The Hawaiian Airline Industry, 2001–2008

Abstract

Two Hawaiian airlines’ cooperative environment is disrupted by the entry of a third competitor, Mesa Airways. The price war leads to fares as low as $0 and causes more than $100 million in losses in the first year with no end in sight. Industry risk factors for price competition were reduced in 2001 when the government granted a one-year reprieve from anti-trust laws, but increased dramatically after Mesa’s announced entry.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

Resources

Exhibit 1: Hawaiian Airlines Route Map, 2007

Figure

Exhibit 2: Aloha Airlines Route Map, 2007

Figure

Exhibit 3: go! Route Map, 2007

Figure

Exhibit 4: Timeline of Events

Date

Event

September

2005

Mesa announces plans for inter-island airline, go!

November

2005

Startup FlyHawaii Airlines shuts down one month after Steve Case backs out of planned investment

February

2006

Hawaiian sues Mesa

March

2006

Mesa announces $39 fares for service beginning in June

March

2006

Aloha and Hawaiian match $39 fare

June

2006

Mesa launches go! with $19 fares on remaining seats

June

2006

Hawaiian matches $19 price while Aloha gives 1,000 tickets away

October

2006

A federal judge rejects Hawaiian’s attempt to stop go! from flying

October

2006

Aloha sues Mesa

June

2007

go! Web site crashes after offering limited number of $1 anniversary fares

October

2007

Federal bankruptcy judge rules Mesa breached its confidentiality agreement with Hawaiian

March

2008

Aloha files for bankruptcy and stops passenger service

April

2008

Mesa and Hawaiian reach a settlement; Mesa will pay $52.5 million

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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