The head of Island Air, the state's third-largest airline, has resigned.

Rob Mauracher, Island Air's CEO, stepped down yesterday and his duties have been assumed by the company's existing management team.

He will remain as a consultant with Island Air's San Francisco-based owner, Gavarnie Holding LLC.

"It's an opportune time to pursue management opportunities that will provide new challenges," Mauracher said through a spokeswoman.

Mauracher, a former executive with Air Jamaica Ltd. and Bombardier Aerospace, has served as Island Air's CEO since February 2005.

He oversaw a major expansion of the airline after Gavarnie purchased the company from Aloha Airgroup Inc. in May 2004.

But soaring fuel prices and a costly fare war brought on by the June 2006 entry of Mesa Air Group's go! airline cut into Island Air's bottom line.

Last December, Island Air laid off 65 of its 415 workers, citing the interisland fare war.

The company also eliminated five of its 17 interisland routes and took two of its 37-seat De Havilland Dash-8 aircraft out of service.

The company currently has 300 employees.

Founded in 1980 as Princeville Airways, Island Air is a niche player in the interisland market.

The carrier has focused on smaller routes such as Kapalua, Moloka'i and Lana'i, which were traditionally underserved by Aloha and Hawaiian airlines.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.