Checking in on Hawaiian Airlines with CEO Peter Ingram

Last week, I was supposed to be with some friends hiking around Molokai, but Mother Nature had other plans. The abnormal deluge that soaked Molokai and the western islands killed our plans, so we postponed the trip. Unfortunately, that meant I wasn’t able to make the interviews I had lined up in Honolulu before heading back home. But don’t worry, video calls saved the day.

Peter Ingram (left) during the Hawaiian Long Beach inaugural. That’s Brent Overbeek, now Chief Revenue Officer, at right.

My goal was to check in with both Hawaiian and Alaska as the merger slowly churns toward a result. I started with Hawaiian CEO Peter Ingram.

It’s been a busy year for Hawaiian with big projects like inducting the 787 into the fleet and installing Starlink internet. Throw the communications/government relations work around the merger into the mix and you end up with a full plate. Through all this, I was wondering how Peter was managing to keep Hawaiian focused. We’ve seen airlines drop the ball while they wait for a merger to come through… and then it falls apart. (I think you know what I’m talking about.)

There’s no silver bullet, because people are expecting a merger to happen, so it does preoccupy them. But here’s how Peter explained it to his team.

…last fall when we were in discussions but hadn’t come to final terms with Alaska on the combination, one of the things I kept saying to our team was look, Plan A is running our standalone business, operating a stand-alone plan. [Plan] B is going forward with the combination…. When we signed the final paperwork in early December and announced the deal. I said, okay, now Plan A is combining the business with Alaska, but we still have to keep Plan B in mind.

As for the merger itself, there wasn’t much to discuss. The Department of Justice (DOJ) came back with a second round of questions as expected, and the airlines submitted responses in early May. Now it’s time to just wait to see if DOJ opts to challenge it or not. In the meantime, Hawaiian has plenty of work to do.

The Japan Problem

Japan continues to be a real problem. The yen is so weak compared to the dollar that it makes it hard for Japanese travelers to opt to vacation in Hawaiʻi. It’s not just that, however. Peter said that inflation, especially hotel costs, have “changed the equation.” Until those things change, demand will stay low in the Japanese point-of-sale.

To counter that, Hawaiian has reduced some Japan flying, but it is also shifting its mix. Pre-pandemic, Peter says that Japan point-of-sale made up about 85 to 90 percent of the people on the airplane. Now, it’s closer to 50 to 60 percent. That’s an enormous shift. Even more surprising, in some months like March, it tips in favor of more than half the people on the plane not coming from Japan.

Where are they coming from? It’s a mix of people beyond Japan connecting over Tokyo to get to Hawaiʻi along with locals in Hawaiʻi and yes, people coming from the mainland US to Japan. I think it goes without saying that this traffic is not as lucrative to the airline as is Japan origin, but it’s certainly better than nothing until the economic situation changes.

The A321neo

As we all know by now, any airline operating A321neos powered by Pratt & Whitney are in a world of hurt. The engine issues have kept many airplanes grounded while they wait their turn to get fixed up. I experienced this first-hand on Hawaiian last October when my return from Kahului to Long Beach was canceled due to aircraft availability.

We’ve heard airlines like Spirit say this will go on for a long time. Some airlines haven’t even seen their troubles peak yet. But Hawaiian? It is expecting to be back at full strength imminently.

How did this even happen? Hawaiian had some of the earliest models and had other issues that allowed it to get to the front of the line. Now, the airline is over the hump, and even better, all the neos have Starlink installed so wifi is super fast and good.

I asked Peter if there was hope for a lot more flying for the 321s or if it had been tapped out, and he said there wasn’t a ton more they could do. They did recently start Salt Lake, but that is really pushing the boundaries of that airplane. It will have to take a weight restriction westbound during some parts of the year. But how’s that flight doing? “We’re we’re pleased with how it’s going. Demand has been pretty good.”

The South Pacific

Opportunities for the 321 led me into the South Pacific. Hawaiian flies bigger airplanes to Papeete and Pago Pago, but it runs the 321 to Raratonga. Is there more that they can do in the region?

It’s not going to be an area where you see seven or eight airplanes worth of growth potential, but there are opportunities.

I couldn’t get him to tell me more than that, but there are only so many islands with a big enough runway.

As for that Raratonga flight, Peter says “we had a little bit of a slow start,” but once they got the selling infrastructure in place it started to improve and is now in-line with expectations. Of course, the Cook Islands pays a fair bit to support that flight, replacing the old Air New Zealand one to LA, so it’ll be just fine.

Maui

The wildfires that tore through Lahaina caused tremendous destruction and displaced thousands of people, but as a secondary issue, that has made it tougher for airlines. The number of short-term rentals and hotel rooms has declined since they are still housing displaced folks, and that means there’s less demand to go between Maui and the mainland for leisure.

For Hawaiian, this hasn’t been as challenging as you might expect. So many other airlines have pulled down flying to Kahului for the same reason that Hawaiian has been able to keep its load factors relatively steady. But it is an ongoing concern.

So now, Hawaiian continues to sit and wait to see where its future will lie. It isn’t sitting still, however.

The first install of Starlink on the A330 fleet is supposed to happen next month, and then the airline can work on FAA approvals. There are some A330 lease returns coming up that may or may not end leaving the fleet. And the Amazon cargo business is about to get its third airplane with seven in the fleet by year-end.

Still, the acquisition by Alaska hangs over it all. Later this week, I’m hoping to put live a post about my interview with the Alaska team.

Checking in on Hawaiian Airlines with CEO Peter Ingram

Checking in on Hawaiian Airlines with CEO Peter Ingram

Checking in on Hawaiian Airlines with CEO Peter Ingram

Checking in on Hawaiian Airlines with CEO Peter Ingram

Checking in on Hawaiian Airlines with CEO Peter Ingram