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- Hawaiian Airlines
3375 Koapaka Street, G-350
Honolulu, HI 96819
- Main hub
- Honolulu International Airport
- United States of America
- Business model
- Full Service Carrier
- Domestic | International
- Frequent Flyer Programme
- Association Membership
- Codeshare Partners
- Air China
All Nippon Airways
Delta Air Lines
Hawaiian Airlines operates from hubs at Honolulu International Airport and Kahului Airport, on the island of Maui. The carrier provides a network of domestic services throughout the Hawaiian islands and to the mainland US as well as international services to Asia, the Pacific and Australia. Hawaiian utilise a fleet of narrow and wide-body Boeing and Airbus family aircraft.
Location of Hawaiian Airlines main hub (Honolulu International Airport)
Hawaiian Airlines share price
1,350 total articles
49 total articles
Hawaiian Airlines’ geography has been a boon for the airline throughout 2016 as the company’s unit revenue performance has outpaced that of its peers. Hawaiian has benefitted from immunity to the lack of pricing traction in many domestic markets on the US mainland, and rational capacity deployment on is largest North American routes.
The company expects to continue posting a unit revenue outperformance for the remainder of 2016, driven by still favourable capacity trends in its markets. Hawaiian’s own capacity growth is expected to fall between 3% and 4% for 2016, and remain in the low- to mid- single-digit range for the foreseeable future.
Although Hawaiian continues to outperform the industry in unit revenue, the company is facing inflated unit costs in 2016 driven by several factors, including increased compensation and technology investments. The airline is also in the middle of pilot negotiations, and has acknowledged additional cost headwinds once a new collective bargaining agreement is reached.
The largest airport outside Asia with flights to Japan is, perhaps surprisingly, none other than Honolulu. Approximately 19 flights a day in 2016 depart Honolulu for Japan, creating a nearly hourly beach shuttle. Among all global airports Honolulu is eighth largest for international flights, outpaced by airports such as Taipei and Bangkok, but Honolulu still has more Japanese flights than Singapore, Manila or Kuala Lumpur.
All Nippon Airways is proceeding with plans to deploy its forthcoming fleet of three A380s exclusively to Honolulu from 2019. Honolulu presents opportunity, but also protection. Despite all the changes to aviation and tourism over the last decade, Japanese demand to Hawaii has remained consistent. It is also strongly, almost exclusively, outbound Japanese – good for ANA since passengers will pay a premium for a Japanese airline.
Following Japan Airlines' bankruptcy and restructuring in 2010, ANA has overtaken JAL as the country's main international airline and outpaced it, except in Hawaii. Hawaii, with its leisure point-to-point demand, is not core to ANA's strategy. But ANA has a very different, non-operational reason for allocating the A380s to Hawaii.
Hawaiian Airlines’ unique geography continues to benefit the company in 2016 as favourable capacity trends are one factor in its industry outperformance in unit revenue metrics. Hawaiian’s outlook for the remainder of 2016 remains positive as industry capacity on its routes to North America and long haul destinations remains relatively benign.
The airline is acknowledging slight pressure in its inter-island operations due to heightened competition with the smaller operator Island Air. Hawaiian plans to adjust its inter-island schedule later in 2016 to maximise peak flying and cut some off-peak flights.
Hawaiian is expanding service to the Tokyo market in 2016 after being awarded new slots at Haneda airport. But the expansion is not affecting Hawaiian’s overall growth targets of a 2.5% to 5.5% increase in capacity, which is significantly lower than the double-digit expansion it recorded from 2011 to 2013.
The paradox of margin expansion and unit revenue contraction will continue for most US airlines into 2Q2016 as those companies work to alleviate investor concern and set a course for a positive unit revenue trajectory. But maintaining favourable unit costs is key for the continued margin expansion forecast by the three large US airlines – American, Delta and United.
Although fuel prices have been rising, energy costs remain below historical levels, which is helping American, Delta and United to keep their unit costs in check. Excluding fuel, each airline has varying forecasts for 2016 driven by different inputs, including rising labour costs and profit-sharing.
American’s unit costs during the past year have been affected by labour contracts it reached with pilots and flight attendants in 2015. Delta and United will also likely need to weather labour cost increases as both companies are in the process of negotiating contracts with different employee groups. Many US airlines face uncertainty in their cost performance in the future as they work towards favourable contract terms that preserve their efforts to contain costs. And so the wheel turns.
The record profits that US airlines are enjoying from lower fuel costs are being shaded by weaker passenger unit revenues and labour discontent as work groups at various airlines strive for market rates that are on an upward slope.
Some of the higher-profile negotiations include pilot collective bargaining at Delta and Southwest. Pilot groups at each airline have rejected contract proposals during the past year, and are currently requesting wage increases that they believe will put them on par with the industry average; an average which has been growing due to contracts brokered by their competitors, American and United.
Even airlines that have typically enjoyed positive pilot relations are encountering higher levels of turbulence in their latest round of talks. Hawaiian Airlines’ pilots have been especially vocal during the current round of negotiations, the pilots voicing their frustration over lower rates of pay versus the airline’s competitors.
Hawaiian Airlines’ unique geographical positioning is helping the airline to deliver a passenger unit revenue performance that is outstripping its peers, who are more exposed to a lack of pricing traction and growing capacity on many domestic routes on the US mainland. Demand to Hawaii remains solid and competitive capacity growth in Hawaiian’s markets remains reasonable.
Hawaiian’s capacity expansion has been tempered during the last couple of years after a massive push into long haul markets earlier in the decade. Its planned capacity growth for 2016 is 2.5% to 5.5%, and expansion in 2017 is expected to remain in the low single digits. The airline plans to use existing capacity to support additional services to Tokyo Haneda, which will allow the airline to improve its service offering in one its most important markets – Hawaiian estimates that Hawaii is the end destination for one in four passengers travelling from Japan to the US.
Alaska Air Group’s intention to purchase Virgin America and merge with its rival has fuelled speculation about other potential M&A deals in the US market. Hawaiian believes that its attributes could create value for another company but stresses that it is not for sale, and many opportunities remain for the airline to grow independently.