in 1973, Republic Air is a regional carrier with about 4,600 employees. It operates regional service on the Mainland for major carriers such as United, American and Continental airlines.
Mokulele, based in Kailua, Kona, has been flying in the Islands since 1998. It currently operates Cessna Grand Caravan 208B turboprop aircraft that carry nine passengers.
Details about ticket prices, schedules and financing were not available. But local airline experts believe the entry of a new player could lead to lower interisland fares.
Phoenix-based Mesa Air Group kicked off a fare war in June 2006 when its launched go! airline. Shortly after go!'s entry, one-way interisland ticket prices dropped by about half to $39 and sometimes as low as $29 and $19.
But with skyrocketing fuel prices and the March 31 shutdown of Aloha, fares have risen sharply to about $64.
The proposed agreement between Republic and Mokulele likely will spell the end of the 19-month-old code-share agreement between go! and the Big Island carrier. Under the go!Express brand, Mokulele operates less-popular flights such as between Kona and Kahului, Maui; between Honolulu and Hana, Maui; and between Honolulu and Kapalua, Maui.
Mesa said the go!Express venture had been successful and the company said it will continue those flights with or without Mokulele's participation.
Local aviation industry historian Peter Forman said the interisland market can't support three major competitors such as Hawaiian, Aloha and go! when they compete against each other head-on. The fare war cost each of the airlines tens of millions of dollars and helped put Aloha out of business.
But Forman believes that Mokulele may be able to outmaneuver go! if it is well-financed. The 70-seat Embraer 170 aircraft that Republic and Mokulele plan to use are more economical to operate than go!'s 50-seat Bombardier CRJ 200 jets, he said.
"Since the departure of Aloha, there's been a vacuum in this market and go! has not succeeded in becoming a viable competitor to Hawaiian," Forman said.
Reach Rick Daysog at rdaysog@honoluluadvertiser.com.