The demise of Island Air was quick and tumultuous, but the story isn’t over yet. Now Hawaiian Holdings offers to purchase Island Air assets.
Hawaiian Holdings Offers to Purchase Island Air Assets
As if this story couldn’t become any more complicated, on Tuesday, Hawaiian Holdings made an offer to purchase certain assets from Island Air. Specifically, Hawaiian Holding’s subsidiary, Elliott Street Holdings, has offered $750,000 for Island Air’s operating certificate and ground services equipment.
If this move is approved by the U.S. Bankruptcy Court, it will see Island Air’s Chapter 7 liquidation bankruptcy reconverted into a Chapter 11 reorganization. However, a decision on the sale won’t come until January 5, 2018, or later. This is because that’s the date a hearing will be held regarding the sale, during which other interested parties may “overbid” Hawaiian Holdings.
Impacts to Intr-Hawaii Travel
For those of you that don’t know, Hawaiian Holdings is the parent company of Hawaiian Airlines. And, to me anyway, that fact alone will make approval of such a sale all the more interesting. After all, Hawaiian has a virtual monopoly on the inter-island travel market.
However, for Hawaiian, the purchase of Island Air’s assets would allow the Airline to gain full control of its commuter subsidiary Ohana by Hawaiian. Currently, Ohana flights are operated by Empire Airlines. But purchasing Island Air’s operating certificates would instantly give Hawaiian its own commuter airline. And if this were to happen, it would allow Hawaiian to hire and train its own crews for Ohana, and will allow it to independently operate Ohana flights.
Hawaiian Holdings Offers to Purchase Island Air Assets, Final Thoughts
I think it would be great for Hawaiian to be able to take full control over Ohana by Hawaiian. Such a move would allow the Airline to control its passengers’ experiences better and provide them with more flexibility. However, I can’t help but think that this is an anti-competitive move too. After all, if Hawaiian were to acquire Island Air’s operating certificate, this means a possible competitor may not.
Having the ability to purchase Island Air’s operating certificate likely isn’t a deciding factor for potential competitors. But not having this option also means setting up a new competitor would become more costly and time-consuming. Of course, none of this would apply to what might be Hawaiian’s next most significant threat: Southwest.