Aloha Air CEO Hints At More Air Carrier Closures

HONOLULU (KHNL) -- It's no April Fool's joke. Aloha Airlines will stop carrying passengers after March 31. KHNL/ K5 is the only Hawaii station to have this interview with Aloha Airlines President David Banmiller, who hints that his airline is the first to fold, but it may not be the last. "It's a sad day for all of us, I must admit."

Aloha has 3,500 employees, almost all in Hawaii. 1,900 will lose their jobs. The rest will likely continue to work in cargo operations, which is not closing. "I think, frankly, it is going to have a damaging effect on the economy of the state of Hawaii," projects Banmiller.

Aloha's been in bankruptcy court before. So why is the carrier closing down this time? Banmiller explains, "As a fact, fuel has doubled and we have to deal with that. Mesa (Air Group) came in and dropped fares from $60 interisland, to 30, 20, 9 dollars, with the objective to put us out of business. We have that documented in lawsuit."

That lawsuit is pending; however, Hawaiian Airlines won a similar suit against Mesa's go! Airlines, winning $86.9 million in October 2007. Is go! really the bad guy? When Aloha filed for bankruptcy, it said it was unable to generate sufficient revenue due to what it called go!'s "predatory pricing." Mesa has not returned our calls for reaction to the news.

No matter who is to blame, Banmiller hints the entire industry is in trouble. "We are only seeing the beginning of this. You can't take an industry whose exposure to fuel and energy is so volatile and double its expense, and not expect a reaction."

Banmiller also predicts airlines will have to survive by sharing the burden, and pass the higher prices to consumers. "The only way you can manage this is to increase fares and perhaps consolidate. I think consolidation is in the wings." If he's right, planes aren't the only things going sky high in the near future, but also air fares.