Aloha Airlines ceases passenger service, sells cargo arm
Less than 10 days after filing for bankruptcy protection, Aloha Airlines has decided to cease its 60-year-old passenger operations to Hawaii citing a fierce inter-island pricing war and rising fuel prices.
While the firm has agreed to sell its air freight division, it will stop taking reservation for passenger service today. Tickets for dates later than today will not be honored.
The move comes after the Honolulu-based airline filed on March 20 to reorganize its finances under Chapter 11 protection, little more than two years after emerging from pervious Chapter 11 bankruptcy filed in December 2004.
A day after the filing, airline officials told a bankruptcy court that the carrier's passenger, air freight, and contract services — include U.S. mail shipments — were on the block.
'We simply ran out of time to find a qualified buyer or secure continued financing for our passenger business,' said Aloha President David Banmiller in a statement Sunday. 'We had no choice but to take this action.'
The airline has faced stiff competition since Phoenix-based Mesa Air Group Inc. launched its inter-island carrier go! airlines in 2006.
Both were hit hard by the ensuing fare war. But while go! reported a $20 million operating loss in its first 16 months of operation, Aloha and the other inter-island carrier Hawaiian Airlines reported a combined loss of nearly $65 million in the same period.
Aloha blamed its demise on rival carriers, without mentioning !go, and 'predatory pricing' that rendered the carrier unable to generate sufficient operating revenue.
'Unfortunately, unfair competition has succeeded in driving us out of business,' Banmiller said.
Hawaii Gov. Linda Lingle told the Associated Press on Sunday that she plans to ask a federal bankruptcy court to keep Aloha's passenger service flying until all financial solutions for saving the line are exhausted.
The state will also ask the court to require Aloha to provide sufficient time and notification under law to the carrier's 1,900 employees affected by the decision. State workers will evaluate employee job skills and offer appropriate job placement assistance.
Federal Way, Wash.-based Saltchuk Resources Inc., the parent group of Foss Maritime, Young Bros., and Totem Ocean Trailer Express, agreed Thursday to purchase Aloha's air freight arm for undisclosed terms.
Aloha, with a main hub at Honolulu International Airport, served six West Coast mainland cities and provided extensive inter-island service throughout the Hawaiian Islands.
Founded in 1946 as a charter of Trans-Pacific Airlines, the airline owned an all-Boeing fleet of 25 various model 737s, including 16 737-200s, eight 737-700s and a single 737-800.