Hawaiian flying high

KAPAA — The president and CEO of Hawaiian Airlines said Tuesday he recognizes Kauai residents want low airfares. And he believes Hawaiian Air is providing them.

“Flying between the islands of the state is a bargain that is quite, quite, quite remarkable,” Mark Dunkerley said to about 150 people at the Kauai Chamber of Commerce luncheon at the Courtyard Marriott at Coconut Beach.

He said other airlines have looked at providing service between the islands and have opted against it for one main reason: Cost.

“They don’t find the prospect all that appealing,” he said.

While many on Kauai have been critical of Hawaiian Airlines airfares and said they are too high, a relaxed Dunkerley started his talk by thanking those in the room who fly on Hawaiian Air.

“We rely on you. Without you, we wouldn’t exist,” he said.

Mark Perriello, Kauai chamber president, said Hawaiian Airlines plays a vital role in getting visitors to Kauai. He said the airline has been with Kauai through the good times and the bad.

“We are grateful for what they do,” he said.

Dunkerley said he is well aware of criticism aimed at the airline for its airfares and did his best to defuse any tensions with a brief explanation of their goals and reasons for ticket prices.

“We’re not running from the issue at all. We do work really hard to keep our fares low,” he said.

“I understand there’s been a lot of anxiety about the level of fares. I understand why it’s important; I understand the unique nature of your island.”

He cited rising government taxes and fees on airfares to fund areas that have little to do with the airline industry, such as highway projects, as something beyond his control that affects ticket prices. He expects those fees to continue to rise.

“It’s getting worse,” he said.

But Hawaiian is doing what it can to keep consumer costs down, he said.

“I will pledge to you we will do everything we can to keep airfares as affordable as possible,” Dunkerley said.

He produced a chart that showed neighbor island average base fares rose 30 percent from 2004 to 2014, while Hawaii restaurant meals rose 45 percent, Hawaii housing purchases rose 87 percent and Hawaii college education rose 217 percent.

“I’m proud of what we’ve done, considering how taxes have gone up, considering what’s happening in the rest of the country regarding airfares,” he said.

According to the Associated Press, several U.S. airlines are raising base roundtrip fares on domestic flights by $6, the first large-scale increase since June.

JPMorgan Chase analyst Jamie Baker says Delta Air Lines began boosting prices on Monday and was quickly matched by Southwest Airlines. Both airlines confirm the report. American, United, JetBlue and Virgin America also said on Tuesday that they matched the increase, the AP said.

Baker says the hike covers corporate, leisure and deeply discounted fares.

Dunkerley said the higher cost of peak-hour flights subsidizes the lower fares of off-hour flights. He provided an airfare comparison that listed a route from Honolulu to Lihue, 102 miles, with an average fare one way of $69 (not including fees and taxes), while a flight from Seattle to Portland, 129 miles, was listed as a average fare of $105, one way.

Of routes more than 190 miles, a flight from Honolulu to Hilo, 216 miles, had an average fare, one way, of $81, while a flight from Birmingham, Alabama to Knoxville, Tennessee, 221 miles, was $282.

Dunkerley said longer flights, such as to Los Angeles from Oahu, are more cost effective than shorter flights, such as ones between the islands.

He said per mile, it is four to five times more expensive to fly small planes between the islands than larger planes to the Mainland. He noted that costs involved with takeoffs and landings are the same, regardless of distance.

“That is the reality of what’s out there,” he said.

He said 2015 has been a good year, “and a necessary one,” for Hawaiian Airlines. Hawaiian Holdings, Inc., parent company of Hawaiian Airlines, Inc., reported adjusted gross income of $78.4 million. Hawaiian Airlines reduced its debt from about $1 billion in 2014 to $914 million by third quarter of 2015.

Hawaiian’s debt of $914 million was listed as:

· $665 million under secured loan agreements to finance a portion of the purchase price for 11 Airbus A330-200 aircraft.

· $123 million under secured loan agreements to finance a portion of the purchase price for 15 Boeing 717-200 aircraft.

· $97 million in capital lease obligations to finance the acquisition of an Airbus A330-200, two Boeing 717-200 aircraft and aircraft-related equipment.

· $26 million under floating rate notes to finance the acquisition of two Boeing 767-300 ER aircraft.

· $3 million of convertible senior notes.

Its debt had increased each year since 2010 before falling this year.

The company must have profits to pay its debts, fund investments in planes, expand its flights and routes and continue to increase its workforce, which grew to 5,499 in 2015 from 5,379 in 2014, Dunkerley said. It doesn’t receive federal subsidies to provide service, which has excelled in on-time arrivals and departures, and in safety, he said.

Paying debts, he said, is important not just for the balance sheets, but for the communities Hawaiian Airlines serves.

“We don’t make any apology for that because the most important thing is we’re around to provide that air transportation not just this year but next year and the next 75 years,” he said.

To those anxious about the cost of airfares, he said it’s “super, super important to plan so they can go in the off-peak times and get the cheaper fares.”