Monday, April 2, 2018

Hawaiian ready to compete with Southwest in Hawaii, CEO says in Q&A

From its perch in the Pacific, Hawaiian Airlines has recovered from bankruptcy filings in the 1990s and 2000s to carve out a profitable niche flying vacationers from the West Coast and Asia to the 50th state.

Peter Ingram, who joined Hawaiian in 2005, was elevated from chief commercial officer to CEO in March, succeeding longtime leader Mark Dunkerley.

Ingram spoke recently to The Associated Press about increasing competition, plans to expand Asia service, and the difficulty of marketing the airline to investors when its headquarters are closer to Tokyo than New York. Ingram says airlines are in better financial shape today but they're still vulnerable to economic ups and downs.

The answers have been edited for length and clarity.

Q. How are you settling in?

So far, so good. I've been with Hawaiian for over 12 years, so in some respects it is sliding over into a new chair as opposed to being parachuted into a completely new situation, and that's helpful.

Q. What are the top items on your to-do list?

One of the most important things that we're doing this year is bringing the A321neo into our fleet. We have endured some delivery delays in terms of getting those airplanes in, so some of (my) time has been occupied with trying to manage the uncertainties around aircraft deliveries. One of the other big strategic opportunities that we have is our partnership with Japan Airlines, which is reaching an important milestone this weekend with the first code-share flights (each airline can sell seats on some of the other's flights and share the revenue). We have spent much of the past nine months or so negotiating the terms of a joint-venture agreement.

Q. American Airlines CEO Doug Parker says the industry is so strong that he doesn't expect to ever lose money again. Would you make that promise about Hawaiian?

Doug has had to answer for that quote so many times that I'm probably not going to bite and set myself up for two years of questions about it. I think there are a number of things that are fundamentally different about the industry today that position us better for the future. Airlines are much stronger financially, we have generally stronger balance sheets, strong cash flow, and that is allowing people to make long-term decisions that are sensible. We are still susceptible to economic swings and we are still exposed to currency and commodity volatility, but I do agree with the notion that from a financial-performance perspective, the highs should be higher and the lows should be less low as we go through an economic cycle.

Q. Southwest Airlines is about to start flying to Hawaii. Does that scare you?

It doesn't. We think Southwest is a great airline and we are envious of a 40-plus-year track record of profitability, but it's really not something new for us to have competitors coming into the market. A few years ago we had Allegiant start service to Hawaii and I remember a lot of the investment analysts that cover our stock were sort of prophesizing the immediate doom of Hawaiian Airlines. We've had Alaska coming into the market ... ATA was in the market as a low-cost carrier about a decade ago. There is a long list of competitors we have dealt with.

Q. Does your focus on leisure travel make you more vulnerable if the U.S. economy slumps?

If you look back to the time around the global financial crisis, leisure travel actually held up better than business travel. I don't think that is a fluke or an accident. People value their time off. Our guests don't necessarily live to work, they work to live. When companies are trying to control costs, an order can come out tomorrow that says 'We're cutting the travel budget 25%.' That is a very different dynamic than people making individual decisions about their leisure travel.

Q. Some U.S. airlines have had notable customer-service failures. Is air travel getting that much worse?

It's hard for me to tell how much of it is that traveling has become more difficult or that reporting has become better as everyone has become a photojournalist. Our airplanes are very full and that can create stress and tension sometimes and the overall travel experience — not so much on the airplane, but leading up to travel — can be stressful. (We should make) the transactions, whether it's checking in or checking a bag or getting through security, more seamless.

Q. You are in Honolulu, far from New York. Is it hard to get the attention of mainland investors?

It's absolutely still the case that we are less well-known and less understood by investors. People east of the Mississippi don't have a lot of opportunities to see Hawaiian Airlines flights. We are much better known on the West Coast. Our market capitalization, while still very small relative to other U.S. airlines and certainly the big four U.S. airlines, is much larger than it was, so that makes us more accessible to some investors than we used to be, but it is something we have to constantly work at.

(David Koenig - Associated Press / USA Today - Today in the Sky) 

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