Photo courtesy of Hawaiian Airlines

Like many other carriers in the United States, Hawaiian Airlines had a great year in 2015. It posted strong revenue numbers on its inter-island routes and also for its flights to the islands from the Mainland.

Yet even though the year was profitable, Hawaiian did not perform well in all markets, struggling badly on international routes. This was due in part to competition from other airlines, but there were also other factors at play.

2015 was a tale of two markets for Hawaiian

The strong U.S. dollar made it more difficult for Hawaiian to earn profits on flights booked overseas. To add to the problem, Japan and South Korea began to lower their limits for fuel surcharges. This meant that these extra fees could not be used to make up for any revenue lost due to unfavorable foreign exchange rates.

READ MORE: Hawaiian Airlines Serves Record Number of Passengers in 2015

During the last two quarters of 2015, while business was booming on domestic routes, Hawaiian saw its revenue plunge 18 percent on international routes (compared to the same period in 2014).

Competitors are cutting capacity

Now, things are starting to get better. Hawaiian's main competitor on the once-lucrative Japan-Hawaii routes is another U.S. airline: Delta. However, Delta is now starting to cut capacity for its Tokyo-Hawaii and Osaka-Hawaii services. This has left Hawaiian in a stronger position, especially now that fuel prices seem to have bottomed out and the USD-JPY exchange rate has become more balanced as the yen gains strength.

Hawaiian is also in a better position in Australia, where it previously had to compete with Jetstar on the popular Brisbane-Honolulu route. Jetstar has since dropped this service, so Hawaiian is once again in a dominant position Down Under.

Investors are excited

Couple this newly found international strength with a domestic market that is still strong, and 2016 is starting to look like it could be a very profitable year for Hawaiian Airlines.

Airline industry financial analysts have taken notice of the changes in the industry that have put Hawaiian in a better position, projecting a strong performance for Hawaiian's stock this year. Some are forecasting earnings per share to rise more than 50 percent by the end of the year.

READ MORE: Hawaiian Says Interisland Flights Cheap Enough, But Locals Disagree

What does this mean for fliers?

Despite gaining a dominant position on some routes, Hawaiian will still have plenty of competition for flights from the mainland. Virgin America has launched flights from Hawaii to the West Coast, and other airlines are also still very active in the market. 

The long-term affects of Virgin's presence on routes from the Mainland will depend on what comes of all the recent merger rumors. If Virgin (or its new owner) remain active on these routes, then fares could be slightly lower regardless of what happens to Hawaiian's international routes. 

That will be welcome news for fliers. 

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