Mokulele, go! airlines merge

Mokulele, go! airlines merge join forces to compete against Hawaiian Airlines

• By Jaymes Song, Associated Press Writer
• On 11:12 pm EDT, Tuesday October 13, 2009

HONOLULU (AP) -- Two of three jet carriers that fly interisland routes in Hawaii are merging in hopes of growing and taking market share away from Hawaiian Airlines.

The parent companies of Mokulele Airlines and go! announced Tuesday they have formed a joint venture that will create the state's "only low-cost carrier, ensuring a strong competitive presence in the inter-island market for the benefit of consumers."

The company will continue flying under both brand names.

Phoenix-based Mesa Air Group Inc., which operates go!, will own 75 percent of the new company while Mokulele Flight Service Inc. and its shareholders will own 25 percent. Passengers can continue to book travel on both Mokulele and go! and existing reservations will be honored.

"We look forward to building on this strategic partnership, which will create opportunities for future growth of both the go! and Mokulele brands," Mesa Chairman and Chief Executive Jonathan Ornstein said in a statement.

Mokulele Chief Executive Scott Durgin said his company's mission has always been to provide affordable and reliable interisland serivce to residents and tourists.

"Unfortunately, the global economic crisis has dramatically decreased air travel and tourism, and these effects have been sorely felt in Hawaii," he said. "The agreement will allow us to continue offering a low-fare schedule, one that is appropriate to the level of demand in the market today."

The companies were unclear about how the merger would affect employees.

"We are jointly taking a close look at how we can create greater efficiencies in the combined operation and deploy our workforce in ways that make for a viable second airline. We are working very hard to preserve every job," Durgin said.

The partnership is the latest in the fast-evolving saga in the interisland market that in recent years saw both startup carriers expand in Hawaii, and the abrupt shutdown of Aloha Airlines.

Hawaiian, the state's largest carrier, issued a brief response saying "Hawaiian remains focused on its own operations and offering its customers the most competitive service and fares in Hawaii."

Mesa, which launched go! in June 2006, and Mokulele had joined forces in 2007 to serve smaller Hawaii airports. But they were at odds a year ago when Mokulele announced an alliance with Republic Airways to fly Embraer 170 jets.

Indianapolis-based Republic has invested more than $11 million in Mokulele and is a 50 percent shareholder in the Hawaii company.

Mesa then sued Mokulele for allegedly failing to pay nearly $400,000 in fuel expenses.

Mokulele also sued Mesa, alleging the company engaged in anticompetitive behavior. The suit claimed Mesa threatened to drive Mokulele out of business by choking off revenues owed under a code-share agreement with the two carriers.

In Hawaii, the interisland carriers are critical for tourism and commerce, serving as highways connecting the islands.

Buzz up!