Updated 1/9/16: Island Air has been sold. Just two years after buying it, Ellison decided that for reasons below, the airline biz was not for him. Controlling interest was sold this week to Hawaii venture capitalist Jeffrey Au. We’re watching with interest to see if Island Air will survive.
The air in Hawaii has been turbulent for Island Air for some time and it just isn’t smoothing out.  The company was started in 1980 as Princeville Airways. Most recently, Island Air was bought in 2013 by Larry Ellison in conjunction with his purchase of Lanai. Exciting and well received plans to invigorate the carrier, then led by CEO Paul Casey, included a new fleet of Q400 aircraft and increased flights between the islands.
When things started going downhill.
A number of factors have weighed heavily on Island Air and their performance in recent years.
- Increased competition to Lanai and Molokai with the newer Ohana by Hawaiian Airlines.
- Elimination of routes to the Big Island, Kauai and Molokai over the past 6 years (leaving only Honolulu, Lanai and Maui on their schedule).
- Significant employee layoffs as a result of flight reductions.
- Reliability and comfort issues with a small fleet of aged ATR turboprops.
- Financial losses like $22 Million in 2014.
- Temporary closure of the Four Seasons properties on Lanai during renovation.
Island Air For Sale – Would you Buy?
Rumors began circulating some time ago that the company would be up for sale. It appears that in the end Ellison’s concept of a competitive inter-island carrier is not something that they themselves will bring to fruition. While they have the required resources, it does not appear that they want to capitalize Island Air to the extent that would be necessary for it to become a viable inter-island carrier.
Will someone else step in?
On the plus side of the purchase equation Island Air is a known entity in Hawaii with the air certificate needed to authorize flights. On the negative size is a aged fleet of aircraft and a somewhat negative perception of the company in the travel public’s eye.
If the company isn’t sold it would unfortunately not be surprising to see them go out of business.
