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- Hawaiian Airlines
3375 Koapaka Street, G-350
Honolulu, HI 96819
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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)
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1,253 total articles
43 total articles
Tentative approval was finally granted by the Us DoT for Norwegian Air International to introduce long haul, low cost service from Europe to the US. Even though the opponents have successfully lobbied legislators to introduce prohibiting legislation, this was a milestone in the contentious debate about open skies agreements, as well as the intricacies of labour law and foreign ownership requirements. There was a lively debate on this topic at CAPA's Americas Aviation Summit, under the guidance of CNN anchor, Richard Quest.
However, in the larger scheme of liberalisation Norwegian’s victory is a small step in what appears to be a long journey for a mindset change: to create new paradigms in the rapidly changing global aviation industry. In the US aviation landscape the easing of foreign ownership restrictions remains a non-starter, which means that joint ventures will continue to serve as stand-ins for cross-border ownership. As the status quo remains, and members of large global alliances holding anti-trust immunity dominate markets such as the trans-Atlantic, Norwegian’s ability to inject low cost competition is welcome, and a logical development.
HNA, the holding company that owns flagship airline Hainan Airlines, has grown a portfolio of airline investments outside greater China that has recently expanded to Brazil’s Azul, and could be extended to include TAP Portugal. Some of the stakes have been placed to allow HNA to be an active investor and boost its presence in the foreign market. With this general strategic objective – and cash to spend – it is logical for HNA to consider investing in a US airline.
China’s 'one airline, one route' policy generally permits only one Chinese airline to fly a long haul service. Hainan cannot serve blue-chip points like New York and Los Angeles from Beijing and Shanghai since Air China and China Eastern already serve those points. Hainan has instead developed a mostly secondary market network including Boston and Seattle. Purchasing a US airline to have it expand in China, or to launch all-new flights, would overcome these restrictions since there is no US limit on services as long as traffic rights are available. American, Delta and United all serve the Los Angeles-Shanghai route.
China-US open skies would permit HNA and its US partner to enter into a joint venture, and even share profits. Integration has not been a defining feature of HNA’s investments, but the potential ramifications of a US airline investment could be significant and wide-reaching. This potential trans-Pacific change comes as Canada's WestJet weighs an entry into Asian routes.
Although capacity has recently decreased in the Dallas market pricing remains under pressure, which has triggered Virgin America to trim some capacity on its routes from Dallas Love Field, starting in 2Q2016. For the last year, Dallas has been mired in outsized capacity growth and lower pricing. But Virgin America has concluded that the pressure it is experiencing is no longer driven by a supply and demand equation, but rather a decision by its competitors to trade yield for load factor. Virgin America is opting to reduce its exposure to the depressed fare environment instead of engaging in similar behaviour.
Virgin America plans to deploy some of the capacity that it is cutting from Dallas in 2016 to new flights from its Los Angeles base to Honolulu and Maui. Those new routes follow the debut of service to those Hawaiian markets from the company’s San Francisco base in late 2015. Despite entering routes to Hawaii that are already heavily populated by other airlines, Virgin America is pleased with its performance in those markets.
The airline is forecasting a 3% to 5% drop in passenger unit revenue for 1Q2016, while capacity for the full year of 2016 is growing 14% to 16%. Aside from the situation at Dallas, Virgin America remains optimistic about the performance of its network. However, similarly to the state of most US airlines, there will likely be no positive PRASM traction for the airline until 2H2016 at the earliest.
During the past decade, Hawaiian Airlines has exited bankruptcy protection and embarked on a significant network expansion that required the addition of costly widebody aircraft in a relatively short period of time.
Now the company is beginning to reap some of the benefits of that expansion as its growth has slowed during the last couple of years. Its balance sheet metrics have improved, and it is working to manage its debt levels prudently. In fact, it has beat its targets in some leverage metrics in 2015 and expanded its return on invested capital.
Hawaiian’s outlook for 2016 remains positive. Its forecast capacity growth is in line with its supply expansion during 2015, and its upward margin trajectory should continue. The next major milestone for Hawaiian is the delivery of A321neos beginning in 2017, which will give the airline a new level of flexibility to effectively manage its network.
Just as Hawaiian Airlines has taken a breather from explosive growth in the 2011 to 2013 time period, shifts in overall market dynamics have occurred, including the rapid appreciation of the USD against most global currencies and a sharp fall off in fuel surcharges. Those changes have created unit revenue shortfalls for most US airlines, even as significantly lower fuel prices are producing record profitability.
Although Hawaiian’s business model is different from that of most US airlines, it has not been immune from revenue degradation in 2015. Nevertheless, the airline notes positive trends in its largest geography, North America. Capacity growth between Hawaii and the US west coast slowed to single digits in 3Q2015, with similar trends occurring in late 2015 and early into 2016.
Hawaiian has undertaken some pruning of its long haul network within the last couple of years, and the efforts have borne fruit, although the results are masked by pressures from foreign exchange rates and fuel surcharges. However, overall Hawaiian feels comfortable with its competitive position in the North American and long haul markets despite the headwinds pressuring its unit revenues.
Orlando International Airport is capping off a couple of years of impressive growth in Sep-2015 with the highly anticipated launch by Emirates of new service from Dubai, opening up strategic access for the airport’s passengers to the Middle East and Asia.
The airport during the last year has also welcomed new service to Brazil, Peru, Mexico, Denmark and Ireland. The service additions reflect the unique ability of Orlando International, a non-hub for the large three US global airlines, to attract international service in the post consolidation era of US aviation.
As American, Delta and United ratchet up their anti-Gulf rhetoric, Orlando International is stressing the importance of open skies in its ability to secure new international service. And, ironically, Delta aims to capitalise on the US open skies agreement with Brazil when it launches new Brazilian service from Orlando International in late 2015 as it continues to shake the foundations of the US' open skies regime with opposition to the UAE and Qatar open skies agreements.