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HONOLULU (HawaiiNewsNow) -
Mesa Air Group has decided to shut down the interisland airline go! effective April 1.
"While this was an extremely difficult decision to reach, we believe it is in the best interest of Mesa's long-term strategic objectives," said Mesa CEO Jon Ornstein in a statement Monday afternoon.
Mesa makes its living primarily by flying small aircraft on regional feeder flights for larger carriers like United Airlines and US Airways.
Industry sources said go! almost shut down last summer but got a reprieve when Larry Ellison briefly considered acquiring it. Those talks did not bear fruit.
The company said it would try to rebook passengers on Hawaiian Airlines and would issue refunds for anyone who had booked travel beyond June 30.
Mesa Air came forward as a potential buyer during the bankruptcies of both Hawaiian Airlines and Aloha Airlines, signing agreements not to disclose or use any proprietary information it saw about those airlines' business plans or costs. But rather than buy either carrier, Mesa founded go!, launching service on June 9, 2006 from Honolulu to Hilo, Kona, Kahului and Lihue.
Both Hawaiian and Aloha would eventually sue, and Hawaiian won, then settled out of court for a large enough sum to cover its jet fuel expenses during a run-up in oil prices.
When Aloha, facing similar fuel bills, shut down at the end of March 2008, the bankruptcy court found that one of its most valuable remaining assets was its lawsuit. The Yucapia Cos., which had provided funding to Aloha, acquired the suit and sold it to Mesa, effectively ending the litigation.
Both Hawaiian and Aloha had accused Mesa of predatory pricing, which is illegal, and the Hawaiian lawsuit produced a smoking gun memo, but Mesa claimed the memo, despite charts and graphs showing how it could outlast Aloha in a price war, was a joke, and the Justice Department never pursued it.
Aloha Airlines did a cost analysis which found that Mesa's fares meant not only that it was operating at a loss, but that it needed more money per passenger than either Aloha or Hawaiian to break even because of the small size of its aircraft. Eventually go! fares rose to much higher levels.
When Aloha left the interisland business, however, passengers flocked to Hawaiian instead of go!, and go! was further rocked by Mokulele Airlines briefly flying jets on the same four main interisland routes. Mokulele didn't last long as a jet-flying carrier but go! didn't get to grab Aloha's former market share, either. In recent months it was down to flying two jets.