Hawaii Airline Competition

Analysis of Hawaii Airline Competition Before and After 2020

We are curious how Hawaii airline competition will look after this period when US Airlines are in a veritable worst-case scenario. And why then is airline stock analyst Stifel saying that Hawaiian Airlines is well positioned, so much so that today they upgraded the stock from a sell to a hold recommendation? While we don’t own the stock and don’t have any take on that aspect, it does speak to what will happen with cheap flights to Hawaii going forward.

The airline’s upgrade was based in part on the recent downturn in the stock’s price, but more importantly and speaking to our point, the analysts said “Hawaiian Holdings will be well-positioned to serve the market and could witness a more benign competitive capacity environment for a period.”

Beat of Hawaii: For more on what we expect the future to look like, read When Hawaii Air Travel Will Resume: Expect Big Changes. It has been read over 50,000 times in the past two days. 

2019 Hawaii airline competition at Honolulu.

We wanted to glean something about who has what share of Hawaii flights and available seats. We used U.S. government, Bureau of Transportation Statistics for 2019, indicating available seats to Honolulu from all domestic airports. Note that the data is slightly misleading in the sense that Hawaiian does not report data separately on interisland.

Alaska Airlines 495,000 seats
American Airlines 574,000 seats
Delta Airlines 616,000 seats
Hawaiian Airlines 4,057,000 seats (includes interisland)
Southwest Airlines 404,000 seats (includes interisland)
United Airlines 1,288,000 seats

Who might retract from Hawaii airline competition and Why?

We’ve already seen the airlines begin to posture about becoming smaller carriers in the future. Delta said, “We’re going to be smaller coming out of this.” United’s CEO said, “If the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today.”

All the airlines that serve Hawaii are strong players and we expect all of them to survive. Airlines, however, will look forward to the routes with the most profitability, and that relates to a large degree to a “reasonable amount of competition.” The problem with flights to Hawaii is that the competition has been extraordinary, and as a result, the profitability has been dwindling. We’ve had airfares as low as $72 to and from the mainland, and $99 quite regularly. That is not sustainable. So something is going to be different.

Beat of Hawaii: We’d suggest that there will be contraction across all the airlines to at least some degree after this. That having been said, we’d expect all three legacy carriers, starting with United Airlines, then American and Delta, to pull back the most, followed by Southwest, then Alaska, or both.

We do not expect Hawaiian to contract significantly in the domestic market, nor did analyst Stifel. Hawaiian Air will refocus on domestic rather than international flights, since the return of international seems to be more in question. It is also interesting to note that while the Hawaiian Air fleet is small, it has become very versatile, with the current 24 A330 wide-body and 18 A321 long-range narrow-body aircraft.

The number of competitive flights has been excessive since last year, and that just won’t continue. So either the industry will find a way to compete differently and less, and perhaps get re-regulated to some degree.

We welcome your thoughts.

6 thoughts on “Analysis of Hawaii Airline Competition Before and After 2020”

  1. Aloha Guys!

    I appreciate the well thought out research and information. I too have done some research on how the econimic downfall will likely impact the (passenger) airline industry, regarding Hawaii, and I think you are accurate. I thought I would add some further insight.

    One factor that will likely keep airfare prices from rising “to high” is that HAL, unlike All the other passenger carriers, is significantly more dependant on domestic and international vacation travelers to the islands. Not to mention, HAL is more (than any other carrier) directly tied to the dependency of Hawaii’s economic livelyhood, when it comes to the Tourism industry, as they have almost 4 times more flights than the next carrier (United). If ticket prices climb too high, while in a severe recession, and depending how long the economic rebound takes, it would likely lead to the crippling of Hawaii’s Tourism Industry and obviously a huge adverse economic affect to the State.

    The “fear factor” of traveling, after this crisis, by potential vacationers, over the next several months, will also affect how low immediately discounted prices will go, as the primary goal will be to get Tourism moving again as fast as possible (hopefully permanently).

    I believe (like you) we will see an immediate, short term (up to 6 months, possibly longer), discount in airfare prices to the Islands, followed by rising prices, as the industry reconfigures itself over the next few years. The best time to purchase and travel (for the best deals) will likely be immediately following the resuming of flights, as the industry bargains for passengers to fill their planes for the next 6 months to a year. The deeper and longer the recession, the more these factors will affect the impact of Hawaii’s Tourism, in my humble opinion. Thoughts?

    Just my “two cents” worth, and Mahalo, again, for the insight. I look forward to travel being reinstated and seeimg how this progresses…hopefully for the better.

    1. Hi Jim.

      Thanks for all of that! We are on the same page. Certainly the longer this goes on and when and how air travel overall reinstates, will be huge determinants of Hawaii tourism. We’re keeping fingers crossed that between sanitizing and masks and the passing of the initial wave, things will improve sooner than later.


  2. I am amazed when spot checking flights from Memphis,TN current flights available thru 12/15 to Honolulu for $550.00. Normally from dates April thru the first week of December $750.00 the $550.00 is a windfall. Traveling on American and flights are great connection times. Is this the result of Airlines wanting future human bodies in the seats? I travel annually from April 23-30 celebrating my deceased Son’s birth excluding this year.

  3. I was very impressed with Hawaiian’s response throughout this. I noticed their CEO was at most of the Governors press conferences . Of all the airlines Hawaiian is crucial to the state. Not only the crucial service it provides, but as the States largest non government employer.
    I was surprised that SWA tried to keep flying and selling cheap tickets even beyond the quarantine order. They shouldn’t be here now, they may be needed when the state is trying to bring back tourism, but they overplayed their welcome in this.
    I wonder if the industry really does consolidate could we see a Hawaiian Alaska merger? Two really strong carriers that their routes and equipment mesh well. We should be hoping for quality air service in the future, not second class service.

  4. I am interested in what others think about flying in the new configured aircrafts after travel is reinstated. With the 3 seat configuration people will be elbow to elbow. How long before people become comfortable with that configuration?

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