Billionaire Larry Ellison buys Island Air, more routes planned - Hawaii News Now - KGMB and KHNL

Larry Ellison buys Island Air, more routes planned

Posted: Updated:
Larry Ellison Larry Ellison
Island Air's new ATR 72 aircraft Island Air's new ATR 72 aircraft
Paul Marinelli Paul Marinelli
Peter Forman Peter Forman
HONOLULU (HawaiiNewsNow) -

Billionaire Larry Ellison now officially owns Island Air, and expansion plans are underway. The acquisition was concluded on Tuesday. The sale price was not disclosed.

Island Air's new 64-seat plane will soar into service on Wednesday, flying to Kauai and Lanai. The ATR 72 turboprop just received its certification from the Federal Aviation Administration. The fuel efficient aircraft joins two smaller and older Dash 8 planes that will eventually be phased out. A second ATR 72 is expected to arrive within a couple of months.

"The acquisition of Island Air is another major investment in and commitment to Hawaii on the part of Mr. Ellison," said Paul Marinelli, vice president of Lawrence Investments, a private equity investment firm that is run by Ellison.

"Mr. Ellison brings resources to grow the airlines. We plan to service all the communities of Hawaii, which we feel will benefit both kamaaina and visitors alike," said Les Murashige, president of Island Air. 

After purchasing most of Lanai, Ellison bought the Island Air to ensure adequate air service for visitors to the island.

"Princeville Airways was the predecessor of Island Air, and that was started by the oil company that was developing Princeville, so we've seen this type of thing before," said airline analyst Peter Forman.

No specific timetable was released, but Island Air plans to expand service statewide

"What we realized is there's an incredible market opportunity here for all the islands and we fully intend to engage that opportunity," said Marinelli.

Officials said airfares would be competitive, but prices would not be ridiculously low.

Forman isn't sure how the ATR aircraft will stack up against jets when it comes to traveling to Hawaii's major destinations.

"Costwise, they probably make more sense than jets interisland, but passengers prefer the jets, so if the cost is the same at both airlines, passengers usually go to the jets, which then puts a little bit of pressure for discounting," Forman said.

Earlier this month, Hawaiian Airlines announced plans to launch its Ohana service this summer to Lanai and Molokai using turboprop planes. Ellison's purchase also affects the other two carriers, go! Airlines and Mokulele Airlines.

"I think it puts go! in a really tough spot because they're not the big jet airline and they're not the lowest cost competitor," said Forman. "Mokulele has small enough airplanes that they can be a niche player and I think they can find a way to make it work."

 

Copyright 2013 Hawaii News Now. All rights reserved.

Top Stories

Ellison's Lanai Slideshow (SIDEBAR)

Updated:

SLIDESHOW: Lanai - Ellison's Island Click to view photos of Lanai. More>>