Island Air

The pilots of Island Air find themselves in a holding pattern as they await their carrier’s next move. Following significant reductions in fleet, staffing, and route structure in 2015, the company indicated that an end-of-the-year announcement would finally reveal Island Air’s repositioning plans. As this issue goes to press, the news media reported that owner Larry Ellison wants to sell the airline, so the pilots continue to wait and see what’s in store for the struggling Hawaiian intraisland carrier.

Oracle Corporation CEO Ellison, one of the wealthiest men in America, purchased Island Air in 2013 with plans to refocus its operations to provide intraisland transportation to and from his upscale resorts on the island of Lanai. Ellison, who acquired a 98 percent stake in Lanai the previous year, is currently overhauling his Four Seasons Manele Bay and the Four Seasons Lodge at Koele resorts, with renovations expected to be complete in 2016.

But here’s the challenge: Lanai Airport, which serves these resorts, has a single, restricted 5,000-foot runway, limiting the kinds of aircraft that can access it. Island Air is one of only two scheduled airlines serving the airport, and the carrier’s aging fleet of ATR 72s continues to experience reliability issues resulting in routinely canceled flights and stranded passengers. Although reliability has improved in recent months, settling on a more effective aircraft type to move the operation forward has been at the center of Island Air’s challenges.

“In 2014, the pilots signed a new aircraft letter of agreement with management, regarding management’s plans to upgrade the airline’s fleet with either Dash 8-Q400s or ATR 72-600s,” said Capt. James Morris, the pilot group’s Master Executive Council (MEC) chairman. The airline later acquired two Dash 8-Q400s with plans to purchase more. Island Air even trained a portion of its pilots to fly the new aircraft. “However, the company went through a series of senior leadership changes, and the -Q400s were never entered into service,” noted Morris.

Island Air announced in fall 2014 that it was delaying use of the new aircraft pending a new fleet and route study. Meanwhile, the airline has yet to announce refleeting plans, and the two new airplanes are currently gathering dust, parked on a tarmac in Tucson, Ariz.

Citing losses of more than $21 million for 2014, Island Air approached its employees for concessions in early 2015. However, the pilots and management were unable to reach an agreement, and the carrier soon publicized that it would downsize its operation by reducing the markets it served and the number of daily flights—part of an effort to bolster its cost and revenue structure.

Consequently, Island Air shut down its Kauai operations and furloughed employees, reducing its flight operations to three airports: Honolulu International, Kahului on the island of Maui, and Lanai.

Island Air, which once served destinations throughout the Hawaiian islands, has been facing stiff competition from Ohana by Hawaiian, a subsidiary of Hawaiian Airlines that operates a fleet of ATR 42-500s. Hawaiian also offers service between the islands using its fleet of B-717s.

Once viewed as a white knight who would save the airline, Ellison remains an enigma. To date he’s been reluctant to recapitalize this asset. Most surprisingly, Island Air management has yet to come forward with a long-term strategic plan for the airline.

“We’ve lost pilots who have moved on to Hawaiian Airlines and other mainline carriers,” acknowledged Morris, who expressed concerns about what it will take to replace them. “If we begin to grow again, the airline is likely to have trouble finding qualified pilot candidates. Hawaii is an expensive place to live, and there are so many opportunities for young pilots right now,” he said.

Island Air began operations in 1980 as Princeville Airways, operating two DHC-6 Twin Otters between Honolulu and Kauai’s Princeville Airport. The airline continued to add routes and, seven years later, Aloha Airlines’ parent company, Aloha Airgroup, purchased Princeville Airways and renamed it Aloha Island Air. In 1995, the airline simplified its moniker to Island Air. 

Island Air ATR 72 on approach - ALPA
An Island Air ATR 72 on approach.