Post #371434 by VampiressRN on Thu, Apr 3, 2008 7:58 PM

It's inevitable....

Closed Airlines Mean Higher Hawaii Fares
By ADAM SCHRECK, AP

The abrupt shutdowns of ATA Airlines and Aloha Airlines won't keep travelers off Hawaii's shores altogether, but they could make an already expensive vacation destination even pricier and potentially put the leis and luaus out of reach for many.

Flights to and from Hawaii had been a key part of ATA's business ever since the Indianapolis-based carrier scaled back its route network following a previous trip through bankruptcy in 2006.

On Thursday, the airline suddenly quit flying, leaving passengers on the islands and elsewhere stranded as it again headed for bankruptcy court. Virtually all the carrier's more than 2,200 employees were laid off.

"It'll hurt," said Minneapolis-based airline expert Terry Trippler. "They did a lot of business to and from Hawaii at fairly reasonable prices."

The surprise announcement came just two weeks after Aloha filed for bankruptcy protection following years of losses. The airline, which served the state for more than 60 years and was the islands' second-largest carrier, ended passenger service Monday and is hoping to offload its cargo business this month. It flew both inter-island routes and flights to the mainland.

The one-two punch, coming at a time when the airline industry is already straining under rapidly rising fuel prices, will likely prompt remaining carriers to push their fares even higher, industry observers said.

"They've really been thrown a curve ball. Nobody really expected two major competitors to go away," said Robert Mann, an independent airline analyst in Port Washington, N.Y. "When you pull out a major carrier, it's going to create a lot of demand on the remaining carriers."

Hawaiian Airlines, the state's biggest airline, could emerge as the biggest winner following its rivals' collapse. The carrier flies to nine cities on the mainland -- more than any other airline -- including all four markets where ATA operated. It also controls a hefty share of inter-island traffic.

A number of other domestic carriers also fly to the islands, and each will likely see additional traffic flowing their way now that two rivals are out of the picture.

Delta Air Lines and Continental Airlines competed against ATA on direct flights from Los Angeles, for example, while US Airways challenged the carrier in Phoenix. Northwest Airlines, United Airlines, American Airlines and Alaska Airlines all also fly from multiple mainland destinations.

"It helps all the carriers who fly from the U.S. mainland to Hawaii," Avondale Partners airline analyst Bob McAdoo said. "There'll be less seats offered at really deep discounts."

Flights between the islands could also grow more expensive.

Hawaiian and Mesa Air Group, the parent company of inter-island carrier go!, have each recently announced plans to add spare planes and flights on routes within Hawaii to help make up for the loss of Aloha service.

Even so, experts doubt fares that have fallen as low as $49 or less one-way are sustainable over the long term.

"It's an unrealistically low price," Mann said.