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'The pent-up demand for travel is really manifesting itself': Hawaiian Airlines CEO

Hawaiian Airlines CEO Peter Ingram joins Yahoo Finance Live to talk the airline recovery outlook amid COVID-19.

Video Transcript

ADAM SHAPIRO: And of course, COVID has an impact on several businesses, major businesses, like the US airlines. Coming into the stream right now is a guest we've had on before, Peter Ingram. He is the president and CEO of Hawaiian Airlines.

And Peter, while high and tight might refer to a military haircut, I think it also refers to the fact that your team runs a tight ship with Hawaiian and you are flying high right now, you're doing very well. You just started selling tickets nonstop from Phoenix to Maui. And I read an interview in which you said you expect to be flying 60% to 70% full as more planes are taking to the air. Why the optimism?

PETER INGRAM: Well, we've seen a good uptick in bookings over the last couple of months really. Since the end of January our domestic US bookings have really started to accelerate. And as we are finishing the month of March we'll end up with a load factor in the 60s during the month of March.

We think we've got an opportunity to better that in April. We're starting to see people optimistic about booking out into later in the second quarter and even into the third quarter. So as vaccinations are rolling out, the pent up demand for travel is really manifesting itself.

ADAM SHAPIRO: We hear about this pent up demand in travel. We had on Nick Calio from Airlines for America talking about this, Mike Boyd the airline consultant talking about this. In regards to Hawaiian, I think in the previous interview with you, was it 30% of pre-pandemic traffic was actually coming from Japan. Help us understand how important the Japanese passenger is and when that person might be coming back aboard Hawaiian Airlines aircraft.

PETER INGRAM: For our airline, international prior to the pandemic represented about 25% of our revenue. And the biggest piece of that, more than half of that, is from Japan. And Japan represented about a million and a half visitors for Hawaii overall. So a really substantial part of our traditional visitor base here.

Japan is a little bit behind the US in terms of vaccine rollout. And I think that is being reflected in a little slower return to normal travel behaviors and lifting of restrictions. We have in recent weeks seen the Japanese government start to lift some of the restrictions on domestic travel and you've seen JAL and ANA announce some expansions of their schedules in the months ahead for domestic travel.

As far as coming to Hawaii and coming to the rest of the US, I think that's going to depend on the vaccine rollout. And we had some good news in that regard this past week with the Japanese government announcing that they were going to have a fairly significant amount of supplies of vaccines available and start rolling them out in earnest over the next couple of months.

So it's a little early for me to predict the timing of when the Japanese traveler is really going to come back in volume, but we're optimistic that there is a chance to get some of them back certainly for the summer. And we're definitely optimistic about later in the year. So that is a key variable we're watching for our business going forward.

SEANA SMITH: Peter, you're very optimistic. We've seen this uptick in bookings like you're talking about, how are you going about rebuilding your schedules, have you abandoned the historical travel data because so much is up in the air right now?

PETER INGRAM: A lot of what we're doing is looking at what demand patterns were in 2019 to really understand in a more normal demand time frame when we're not dealing with the restrictions that we've had since this time last year. We are really already back-- by the month of May we'll be back almost to 100% of our North America to Hawaii schedule. We've started to rebuild our schedule for flights within the islands as we have more demand coming in there. That is still being held back a little bit by the cost of testing, which is restricting how people move about the islands.

But the best thing we can look at in terms of where demand exists is the history from 2019. Our business is primarily leisure and we think that the leisure business is going to come back to 100% very quickly. And potentially grow beyond as flexible work and other things drives people to think about travel a little bit differently.

ADAM SHAPIRO: There are two topics we want to get your opinion about. One is perhaps some kind of passport they call it to show who's been vaccinated and that would be for all the airlines, but before we go there, I want to go to Hawaii one day. I'm going to do it, but I am curious, will the fares that you're able to charge, will they be higher than they were pre-pandemic because Helane Becker, over at Cowen said that they're running at about 20% below what they had been before the pandemic. And we know that fares were pretty cheap before the pandemic too. So what's going to happen to fares do you think?

PETER INGRAM: Well, it's difficult to talk about future prices because it depends on so many things. It depends on our cost structure as an industry, it depends on supply and demand in the marketplace. I can tell you what we're seeing right now is it's a great time for people who are looking for attractive pricing to fly and you should think about doing that Hawaii vacation as soon as you can.

And that's really just a factor of what I think is unsurprising is that as demand is coming back we're still in a condition where there is some extra supply out there throughout the industry. Business travel hasn't come back as robustly as leisure travel. And I think that is manifesting itself in traffic coming back before pricing but I think as demand ramps up that may not always be the case. So should get those great fares when you can.

SEANA SMITH: Peter, Adam just mentioned the vaccine passport. I was just reading that Hawaii is exploring this for inter-island travel. I'm curious just to get your thoughts on this, is this a good idea?

PETER INGRAM: Well, I think ultimately, we want to get to a place as the pandemic recedes, where we think about not having some of these restrictions when we don't have concerns about the spread of the disease, when we don't have widespread pressure on our hospitals and our medical infrastructure. For the time being though, the pandemic is still a reality and even as things have been getting better, we're not out of this crisis yet. And having the government play a role in setting the standard so the private market can go develop tools for people to demonstrate their credentials for travel based on whatever regulations are in place in different domestic or international places, whether that is having a certain type of test, being vaccinated, having that infrastructure in place to make it so it's more frictionless.

One of the things we're dealing with in Hawaii right now is with the testing regime that has allowed us to start traveling, it's a really cumbersome experience for our guests and we would like to see that eased and smoothed out over time to make travel more effortless, which is one of our long standing goals as an airline, is to really make it easier for our guests to be able to transact with us and get to enjoying the things they want to do when they're on a trip.

ADAM SHAPIRO: You know, we don't have the time to jump into the successful steering of the airline with you at the helm, you know, the cash burn down to $1.5 million per day, calling back the 800 employees. I promise you the next time you visit with us we will jump down on those numbers so that you can brag rightfully so as you steer your airline to success. Peter Ingram, Hawaiian Airlines, President and CEO, all the best to the 7,000 women and men who are part of your team.