Business/Economy

Alaska Airlines deal with Mokulele intensifies Hawaii interisland airline competition

Mokulele Airlines

Alaska Airlines has entered an agreement with Mokulele Airlines that will allow Alaska’s customers to book connecting flights to the Hawaii destinations that Mokulele serves while earning Alaska miles.

The partnership, announced Tuesday, adds more competition to Hawaii’s recovering interisland market, which in recent months has seen increased traffic, airfare sales and added routes.

The new agreement, which starts in 2023, is mostly about convenience, since customers can book through itineraries on the two airlines without having to book each separately. Also, it has the potential to attract more customers by providing easy connectivity to Hawaii destinations, especially those that were not originally served by Alaska.

With connecting service on Mokulele, Alaska’s passengers will have through-access to 10 Hawaii destinations, including new locations such as Kapalua, Hana, Hilo, Waimea and Kohala, as well as Lanai and Molokai.

Mokulele is the only carrier in Hawaii with regularly scheduled service to Lanai and Molokai.

The partnership also extends to all flights operated by Southern Airways Express, enabling connections beyond Alaska’s existing West Coast network. Southern Airways Express has connections in Los Angeles, Phoenix, Denver, Washington-Dulles, St. Louis, Dallas-Fort Worth, Nashville, Atlanta and Pittsburgh.

“What we really want to do is create seamless travel for our guests anywhere they want to go,” said Ben Minicucci, CEO of Alaska Airlines. “Our Hawaii strategy is always point to point. We fly from all our West Coast hubs point-to-point to the islands. How do we get people between the islands? Mokulele is just a great option—they have 800 flights a week to major airports and smaller airports. We thought this is a great partnership. We can sell it on alaskaair.com, and if you are a mileage plan member, you can earn miles.”

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Minicucci spoke with the Honolulu Star-Advertiser on Friday at Daniel K. Inouye International Airport, where he welcomed veterans returning on Veterans Day from Hawaii’s first honor flight. Alaska Airlines provided complimentary travel to 28 veterans and 22 guardians to Washington, D.C., to view the war memorials.

Minicucci’s Hawaii visit also was tied to celebrating the carrier’s 15th anniversary of flying to Hawaii and its 90th year in business.

Alaska started its service to Hawaii in October 2007 with a flight between Seattle and Honolulu.

Service between Seattle and Lihue started two weeks later, followed by Anchorage-Honolulu service in December 2007. In 2008, after Aloha Airlines stopped flying, Alaska began serving Kona and Kahului.

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Alaska Airlines and its regional partners serve more than 120 destinations across the United States, Belize, Canada, Costa Rica and Mexico. Minicucci said he’s bullish on Hawaii, where demand has come back strong from the earlier part of the pandemic, as it has across Alaska’s entire network. He said the carrier has long-term plans and will continue to grow steadily over time.

Mokulele Airlines, which is owned by the nation’s largest commuter airline, Southern Airways, has operated for nearly 30 years and is currently in a growth mode. Altogether, Southern, along with its subsidiaries Mokulele Airlines and Marianas Southern Airways, serves 52 U.S. cities, with hubs at Chicago-O’Hare, Dallas-Fort Worth, Denver, Honolulu, Kahului, Los Angeles, Memphis, Phoenix, Pittsburgh, Sai pan, St. Louis and Washington-Dulles.

In a sense, the new agreement allows Alaska Air to finally have a presence in Hawaii’s competitive interisland market, which, at this stage of the COVID-19 pandemic, still lags trans-Pacific flight recovery.

Market conditions prompted Mokulele to fold Makani Kai Airlines under its operations as part of a 2020 merger. Today, Mokulele offers more interisland frequencies than any other airline in Hawaii, including as many as 150 peak-day departures to 10 destinations, including Honolulu, Hana, Kahului, Kapalua, Hilo, Waimea- Kohala, Kona, Lanai City and Kalaupapa and Hoolehua on Molokai.

Keith Sisson, chief of staff at Southern Airways, told the Star-Advertiser that later this month Southern will add a second 28-seat Saab 340 aircraft to Mokulele’s fleet as part of its expansion.

“We are in a growth mode. You’ve seen that over the last year. It’s going to get even more aggressive going into 2023 and beyond,” Sisson said. “We want to be a full-service airline for Hawaii. Not just doing what we are doing now, but doing everything you can possibly do with an airline. That does include having these alliance partnerships with the major carriers. This falls right in line with our strategic plans for the upcoming year.”

He said the new agreement “certainly may” make Alaska another player in Hawaii’s interisland market. Sisson added, “We also have an interlines with Hawaiian, American and United. But Alaska is the only one that we have the mileage program with.”

Minicucci said Alaska has the most individual flights between Hawaii and the West Coast, and doesn’t have plans to enter Hawaii’s historically competitive interisland market. Alaska operates an average of 30 nonstop peak-daily flights between Hawaii’s four largest islands and seven West Coast cities, including Anchorage, Seattle, Portland, San Francisco, San Jose, Los Angeles and San Diego.

“When we look at our whole network, (interisland is) not a place we want to be at right now. We are a West Coast airline; that’s where we have strength, and we just want to expand our network on the West Coast to where people want to fly. We believe that’s where our niche is, and we have a lot to do there.”

However, he said Alaska expects that its interline partnership with Mokulele also will draw more customers.

“Once you visit Hawaii several times, you are like, ‘I want to see something else, ' or maybe, ‘I want to spend some time on one island and go to another, ‘” Minicucci said. “I think it will promote more travel from those guests. And when they know it’s a one-stop shop, I go in, I check in and get my boarding passes and drop my bags, and I don’t have to worry about it. I think it should stimulate more business.”

Brad DiFiore, managing director for Ailevon Pacific Aviation Consulting, said interline agreements, such as the Alaska-Mokulele deal, expand consumer opportunities. But he said one that does not cover many seats in markets directly served by Hawaiian Airlines and competitor Southwest Airlines is not going to change the competitive balance.

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During the third quarter, Southwest significantly increased interisland trips, which by Sept. 6 tallied about 60 a day from an earlier count of 38. Southwest supported its expansion with an aggressive $39 fare on every seat for every nonstop interisland flight, which began July 26 and runs through Dec. 31.

DiFiore said the aggressive competition for interisland share has benefited consumers, who have enjoyed sharp albeit unsustainable price declines.

“Promotional fares in a high-cost environment are not going to last forever, " he said, adding that airlines already are grappling with increasing fuel and labor costs.

“I think that they are staking out a competitive position, " DiFiore said. “At some point, the market will have to support higher fares, or capacity will have to be reduced.”

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