LAXintl
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Aloha Post $10mil Loss For Q3

Tue Dec 19, 2006 1:20 pm

Aloha Airlines reports $10M loss
Monday December 18

Aloha Airlines lost $9.9 million in the third quarter, the result of the grueling interisland fare war

According to the report filed with the Bureau of Transportation Statistics, Aloha said total revenue for the quarter ending Sept. 30 was $99.8 million and expenses totaled $110.4 million.


http://biz.yahoo.com/bizj/061218/1392099.html?.v=1


Not a good sign, posting such a large loss(-10% operating margin) having just out of Bankruptcy.
From the desert to the sea, to all of Southern California
 
AirWillie6475
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RE: Aloha Post $10mil Loss For Q3

Tue Dec 19, 2006 1:50 pm

Not a big surprise here and in fact scary for aloha. If you can't post a profit in the 3rd quarter when can you? One of the airlines will lose over there and it's probably not going to be Mesa.
 
ikramerica
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RE: Aloha Post $10mil Loss For Q3

Tue Dec 19, 2006 2:02 pm

But don't you understand? The fare war is good for the Hawaiians who were being "overcharged." That's what all the Hawaiians seemed to think when this first started. They were all happy that Mesa was there because it forced their preferred carriers (AQ or HA) to drop their fares to stupid levels, and they were all more than happy to go out and exploit those fares.

I warned then that it would just destroy their local airlines...
Of all the things to worry about... the Wookie has no pants.
 
LAXintl
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RE: Aloha Post $10mil Loss For Q3

Tue Dec 19, 2006 3:47 pm

Quoting Ikramerica (Reply 2):

And the competition has indeed been good for the consumers.


The December print edition of Air Transport World has an article titles "Blue Hawaii" discussing the incursion of go! into the island market.

Over and over, even local and state government officials state the arrival of go! has been good for consumers.

In a market that has declined by 22% in size since 2000, for the first time with the entry of go! interisland boardings have grown.

As mentioned in the article "Local officials have been receptive to go!"

Saying the competition is good for consumers." "The winners for now seem to be passengers" Scott Ishikawa of Hawaii's Department of Transportation. "I think the passengers are happy about it. If fares are down, this is the chance to go see grandma or auntie on another island."

Marcia Wainart, liaison with the Sate Department of Economic Development, notes that a number of airlines have come and gone over the years and their demise allowed Aloha and Hawaiian to maintain higher fares. "The cost was almost prohibitive for people wanting to visit family and friends" she says. The arrival of go! spurred travel "like we have not seen in years". "Hopefully they [airlines] will all survive. It's nice for our residents to have competition in the market place. Choice is good for the residents"
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T prop
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RE: Aloha Post $10mil Loss For Q3

Tue Dec 19, 2006 8:47 pm

.

Quoting Laxintl (Reply 3):
And the competition has indeed been good for the consumers.

Good for consumers yes, but I don't know if I'd call it competition since Mesa is dumping seats at a loss for the purpose of bleeding the local airlines to death.

Quoting Laxintl (Reply 3):
In a market that has declined by 22% in size since 2000, for the first time with the entry of go! interisland boardings have grown

Boardings are up like 3% or somewhere in that area. If all 3 airlines are just about giving seats away, this will happen. Raise the fares back to a level where you break even, say $58 and the boardings go back to their previous levels. Even with this increase and with the low fares, I hear Mesa still is not filling thier 50 seat CRJ's. load factor was 63.7% for November.



Quoting Laxintl (Reply 3):
Marcia Wainart, liaison with the Sate Department of Economic Development, notes that a number of airlines have come and gone over the years and their demise allowed Aloha and Hawaiian to maintain higher fares. "The cost was almost prohibitive for people wanting to visit family and friends" she says. The arrival of go! spurred travel "like we have not seen in years". "Hopefully they [airlines] will all survive. It's nice for our residents to have competition in the market place. Choice is good for the residents"

Yes, airlines have come and gone, proving that there's only room for 2. The statement that airlines have come and gone allowing AQ and HA to maintain high fares, only serves to vilify AQ and HA, it looks as if some of the weak minded in this state have been duped by the Mesa Jedi mind trick of accusing the local airlines of ripping people off. Mesa comes in and flys, obviously at a loss to most in the local industry who are following this, and yet you would think that someone who is in the states economic development section, like this liaison, would know this. Either they are ignorant or they're burying thier heads in the sand thinking that it will go on forever, all 3 airlines will keep on like this and we'll have $29 fares happily ever after. Dream on, when all is said and done there will again only be 2.

So who will the 2 left be? HA seems to be doing o.k. at the moment and AQ, even though they lost $10 mil, is backed by Yucaipa a multi billion dollar company who looks to be in with AQ for the long haul. Don't forget AQ's lawsuit against Mesa. They appear to have a good case against Mesa and if they win it, monetary damages could be huge.

http://the.honoluluadvertiser.com/ar...le/2006/Oct/14/bz/FP610140314.html




T prop.
 
ikramerica
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RE: Aloha Post $10mil Loss For Q3

Tue Dec 19, 2006 9:05 pm

This is the biggest fallacy of capacity dumping.

Is it good for consumers to have a temporary price break if it leads to a long term increase in prices and reduction in service?

These kind of things never end well. So 5% more people flew because the fares were cheap, but AQ goes deep into the red, Mesa isn't making money, and I'm sure we'll hear about HA's problems just as they are trying to recover from BK.

The consumer benefits most by stable, competitive markets where the companies charge enough to survive and innovate. That was the state of affairs with AQ, HA and Island as they were all recovering from the last destructive price wars. Now, things are being torn apart again.

But it's what the Hawaiians claimed they wanted and deserved, so, it's what they are getting. They didn't want to support Mesa, they just wanted to exploit AQ and HA with $29 fares that obviously were going to hurt their favorite airlines.
Of all the things to worry about... the Wookie has no pants.
 
LAXintl
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RE: Aloha Post $10mil Loss For Q3

Wed Dec 20, 2006 2:25 am

While I am no fan of Mesa in general, obviously we have different views on competition and market economics.

Quoting T prop (Reply 4):
Good for consumers yes, but I don't know if I'd call it competition since Mesa is dumping seats at a loss for the purpose of bleeding the local airlines to death.

Good thing, Mesa has deep pockets and can afford to offer such low rates. Its just like any industry where the new comer often must sacrifice price to build a name and market share.
Unfortunately upstarts in Hawaii during the past had failed as they simply could not hang in a war of attrition with AQ & HA.

Quoting T prop (Reply 4):
Yes, airlines have come and gone, proving that there's only room for 2. The statement that airlines have come and gone allowing AQ and HA to maintain high fares, only serves to vilify AQ and HA,

Airlines have indeed come and gone leaving the HA & AQ duopoly in place basically over and over.
While some airlines succumbed due to their own issues (eg Discovery), others could and were doing decent like Mid Pacific however were basically squeezed out of the market by AQ & HA doing exactly what Mesa is doing by offering incredibly cheap fares at below cost.

Quoting Ikramerica (Reply 5):
Is it good for consumers to have a temporary price break if it leads to a long term increase in prices and reduction in service?

Absolutely. If go! spurs the airlines to provide consumers with some great deals for one or two years the consumers win. If a carrier gets knocked out then the situation goes back to prior days, until someone else decides to challenge the status quo.

Quoting Ikramerica (Reply 5):
The consumer benefits most by stable, competitive markets where the companies charge enough to survive and innovate. That

Agree, except neither AQ & HA have been quite competitive nor innovative for the consumer these last few years. Remember the airlines even entered into an agreement to coordinate schedules to reduce what they considered was and overage of capacity in the interisland markets.
What did that get for the consumers? Nothing, just continued relative high fares, with the two main games in town now even tacitly agreeing not to compete with each other as strenuously.


As with everything in life, choice and competition is good for the consumer.
Hawaii deserves robust competition after basically having survived for decades since WWII with a basic duopoly in place, and only an occasional competitive bump in the road.
From the desert to the sea, to all of Southern California
 
Bluewave 707
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RE: Aloha Post $10mil Loss For Q3

Wed Dec 20, 2006 3:11 am

Capacity dumping? It's called the Wal-mart mentality ... stack'em deep & sell'em cheap. Look at what happens to local type stores when a Wal-mart moves in? Looks like Mesa is doing the same thing.

I have heard from quite a few people that they flew go! once(!). In other words, they weren't impressed by the cheap fares, lack of carry-on and baggage space, and narrow seats. Most I know have flown to check it out, but will remain loyal to HA, AQ, and WP.
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aloha73g
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RE: Aloha Post $10mil Loss For Q3

Wed Dec 20, 2006 3:23 am

Quoting Bluewave 707 (Reply 7):
I have heard from quite a few people that they flew go! once(!). In other words, they weren't impressed by the cheap fares, lack of carry-on and baggage space, and narrow seats. Most I know have flown to check it out, but will remain loyal to HA, AQ, and WP.

Same here. Has anyone else noticed that Mesa has a ridiculous sale of some sort every 2 weeks, but still can't fill their planes up more than 63%.

-Aloha!
Aloha Airlines - The Spirit Moves Us. Gone but NEVER Forgotten. Aloha, A Hui Hou!
 
T prop
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RE: Aloha Post $10mil Loss For Q3

Wed Dec 20, 2006 5:39 am

Quoting Laxintl (Reply 6):
Good thing, Mesa has deep pockets and can afford to offer such low rates. Its just like any industry where the new comer often must sacrifice price to build a name and market share.
Unfortunately upstarts in Hawaii during the past had failed as they simply could not hang in a war of attrition with AQ & HA.

If Mesa and their deep pockets can't hang with AQ & HA what does that say? No room for 3 here. Their dismal load factors despite the firesale fares are telling.

Quoting Laxintl (Reply 6):
Airlines have indeed come and gone leaving the HA & AQ duopoly in place basically over and over.
While some airlines succumbed due to their own issues (eg Discovery), others could and were doing decent like Mid Pacific however were basically squeezed out of the market by AQ & HA doing exactly what Mesa is doing by offering incredibly cheap fares at below cost.

Midpac was not squeezed out by AQ & HA, they did themselves in. In fact HA & AQ did nothing at first when Midpac came to town and lowered fares, they ended up getting kicked in the butt until Midpac tried jets and that was the end of them. It was because of Midpac that the local airlines learned not to sit around and do nothing when another player shows up. When the new guys revenues are coming out of your pocket, you don't twiddle your thumbs and watch them do it. Did you expect them not to match Mesa? If they didn't, you know what the outcome would be by now.

What other airline that went bust can be blamed on HA & AQ? Not Mahalo, one big nail in Mahalos coffin, among the others, was their tendency to keep burning up engines on the ATR42's they had. We know Discoverys story, so someone expain how AQ & HA are responsible for these airlines going bust? If the other guys play on a level field with HA & AQ, it just goes back to the fact that with 3, there are to many seats out there and someone's going down.

Quoting Laxintl (Reply 6):
Absolutely. If go! spurs the airlines to provide consumers with some great deals for one or two years the consumers win. If a carrier gets knocked out then the situation goes back to prior days, until someone else decides to challenge the status quo.

Good for consumers in the short term yes, but after it's over fares will probably climb to a higher level than if the 3rd airline had never been here as the ones remaining try to recover from their losses. As for another airline coming in and challenging the status quo when there's only 2 left again; If Mesa can't make it here I don't think there will be any more challengers for many years to come.

Quoting Laxintl (Reply 6):
Agree, except neither AQ & HA have been quite competitive nor innovative for the consumer these last few years. Remember the airlines even entered into an agreement to coordinate schedules to reduce what they considered was and overage of capacity in the interisland markets.
What did that get for the consumers? Nothing, just continued relative high fares, with the two main games in town now even tacitly agreeing not to compete with each other as strenuousl

What they did was not illegal, but it was questionable in many peoples eyes. Lots of airlines besides HA & AQ were looking for breaks after 9/11 and got them. As far as not being competitive or inovative, AQ & HA may look like pals from the outside but before 9/11 they were almost cut throat when it came to competing with each other and being innovative. Each always trying to out do the other, some things I can think of off the top of my head: Drive through check in, AQ offering more and better service on Transpacs while others are cutting back. HA investing in new aircraft. AQ being the first in the US to equip their fleet with AED's before they were even required. HA having the first all female flight crew in the US. There are lots of other small things that just don't make the news.

Quoting Laxintl (Reply 6):
As with everything in life, choice and competition is good for the consumer.
Hawaii deserves robust competition after basically having survived for decades since WWII with a basic duopoly in place, and only an occasional competitive bump in the road.

Competition IS good for the consumer, but just how much competition? Would Hawaii's consumer trade in their big jets and service they get now for CRJ's and the service reputation that Mesa has? we'll see. You can call it duopoly if you like but don't forget Island Air, they do carry quite a few pax themselves.


T prop.
 
ha763
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RE: Aloha Post $10mil Loss For Q3

Wed Dec 20, 2006 8:15 am

Quoting Laxintl (Reply 6):
Remember the airlines even entered into an agreement to coordinate schedules to reduce what they considered was and overage of capacity in the interisland markets.
What did that get for the consumers? Nothing, just continued relative high fares, with the two main games in town now even tacitly agreeing not to compete with each other as strenuously.

It meant continued, reliable interisland service. The agreement, which was allowed by Congress and had to be approved by the DOT, was valid from Oct. 2002 to Oct. 2003 and only dealt with scheduling. It didn't affect fares because they couldn't talk about fares. Both airlines were flying schedules where they were flying with only half full planes due to the massive drop in pax after Sept. 11. Neither carrier was willing to cut flights first since it would put them at a competitive disadvantage. This is the same reason why neither carrier could increase fares to levels that covered the cost of flying. The interisland market was already a money loser before Sept.11 and this incident just added to the losses. When it came down to actually implementing any kind of schedule agreement, it took many months and ended up only being for 8 months before the exemption ended and both airlines added flights back to their schedules.

As for fares, it didn't go up that much. What happened is that we Hawaii residents were too spoiled with low fares and liberal fare rules from the now defunct coupon system (which was started by Mid-Pac). People thought of and still do think of interisland flights as public mass transportation. You could buy flight coupons from wholesalers and they would be valid for one year and any flight. You didn't need a reservation, just show up at the airport and get out on the next open flight. In 2001, the price of the coupons were around $50-55. However, the airlines did not get $50-55 since the coupons were sold through wholesalers, they were getting around $35 per coupon. By the time HA decided to end coupon sales in 2003, the street price of coupons went up to over $60. However, the published fare HA started at was $66. Yes, the fares did rise for a short while, but they did drop to where the lowest fare was $62 for HA and $59 for AQ.

The other thing that we had to get used to is the fact that we now had to plan trips and couldn't travel on a whim. If you want the lowest fares, you had to make reservations in advance. The thing was that you could still get the lowest fares the day prior if you were flexible. I used to check all the time and would find availability through out the day.

The scheduling agreement and the end of the coupon system allowed both carriers to bring the interisland market back to a mostly breakeven basis. This only happened near the end of the agreement.

Quoting Bluewave 707 (Reply 7):
In other words, they weren't impressed by the cheap fares, lack of carry-on and baggage space, and narrow seats.

Not to mention having to pay for beverages you get complementary on HA, AQ, and WP.