Hawaii airline go! having hard time making money

ByABC News
January 18, 2008, 7:05 PM

HONOLULU -- Go! airline, the interisland carrier known for low fares, lost nearly $20 million during its first 16 months of operations, according to a federal filing yesterday.

Go! remains committed to Hawaii for the long term, but "clearly, we're disappointed with our results," said Jonathan Ornstein, CEO of go! parent Mesa Air Group.

Go!'s low fares helped boost interisland passenger traffic but have exacted a heavy financial toll on the airline and Hawaii's dominant interisland carriers Aloha Airlines and Hawaiian Airlines.

Since go!'s launch in June 2006, Aloha and Hawaiian have lost a combined $64.7 million.

Go! began service with a standard price of $39 for a one-way interisland ticket, or about half of what its competitors were charging.

Go! recently raised its basic price by $10 to $49 due to the soaring price of fuel. Hawaiian and Aloha matched the higher rate. The additional $10 will likely add $6 million to $7.2 million in revenues a year based on go!'s passenger counts, which range between 50,000 and 60,000 a month.

In a 104-page filing with the Securities and Exchange Commission, Mesa said go! had an operating loss of $13.7 million in the year ending Sept. 30, 2007. That was on top of an operating loss of $5.9 million for go! during Mesa's 2006 fiscal year. Those results do not include a recent $80 million court judgment against Mesa for misusing confidential information.

"Hawaii has never been friendly to a third carrier, and this is further evidence of that," said Scott Hamilton, a Washington aviation industry expert. "I think that Mesa would be much better off to exit out of the market."

Go! generated nearly $25.7 million in operating revenue during its 2007 fiscal year and had $13.1 million in assets, according to the filing.

Randall Cummings, a seven-year Aloha pilot, said go!'s losses provide further evidence that Mesa's pricing scheme is designed to drive Aloha and Hawaiian out of business.

"It's definitely part of a predatory plan," Cummings said.