Comments get us going. This morning’s statement from Guy caught our attention about his take on Southwest Hawaii and Costco. Whether you agree or disagree, there are some excellent takeaways to consider.
Southwest is so predatory and will sell cheap seats to hurt their competitors. Remember when Costco was cheap. After they destroyed the mom and pops they now can charge whatever they want.
So is the comparison between Costco and Southwest accurate?
Costco made a move somewhat reminiscent to Southwest’s when they came to Hawaii starting in 1988, with ongoing expansion, including gas stations and stores on all the major neighboring islands. When Costco arrived here on Kauai, the neighboring gas stations lowered their prices in a single day by nearly $1/gallon. We’ve seen many mom-and-pops and grocery stores disappear too. Costco used its weight to create an advantage that competitors simply could not match. The smaller gas stations were gouging us before Costco. And now Costco seems to be raising its prices back up with little competition. Similar retail analogies might include Walmart and Home Depot.
Southwest’s Hawaii brainstorm came directly from Hawaiian Airlines.
SWA’s CFO Andy Watterson said that the plan is to go big. And, with enough flights to any given place, “The other airlines can’t really touch you… We needed to force a pace.”
Southwest’s CFO, who came to them directly from Hawaiian Airlines, said, “It sounds risky to open a bunch of new cities, but the alternative is worse.”
Throughout its 55-year history, the airline has encroached on rival territory while others struggled. And so it was that Southwest doubled down during Covid on Hawaii, among other places. While others were contracting, Southwest expanded.
Southwest looks for whatever holes present themselves and jumps right in. They tried that on a wide range of mainland to Hawaii flights before pulling the plug on 10 Hawaii routes just two weeks ago. But even retrenching like that doesn’t stop them in Hawaii.
The next opportunity Southwest saw was Hawaiian’s monopoly on interisland flights.
What did SWA do to press the point on interisland? They announced $39 for every seat on every flight throughout the rest of 2022. Talk about undercutting the competition. We do like that we can fly interisland for a reasonable cost. Hawaiian Airlines has stepped up to the plate to matched the $39 fare on times that compete with Southwest. Here’s the issue. We estimate that it costs the airline multiple times that $39 fare to provide the flight including fuel, airport fees, personnel, and so much more. So how long can and will they both keep this going?
In a near-perfect description of what Southwest is doing, the pilot head of SWAPA (Southwest’s pilots’ union) described the airline’s expansion strategy this way: “Predatory and opportunistic—which we like.”
Since Southwest Hawaii flights began in 2019.
After more than a decade of anticipation, so much has happened since Southwest Hawaii flights began in March 2019. That included Covid and the grounding of their 737MAX fleet after two deadly crashes.
When they came to Hawaii, Southwest saw this special opportunity.
First, they were thinking of expansion. Southwest long felt that Hawaii remained underserved by other low-cost carriers, some of whom, like Allegiant, had tried and failed. Then too, Hawaii represented a big gap in a network so focused on where their California regulars wanted to go.
The mainland to Hawaii market has been dominated by what Southwest thinks of as the premium airlines, Alaska Airlines, American Airlines, Delta Airlines, and United Airlines. That made Hawaii a perfect match for Southwest, with its keen focus on predatory pricing and demographics.
But did that work? Somewhat.
Southwest isn’t averse to trial and error. And so it was as if they just canceled routes from Los Angeles to Kauai and Kona, Phoenix to Kauai and Kona, Sacramento to Kauai, Kona and Maui, and San Diego to Kauai, Kona, and Maui. That comes as the airline remains constrained on any additional direct mainland to Hawaii routes. That is in large part due to the distance limitations of their 737MAX fleet.
Will interisland be part of the Hawaii prize Southwest desperately seeks?
We don’t know. They’ve said their current focus is on convincing Hawaii residents to move from Hawaiian to Southwest for interisland flights. Will that work, and can Hawaiian sustain the $39 prices? One thing is for sure. It simply isn’t sustainable for anyone in the long run.
We’d love to hear your input on Southwest Hawaii and how things are evolving.
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Enrique P says
I have always loved flying HA to the islands, but the last 2 flights to OGG and KOA from Long Beach was on SWA. I am sold as the fares are great and free checked bags is a plus. I do love the aloha vibe when you board an HA flight, but the SWA service is pretty good as well. HA miles program has been so bad, we can’t even use them to go because its so high now to book with miles on HA. I’ll continue to cross shop both airlines from here on out.
Liam G says
Hard to defend Hawaiian when they pull their frequent flier miles scams and block out pretty much everything and they track what you look for and when you go back in 5 minutes later it’s more miles. Then you buy the extra miles and they drop the flight availability for miles but it’s there if you want to pay cash.
Kurt D. says
Competition breeds better service and low prices. The locals win.
Hawaiian has gouged the us locals for years. They didn’t seem to mind putting Aloha right out of business and then acting like a monopoly.
I guess competition is good unless you work for Hawaiian airlines
Ravi A says
Southwest has opened up many avenues / options for convenient travel between Islands. For the sake of tourists, hope it is sustainable. Hawaiian and Alaska have been around a long time but nothing beats Southwest for frequency and liberal cancellation/ change policy coupled with 2 free bags.
Kaido says
Lolz at Hawaiian getting their ___ handed to them after gouging everyone for years. SW is the best thing to island flying since the old $25 per flight coupon books.
Mick says
Love competition here in the islands, Hawaiian Airlines deserves to suffer the same way their made other airlines suffer here, Aloha, GO, etc. They talk about their “aloha” spirit” but where was it before SWA came and HA was charging more for interisland flights ($400-500+) than everyone else was charging for mainland destinations. Not to mention HA’s crappy business decision to not handle baggage from other airlines and that pissed me off as we flew HA from LAX but they wouldn’t transfer our baggage to our GO fight to Hilo back in the day. After that, I no longer keep HA as my first go-to carrier within Hawaii. I do love their service, but until they allow for one free bag per Hawaii resident it’s SWA whenever we can for interisland.
Bruce C says
Been flying to the islands of Hawaii for 31 years on different airlines May 2022 took my first flight on Southwest from San Jose California to Oahu both flights were great using again in October
Tom B says
Please consider that when Costco is cheaper for same product or service that savings is real $ that can be used for other things. Many mom and pops use Costco to as there go to supplier
Ernie S. says
Costxo does get “some” business from store owners as well as other businesses such as Catering and Restaurants, however, SAM’S is getting the Bulk of those Businesses because of the Lower Cost and Quality. Been that way for a long time. Some specialty items are picked up at Costco.
Lance O says
Aloha, I meant to say does anybody remember Aloha Airlines, Go airlines, Mokulele Air, all casualties to the price wars on airfare.
Wouldn’t it be nice if we all played together nicely in the same sandbox.
Just a fair price to do business is all I ask
Not to say I don’t like the cheap airfare, but I do have concerns about safety being shortcutted here and there.
Frank says
I remember looking at the Departures board in HNL Airport a few years ago and seeing that 90% of the scheduled Mokulele flights were cancelled or delayed.
Linda S says
I loved flying with Hawaiian Air when they had the large planes. My husband and I could sit together with his aisle seat and my window seat. Then Hawaiian started using the 3 seat rows (just like southwest) with those dreaded middle seats. So we switched to southwest since their prices are a little cheaper. 2 bags fly free and most importantly there is no change fee. Some stranger just sits between us now.
kaipo S says
Thank you but seriously, Hawaiian was getting out of hand. I agree $39 flights are a little crazy, but on the other side of the spectrum prior to SouthWest coming in Hawaiian was charging $400-$500 for a roundtrip ticket from Kona to Kauai. A market needs competition to keep everyone honest.
Logan h says
I get that it’s easier to call out when you watch it happen in front of you but hawaii companies do all the same moves. Look how expensive it was to fly inter-island when Hawaiian was the main ones. Or why does it cost twice as much to ship a car inter-island because you can only go through Young Brothers.
Mike I says
Hawaiian had a monopoly for so many years. They charged very high prices for inter island travel and also kept their fares to Las Vegas very high where many Hawaii residents love to travel too. They continue to have baggage fees which brings in a lot of revenue. Southwest is a very big airline on the continental US and they have very competitive fares to at all their destinations and with their low fares and no baggage fees and they are still in business. I will continue to give Southwest my business even if they raise fares as long as they continue to have no baggage fees.
Val W. says
Hawaiian Airlines has 1) Safety record 2) on-time record 3) Aloha spirit 4) fewer cancelled flights 5) nicer, more comfortable aircrafts. And supports the local economy.
Ernie S. says
Everyone finds reasons to defend HWA, Is it worth the one way loyalty in the end? Apparently no one defending HWA heard or saw the Announcement that they made Months ago. They Stated on an Earnings Call that They were charging some things to make them Much More Profitable. Those “Ethnic” Donations were on the chopping block, They’re being more Liberal Compliant! It’s a surprise to many that will become apparent.
Cal A says
I can see Southwest being a long term competitor on the islands, the competition should be healthy if they maintain their prices but this price war will continue until the other surrenders. If Southwest is able to open a crew base there in the future, I think they’ll be able to stick around for a long time. However, that’s if they can have the same or exceed the amount of interisland flights Hawaiian has which is honestly really difficult. I fly on both but fly Hawaiian from the mainland because of their reliability, but I also don’t mind the lower pricing and 2 free bags for island hops offered by Southwest.
Kenneth R says
It may work as long as swa, keeps it crew diverse, As much as I love Hawaiian Airlines, for mainland passengers it would be great to see its crew more representative of the mainland population. Who have made the islands home.African-Americans.thx.
Sally says
This seems a bit random. Why not just hire the best applicant for the job? Does a “mainland looking” person (whatever that means to you) make the flight more enjoyable to you?
Jeff says
Haha… yes, because the color of the pilots skin is important to experience and safety…
Tim S says
First of all, I absolutely love the service on Hawaiian Airlines. I will pay more to fly Hawaiian to the mainland and now Asia, but not exorbitantly more. I find their pricing in line most of the time. When HA had the monopoly on inter island flights, they were not in line. They charged whatever they wanted and it was unfair to the consumers. They even changed the mileage for rewards on their inter island flights. There is very little service on an inter island flight and the mileage is minuscule. It is good to have some competition.
Mark W. says
We still have small grocery stores hear in Hawaii. They still charge usuriess prices, I’m sure there on all the islands. We continue to have the highest electricity prices in the country and gas prices are really high. If he wants to (commentor) step over a dollar to pick up a dime, let him. I just want to live here (Hawaii).
Frankln says
Hawaiian service to the mainland is by far superior. Love them. I may be biased living in Maui. But I am glad their rates are lower and I am glad they have competition.
Before Covid they were high. And Southwest etc made them lower rates.
Now on Inter-Island flights being so short. Really not concerned about which airline but stick to Hawaiian because I consistently have no issues.
But people need to understand Hawaiian is not nearly as established on Mainland as anyone else so you can understand their higher prices before the competition to the mainland.
But become a Hawaiian miles member which is free and you get miles that really add up. I have 100,000 miles because Hawaiian offers so many ways to earn them. They always treat u amazing.
Jim T says
I have to agree with Franklin. We have ohana on Maui and finally decided Hawaiian is our go-to airline for travel from the greater Los Angeles area. SWA does not fly direct to Maui from either LA or Long Beach.
Dale G. says
Jim, I just put in this Friday from LAX to Maui, coming back on Monday, and Southwest’s web site shows one nonstop a day in each direction. I checked Long Beach, and it also has a nonstop in each direction.
Rachel says
I wonder how much revenue they earn transporting good between the islands.
Frank says
It’s good to see airfares and grocery prices drop due to competition from company’s such as Southwest airlines and Costco. They make living in remote places like Kauai more affordable for the folks living there.
Steve says
Competition is good. Hawaiian Airlines had a monopoly for years and took advantage of the locals and tourists by very very expensive fares. Southwest can and will offer low fares for long time to come. Low fares will stimulate demand and provide relief to the Hawaiian population. You shouldn’t have to pay 250 dollars to go to a doctor appointment in Honolulu.