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No Aloha
By JD Bluefield | April 1, 2008
Yesterday saw the last Aloha Airlines passenger flight, and today Hawaii is back to having only two regional carriers, in almost as many years. Yesterday, I threw a bone out there to try and help out anyone affected by this huge loss. My main focus is to help smart people save money and I tried to do just that. After reading some comments to my last post and going through the comments on various newspaper articles, I must agree that a there has been a lot of finger pointing, and its getting nasty! They blame Go! Airlines, Aloha management, the Hawaii politicians, jet fuel… I’m surprised no one threw in global warming? So here is where I give it to you straight…
First, it was me, I did it! I blame myself to choosing to pay the least amount possible to fly interisland and between the mainland. Last year I flew interisland twice and the mainland 4 times, yet not one was with Aloha, huh? I could have chosen to fly Aloha, it sat about $100 higher and 10 choices down on my Orbitz page, but I chose not to. With that said, I’ve only read one article saying the same, although it alludes that we were fooled by trickery. How about we call a spade, a spade? Hawaiian and Aloha blasted the news with anti-Go! advertising and statements in trying to win “local loyalty”, but in the end we valued price over the infinitesimal difference in services promised by both companies. America is a free country and we ALL voted with our wallets to shut Aloha down.
Second, poor employees? Everyone feels bad for the employees, and no one likes to be kicked when they’re down, but I found this article and it smelled of karma. Apparently, back in 2005 the pilots and flight attendants threatened to strike while Aloha was still in its 1st bankruptcy! The attourney for the pilots argued,
“Although the company has failed to generate net income, it has posted positive operating income as well as positive earnings before interest, taxes, depreciation and amortization– a measure of cash flow that financial analysts frequently use to measure the health and value of a company.”
It would appear the guess may have been wrong. I don’t know about you, but asking for a raise while a company is in bankruptcy just sounds absolutely insane. But it wouldn’t be worth having a union if they didn’t ask for a raise right? Like the commenter on the last post said,
“You would think that 1900 employees would be smart enough to figure out one simple thing. If I take a pay cut or buy into Aloha, then Aloha can compete and I would still have a job, less pay, but a job.”
Third, Management sucks? In the same article on striking employees, you’ll find the managment proposed to change to a “low-cost carrier, like Southwest.” If you’re any follower of the airline industry, you’ll know that Southwest is the most profitable airline in the WORLD, and this year posted its 35th year of profitability. It sounded like a good idea on paper, but according to the article, they needed further concessions by labor to make it happen. I don’t know if management had the means or wherewithal to accomplish this low-cost goal, but as an investor I would never put money into a company who said, “we want to give everyone raises and be the highest-cost carrier!”
I also find it hard to swallow that management would purposefully run a company into the ground as some have stated. In referring to possibilities of keeping Aloha running, Judge King, the judge presiding over the bankruptcy has stated that,
“no one has showed that Aloha did not make a good-faith effort.”
The truth is, no one is willing to add further financing to Aloha. Its a sinking ship in an economic sea of turmoil. Commodities are rising, fuel cost are going up, unions refuse to budge on pay, what would YOU have management do? They sure can’t raise prices, with Hawaiian and Go! selling low fare seats.
Also, jet fuel? Definitely. $100/barrel oil was one of the many straws that broke this camels back. I could not find evidence of Aloha hedging fuel to maintain cost, but as a small regional carrier I doubt it had the pull to do as Southwest in this regard. Hedging fuel was one of Southwest’s keys to profitability.
Last, Go! unfair/predatory practices? I’d say, yes and no on this one. A judge did hold Go! liable for around $80M to Hawaiian, due to misuse of confidential information, but that is still in appeals. With incriminating emails it may be hard to deny these allegations. On the other hand, I don’t think Aloha or Hawaiian would have done any different. The two have held a strangle hold on Hawaii since the 1970’s and have put under or absorbed several fledgling airlines. Lets not again forget the anti-Go! campaigns that were rampant upon start-up. Oh and although it employs many local people, Aloha’s majority stakeholder is the privately owned Yucaipa Co LLC, run by billionaire Ron Burkle.
Basically, there are no innocents. I find it extremely ironic that Aloha was done in by the same tactics it and Hawaiian Air used to keep other players out of the islands and hold onto their monopoly. In years past, I recall $100-200 fares for a 200 mile inter-island flights, where as it still only costs $350 to fly 2500 miles to the mainland. What gives?
Going back to that 2005 article one last time, the closing statements referenced a possible-striking pilot’s sons wearing t-shirts which read:
“No Pilots, No Aloha”
Flip that around and again, bitter-sweet irony.
Topics: Travel |
One Response to “No Aloha”
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April 1st, 2008 at 8:04 am
The article basically is saying that the unions don’t want to give more concessions and Yucaipa wants to compete like Southwest. Coming forward to today. Yucaipa will shut down Aloha, get rid of the union and start up union free.