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A Story of Hawaiian Airlines in 3 Charts

Last week Hawaiian Airline announced it has revised fourth quarter expectations for financial performance downwards and Skift, the industry news provider, reported this as being due to lower than expected fares and demand in key markets. In other words, competition!

Hawaiian has certainly been feeling the heat in the market for air travel between Hawaii and the US Mainland and, as our charts show, much of this has been coming from United Airlines which has added capacity, lowered fares and won the business. We’ve looked at each of these metrics for the period January 2017 to August 2018, which is the most recent month for which traffic data is available from OAG. The charts highlight Hawaiian and United performance but also show data for America Airlines, Alaska Airlines with Virgin America, and Delta.  

Looking at capacity first, two years ago Hawaiian and United were level pegging for the number of seats they operated form Hawaii to the mainland and back, but over the past year United has been steadily adding capacity so that as of August it had 12% more seats in the market than the previous August. It’s not that Hawaiian hasn’t also added capacity – it has, with 9% more seats – but as the chart shows, United now has a clear lead on Hawaiian.  

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During this period, average fares have steadily come down for most airlines, although the decline seems to have tapered off for all the major players. This is a sure sign of an actively competitive marketplace. While great for the consumer with average fares almost 20% lower in the first 8 months of 2018 than the same period in 2017, here’s a tricky reality for Hawaiian; as of August this year, its average one-way fares excluding taxes were USD188 compared to USD299 at United, according to OAG’s Traffic Analyser data. That’s a whopping discount of a third, placing huge pressure on yields but not enough to secure its place as the preferred airline.

Hawaii+to+mainland+Average+Fares.jpg

Rather, what the bookings volumes show is that while Hawaiian used to be the airline of choice for more passengers than any other airline, this changed earlier this year. In July, the peak month for travel between the US and Hawaii, United carried 8% more passengers from Hawaii to the rest of the US than did Hawaiian.

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While the current easing of pressure on yields is to be welcomed by Hawaiian, this is likely short-lived relief. Next year sees the likely arrival of Southwest Airlines in this market, supposedly still awaiting ETOPS certification. The battle this year for traffic may look like a picnic compared to the bunfight we may witness next year. 

-Rebecca Rowland