How Hawaiian Airlines stays alive with plenty of liquidity?

Lori Ranson:
Do you see any more opportunities for markets like this that you’ve been looking at for a while that may be more favorable to launch now or in the next year? Or is it just, “Let’s take a look and see how thesemarkets spool up?” I’m sure the spool up requirements are different than they would be a year or two years ago.

Peter Ingram:
Yeah. We’ve always got a number of routes that we’re looking at. This is unusual for us to be launching four new routes in the course of a couple of months coming up. It really is a little bit of a function of taking a realistic look at how demand is going to come back over the next year or so and realizing that the depth of some of our traditional markets isn’t going to be what it was in 2019, 2018 immediately. So this is an opportunity to accelerate some of the broadening of the network by moving some of these
new demand pools so we can access up and getting them into our network sooner rather than later.

So we’ll continue to look at that. Obviously, we’ve got to manage building back service on our existing network as well and some of the timing of that is going to be a little bit unpredictable, particularly with the international routes where we’ve got different government regulations on either end of the route that we have to manage through, and the pace of those coming back is going to vary market by market and country by country. But we’re working to keep looking at these. Right now the focus is on, “Let’s get
these four up and running,” and they’re looking fine right now. They’re generally in line with how we’re booking system average for our existing routes. So we think we’ve done a good job of creating some of
the awareness.

Lori Ranson:
You mentioned fleet earlier, and I just want to touch back on fleet for a moment because I’m curiousโ€ฆ I know that you all very bullish on the A321. Do you think that aircraft presents certain opportunities in the pandemic that are unique to these crisis conditions?

Peter Ingram:
Well, I think one thing that’s great about it is forโ€ฆ The routes of we’re serving it’s by far and away, the most efficient aircraft out there in terms of the fuel economy and the good mix of density and comfort
that you get on that airplane. So for us, we look at the 321 as a little bit of a Swiss Army knife in our network. For a while, we’ve actually flown it on some inner island routes, very short-haul and we’re using it for some of those flights. While at the same time, we can put it into a market on the mainland U.S. that might’ve been an A330 market in prior times but doesn’t have the volume of demand to support that right now and the cost per cycle of an A321 is considerably below that of a wide body aircraft.

If you don’t have the cargo revenue to offset that and you can’t fill all those seats, then absolutely we’d like to go ahead and use the 321 as much as we can. Most of the planning that we’ve done about how the network ramp backs up has us flying the 321s more fully of historic utilization before the other aircraft in our fleet.

Lori Ranson:
Yeah, obviously it makes sense. It’s interesting. What routes were you flying them on the inner island markets?

Peter Ingram:
Well, we’ve flown them Honolulu to all of the major neighbor islands. So Maui, Kona, Hilo, but probably Maui more often than the others because that is the densest of them. Particularly at certain times of day, even when demand was very low, we would have times of day and times of week where there’s peak demand periods in the day. As we were for a period of time not selling the full load factor on the airplane, it gave us a little bit more seat capacity than our 717s.

Lori Ranson:
Yeah, interesting. So it really is a Swiss Army knife.

Peter Ingram:
Yeah.

Lori Ranson:
Maybe justโ€ฆ I know you can’t really talk about international markets, but do you see any positive signs emerging? Do you think there’s as much pent up demand as you would say for domestic travel in the U.S. in your long haul international markets? I mean, I know it’s a matter of regulations and confusion and passenger friction because they don’t really know what they’re supposed to do on the other side, but do you see countries coming together and trying to work together terms of, “Let’s figure this out.
Let’s have some standardization across what we’re trying to do to get the traveler back in the skies?”

Peter Ingram:
Unfortunately, I don’t think we’ve seen much of that. I think it has beenโ€ฆ In our experience with the Asia Pacific markets that we fly to, it’s been very much a country by country approach, and I’m expecting that’s liable to continue for the foreseeable future. A lot of it has been a little bit of two steps forward, one step back, or some days it feels like one step forward, two steps back, and it very much differs by how different countries have reacted to the crisis and what they’re experiencing with the spread of the virus is. So, for us, we’ve been flying to a certain degree between Japan and Hawaii and Korea and Hawaii for several months. That started with originally all-cargo flights, just carrying cargo in the belly of the aircraft
with demand high enough to justify that the cash costs of operating. That allowed us to, as the pretravel testing regime has come in place in Hawaii, to open it up to passenger demand with a low hurdle for what incremental costs we need to cover to do that.

It’s worked generally fine, but what we saw was there’s still a lot of restrictions. People still have travel restrictions on their return from their trip, which hasn’t been the case with our domestic flights. That
really curtails how much demand there is to access right now in Japan and Korea. We haven’t flown at all to Australia and New Zealand. They’ve obviouslyโ€ฆ Those are two countries that have taken a very strict
approach to close their borders and have really not sought to control COVID-19, but to completely eradicate it within their countries. That’s leads us to the conclusion that it’s going to be even longer
probably well towards the end of this year at least before we see those markets open up. But we’re keen to get back in when conditions are available to do so.

Lori Ranson:
Is South Korea still on track to be added to Hawaii’s testing program?

Peter Ingram:
Yeah. South Korea has been added to the program now. I don’t know if we’re past the effective date, but I know it’s been announced that South Korea is in the program and there are testing partners available. I’m pretty sure we’re actually up and running with tested partners now. So South Korea and Japan are in place and that Canada is in place as well, although that’s not part of our network, and Canada has some incremental restrictions for people coming back in now. Again, I expect this is going to be a global question of jurisdiction by jurisdiction managing through what the restrictions are for some period of time.

Lori Ranson:
Right. We don’t have too much time left, but I want to end on a positive note in terms of, can you just share what’s been the biggest lesson learned or the biggest positive takeaway, if there is any positive takeaway, from this crisis for you all at Hawaiian?

Peter Ingram:
I think what’s been really gratifying about this is how our team came together in a moment of extreme challenge and extreme crisis and really just look for, “What do we have to do to go and address this and make sure that our company survives and comes out ready to thrive on the other side of this period?”
To see how much all of our employees care about Hawaiian Airlines and care about one another has really given me a lot of energy during this time period. Here, at our offices, looking at people taking on different roles. We talked about testing earlier, the folks who set that up didn’t think that that was going to be thatโ€ฆ That wasn’t on their list of goals as we entered 2020, and it really just became a case of, “Hey, there’s work to be done. Let’s go and figure out what that is. Doesn’t matter what my job title is. If
I can help, I’m going to help and then we’ll move on to the next thing after that.” That spirit of collegiality and working together has just been remarkable and wonderful to be a part of.

About the author

Avatar of Juergen T Steinmetz

Juergen T Steinmetz

Juergen Thomas Steinmetz has continuously worked in the travel and tourism industry since he was a teenager in Germany (1977).
He founded eTurboNews in 1999 as the first online newsletter for the global travel tourism industry.

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