Hawaiian Airlines eyes Asian expansion


There is one particular quirk of Japan’s love affair with Hawaii that visitors never forget: Hawaii’s favourite snack is the ‘Spam musubi’ – a Japanese-style ‘onigiri’ roll of rice and seaweed, but with pink processed meat replacing the traditional raw fish.

Over a million Japanese visit Hawaii every year, drawn by the tropical beaches, the US culture and relative proximity. There are about a dozen daily flights between the US island chain and Japan, divided among two US carriers – United Airlines and Delta Air Lines – and two Japanese – Japan Airlines (JAL) and All Nippon Airways (ANA).

Despite being based in Hawaii’s capital Honolulu, Hawaiian Airlines has never had rights to serve the route under the existing bilateral air services agreement. This is about to change, as Hawaiian, along with American and Delta, is now set to begin operations to Tokyo’s downtown airport Haneda in October once the airport’s fourth runway is completed. The US Department of Transport has now granted Hawaiian access to the market in order to stimulate competition.
Hawaiian has been growing in competitive strength over the past five years, expanding to become the tenth-biggest US airline. In the mid-2000s the carrier expanded its services to the mainland USA, building up a network of ten destinations on the US West Coast connecting to Hawaii’s three main islands.
Westward Ho

But for Hawaiian Airlines Chief Executive Officer Mark Dunkerley the future is west. Westward from Hawaii lies Asia, offering potentially fatter yields than the carrier could gain by chasing its US rivals for a larger slice of the leisure traffic to the archipelago.

“Asia is a growth-region economically and with that will come a desire to travel among the middle class,” Dunkerley says. He points to Australia, a country that has successfully lured Asian tourists, with massive inflows not only of Japanese, but also Chinese, Korean and Thai visitors.

The expansion plans are underlined by the aircraft orders Hawaiian has placed. The carrier ordered six Airbus A330-200s in November 2007, as part of a Memorandum of Understanding with the European manufacturer covering 24 long-range jetliners in a US$4.4 billion deal.

In addition to the six A330s, the airline also took purchase rights on a further six, the first of which it exercised in March for a 2011 delivery. The deal was completed with six firm orders and six options for Airbus’s planned long-range A350-800, which Hawaiian hopes to fly non-stop to US east coast cities after it enters operational service in 2013.

Deliveries of the A330s have already started. Two will be in service this year, with the remainder joining the fleet over the next two years. But Asia’s potential is such that Dunkerley cannot wait that long. Hawaiian has now agreed to lease two additional A330-200 aircraft from Ansett Worldwide Aviation Services (AWAS), beginning in 2011, and one from CIT Aerospace, which arrived in April.

Hawaiian Airlines officially welcomed the first of the widebody twinjets into its fleet on 1 June, saying that the aircraft heralds “a new era” in the company’s history. The 294-seat aircraft completed its first commercial service from Honolulu to Los Angeles on 4 June.

Long-range capability

The new aircraft has been named ‘Makali’i’, the local term for the constellation of the Pleiades, or Seven Sisters, which guided ancient Polynesian voyagers across the Pacific and was seen high in the sky when Inter-Island Airways (renamed Hawaiian Airlines in 1941), launched its first scheduled flight on 11 November, 1929. Each of the new aircraft will be named after a constellation used for astral navigation by Polynesian voyagers.

The aircraft first arrived in Honolulu on 3 May and had been undergoing final preparations for service since then. Hawaiian’s second A330, named ‘Hokule’a’ (‘Star of Gladness’), arrived from the manufacturer’s Toulouse plant on 29 May.

“The A330 provides Hawaiian with an increased operating range of 6,050 nautical miles and the capability to expand its service area on both sides of the Pacific by offering non-stop flights between Hawaii and points in eastern Asia and all of North America,” the airline says.

The only long-haul routes Hawaiian currently flies, other than to the mainland US and Samoa, are to Manila in the Philippines, Papeete in French Polynesia and Sydney, Australia. However, the new A330s open up new choices.

For the moment, the airline has made an economic decision not to fly to the US East Coast with the A330s, due to operational restrictions, Dunkerley says. “We review the economics all the time,” the airline chief says.

The US has bilateral Open-Skies agreements with South Korea, Malaysia, Singapore and Thailand, which are all markets ripe with further tourism potential, Dunkerley says. Still, some markets will have to wait until delivery of the A350s in 2017.

“The A350-800s have a range of 8,000 nautical miles [15,000km] so we could even go direct to Europe, but we will certainly go deeper into Asia,” he says.

China hurdles

China, however, is a less likely prospect, having a “less progressive” air services regime that favours the larger US carriers, Dunkerley says. Also, the USA is not on the Chinese government’s list of approved destinations, making visas for travel to Hawaii hard to obtain for the ordinary tourists the island chain wants to attract.

Hong Kong, on the other hand, with its special autonomous region status, might be a suitable target market, Dunkerley says. Similarly, Taiwan has much of the same economic and cultural potential of South Korea and of Japan some 20 years ago. The carrier will weight up the merits and may launch services later this year, he says.

Hawaiian is also betting on the strength of the Virgin name to aid it in the wider Asia-Pacific region. It has signed a code-share agreement with Virgin Blue, Virgin America and V Australia that extends to frequent flyer reciprocity. The move will see Hawaiian codes placed on connecting flights to Adelaide, Brisbane and Melbourne from its daily Sydney service and Virgin Blue codes on Hawaiian’s inter-island routes.

Dunkerley says the deal will have “enormous impact” since the Virgin Blue brand is one of the best-known leisure brands in Australia, one of Hawaiian’s biggest source markets.

Australian passengers are also being targeted with stopover services to Las Vegas, Seattle or the eight other US West Coast ports served by Hawaiian. These destinations will also be promoted to the Tokyo market when it opens, with Honolulu a hassle-free alternative to Los Angeles.

The airport had better start stocking up on Spam musubi.

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