Will 'Predatory' Pricing Win The Day In Hawaiian Skies?

Sometimes, the airline industry reminds us of the old "Wild Kingdom" TV series... complete with graphic images of prides of lions jumping over themselves to devour the carcasses of slain prey. Hot on the heels of Aloha Airlines' discontinuation of service, on Monday rival Mesa Airlines announced its go! Airlines subsidiary will increase the number of flights it operates in the region, from an average of 54 flights per day to 94 flights beginning Tuesday.

With its new service, go! will step up its daily round trip flights from Honolulu, to Maui, Lihue, Hilo and Kona. The Mesa subsidiary will also offer all seats at $49 through Monday April 7.

"In response to demand, we have significantly increased the number of flights in all markets providing high frequency service throughout the business day," said Mesa Air Group Chairman and CEO Jonathan Ornstein. "We will continue to adjust our schedule to satisfy demand and work hard to provide the highest quality, lowest cost service to the people of Hawai'i."

Mesa finalized plans to launch service in Hawaii in 2005... and promptly shook up what had been relatively stable (some would say "noncompetitive") market dominated by two airlines -- Aloha, and Hawaiian Airlines. Offering much lower fares than its rivals -- to the point of operating routes at steep losses -- go! promptly commanded a large share of the market, eating into its rivals profits.

As ANN reported, in November 2007 a US Bankruptcy Court judge ruled go! illegally used confidential information obtained from Hawaiian while under bankruptcy proceedings to launch the interisland airline... and ordered Mesa to cough up $80 million in damages, determining Mesa used information it obtained while a bankrupt Hawaiian Airlines courted Mesa as a possible investor -- including profitability figures for local and Hawaii-US mainland routes, and passenger profiles -- to turn around and launch its own airline.

In its announcement of filing for Chapter 11 bankruptcy last week, Aloha called the predatory pricing strategy employed by go! "illegal," a claim go! officials downplay.

"Since June 2006 when go! first entered the market, the people of Hawai'i have given us tremendous support," said Frank Among, go!'s Vice President e-Commerce. "Almost 1.5 million people have flown on go! and more than 65,000 have joined our go!Miles frequent flyer program. Today we renew our commitment to serving the people and businesses of Hawai'i with friendly, reliable service and affordable air fares."

Darwin would likely approve.

FMI: www.iflygo.com/