Last updated: 09:30 AM ET, Fri January 08 2016

Hawaiian Says Interisland Flights Cheap Enough, But Locals Disagree

Airlines & Airports | Josh Lew | January 08, 2016

Hawaiian Says Interisland Flights Cheap Enough, But Locals Disagree

Hawaii’s interisland flights are a necessity for people who live on the state's smaller islands like Kauai. Not only do Kauai’s residents need flights that connect them with the state’s population centers, but they need reasonably priced service so that tourists can get to their island from hubs like Honolulu. Unfortunately, few airlines have been able to make such routes profitable.  

Are inter-island fares too high?

When the CEO of Hawaiian Airlines, Mark Dunkerley, spoke in Kauai recently, he stressed that the current fares offered on flights to the other islands are actually quite cheap when the distance traveled is taken into account. However, because of a lack of competition on routes such as Honolulu-Lihue (Kauai’s hub), some people have accused Hawaiian of purposely keeping its fares too high and making it harder for people on Kauai to reach the capital and too expensive for tourists to fly from Hawaii’s hub on Oahu to Lihue. 

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To dispute the price-gouging claims, Dunkerley compared the price of interisland flights with the price of flights that cover a similar distance on the mainland. A Honolulu-Lihue flight costs, on average, $69 one way before taxes and fees. Fares between Seattle and Portland, a trip that is only slightly longer, averaged $105 before taxes. Even longer flights in Hawaii, such as Honolulu-Hilo, cost less than $105 one way. 

Supply and demand

Many of the complaints from Kauai residents stem from higher prices charged for flying during peak times. They feel, more or less, like the laws of supply and demand are keeping them trapped on the island. Dunkerley acknowledged this, but explained that getting the most out of the higher demand was necessary if Hawaiian wanted to keep offering the flights without taking a loss. He advised people who wanted to avoid the high fares to plan ahead: "it’s super, super important to plan so they can go in the off-peak times and get the cheaper fares.”

Balancing the books is important for long-term success

Hawaiian is known as one of America’s most punctual airlines. However, it operated at a net loss for several years before making a profit for the year in 2015. Thus far, the carrier paid off about one-tenth of its billion dollar debt. Moving towards balanced books is a necessity if Hawaiian wants to remain the main air transportation option for Hawaiians in the future.

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There has been talk of a possible takeover or merger with another carrier, perhaps one of the three legacy airlines. If Hawaiian falls back into deeper debt, this could very well be the only solution. However, if this happened it would leave some of the lower-traffic interisland routes in doubt. 

For now, it looks like Kauai will have to be content with the current airfares, and residents will have to look to off-peak times if they want to save money. The best outcome that they can hope for seems to be a debt-free Hawaiian Airlines that will be able to offer reasonable, if not cheap, fares for the foreseeable future.  

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