go! Airlines has announced that they will be exiting the Hawaii market and ceasing all operations as of April 1, 2014. go! came to Hawaii eight years ago and had hoped to compete directly against Hawaiian Airline on all interisland routes. However, during that period of time, they had captured only 6.8 percent of the market share as compared to Hawaiian Airlines 85.2 percent market share. Chris Pappaioanou, the president of go! airline, stated that while the company had profited occasionally, on an annual basis it was unprofitable. Pappaioanou added, "At the time we entered it made perfect sense. If fuel prices had not doubled we would have been significantly profitable today. But losing money in business for any reason is never a good thing."
Jonathan Ornstein, the chairman and CEO of Mesa Air Group, which ran the operations of go!, stated, "While this was an extremely difficult decision to reach, we believe it is in the best interest of Mesa's long-term strategic objectives. We are redeploying the go! aircraft to support our existing mainland operations. An additional factor that we accounted for was the long-term increase in the cost of fuel, which has more than doubled since go! began service and has caused sustained profitability to be elusive. I think it would be fair to say that we wouldn't have gone into Hawaii had we known that we would have a $52 million settlement hole to dig our way out of. But once that happens, what's done is done. It's an operation that makes sense; we've carved out a nice niche and put a lot of people to work, and I think over time it will be a good investment for us."
Many residents in Hawaii still blame go! for putting Aloha Airlines out of business on March 31, 2008. Peter Forman, a local aviation historian, stated, "The demise of go! in Hawaii was a foregone conclusion for two reasons. First, people of Hawaii remembered go!'s involvement in the destruction of Aloha (Airlines in 2008). And secondly, go!'s 50-seat passenger jets have too high of a cost structure to compete effectively in this market. I think you could actually, in a few years, see the interisland market be more competitive than it is now from the standpoint that Island Air will become a more robust carrier now that it's a two-airline race rather than three. Island Air will need to seize the opportunity, or some third party will come in and join the competition."
Source: Honolulu Star Advertiser, 3-18-2014, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Principal Broker, REALTOR®
Global Executive Realty, LLC
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