Hawaiian Airlines chief executive Mark Dunkerley says the Australia-Hawaii market has not experienced the same level of extreme discounting on flights between this country and the US mainland.
The trans-Pacific market has been particularly active in recent times, with the arrival in late 2015 of American Airlines to Sydney, Qantas’s resumption of San Francisco services and Air New Zealand opening up the Auckland-Houston route.
And there is more new capacity to come, with American launching Auckland-Los Angeles later in June and United returning to NZ with Auckland-San Francisco starting in July.
As a result, and due to some currency changes that have affected demand, airlines have been offering heavy discounts to fill their flights – travel websites have reported US-New Zealand itineraries, including some via Australia, were being offered for as low as $US225 return in April.
There have also been sales for US-Australia flights for less than $US400.
Hawaiian serves Brisbane, Sydney and Auckland from its Honolulu hub and Dunkerley says demand for travel to the islands from Australia has softened a little this year.
However, the Hawaii market has not faced the same level of price discounting compared with North America.
“I wouldn’t say we are entirely insulated from the dynamics of North America to Australia, but neither are we entirely exposed,” Dunkerley told Australian Aviation in an interview on the sidelines of the International Air Transport Association (IATA) annual general meeting in Dublin on June 2.
“Hawaii is culturally and geographically quite different from the US mainland as a whole and so it attracts travellers for slightly different reasons.”
“The one geography in which we have seen a little slowdown in overall demand is Australia, although my understanding is that when compared to the slowdown in outbound travel from Australia, Hawaii as a whole has fared pretty well and Hawaiian has fared particularly well.”
Looking beyond Australia, Dunkerley said the combination of low fuel prices and robust demand across all of Hawaiian’s markets – the airline has focused on building up its Pacific network connecting Asia to Hawaii – has been a positive.
“In general for our business, things are very good,” Dunkerley said.
From November, Hawaiian will be the sole nonstop operator between Brisbane and Honolulu, with Jetstar to pull off the route.
Jetstar group chief executive Jane Hrdlicka said the decision to drop flights from Brisbane to Honolulu was because the Qantas-owned low-cost carrier could “make more” by flying the 787-8 used on the route to Bali and Phuket instead.
“Honolulu remains a really important part of most Australians’ wish list in terms of places to go visit,” Hrdlicka told reporters at the IATA AGM in Dublin. “Demand is still very strong.”
“We pulled out of Brisbane because we had better opportunities to use the aircraft, not because it was not a good market.”
Hawaiian was planning some seasonal reductions to Brisbane, reducing its four times a week offering to three times a week, due to what Dunkerley described as “fleet constraints” between the arrival of the airline’s 23rd Airbus A330 and the first A321neo.
He said it was still unclear what the impact of Jetstar’s withdrawal from Brisbane would be, given it was continuing on the route until November.
“It’s too early to read the tea leaves,” Dunkerley said.
Dunkerley said Hawaiian was still keen to forge a closer partnership with Virgin Australia – the Australian carrier codeshares on Hawaiian’s Australian flights and the pair has an interline agreement for travel beyond their respective gateways – but understood there was a lot going on at the John Borghetti-led airline right now.
“Virgin has been doing a good job of keeping your headlines full,” Dunkerley said.
“For reasons I completely understand, I mean they’ve got some big issues very close to home that they have to deal with.”
Hawaiian’s first reconfigured A330 with a new business class cabin started commercial service in early June and Dunkerley flagged Australia as one of the first markets to receive the new product once enough aircraft had been upgraded to dedicate them on a specific route.
“As soon as we can isolate the modified aircraft to a route or two, we will do so and I think our flights to Australia will be an early beneficiary of that,” Dunkerley said.
Hawaiian has been one of the strongest voices calling for the US Department of Transportation (DOT) to place conditions on the proposed joint-venture between Qantas and American Airlines.
Although the tie-up has received the green light from regulators in Australia and New Zealand, the application is still before the US DOT, which has taken a lot longer expected to issue a determination.
Dunkerley said his airline’s submission against the granting of antitrust immunity to American and Qantas without limits and for an indefinite period attempted to highlight the impact on independent carriers from these types of joint ventures.
Hawaiian cited research it produced on what happened to fares and customer choice on the trans-Atlantic market between the US and Europe following tie-ups such as American-British Airways, United-Lufthansa and Delta-Air France-KLM, as part of its submission.
“Clearly, I think our arguments have a great deal of merit and should carry a great deal of weight,” Dunkerley said.
“This is no direct criticism of American or Qantas, both of whom are terrific airlines and do a terrific job.
“I think this is more a question for the policy makers and it really goes to the issue of whether or not having independent airlines ready to challenge the airline orthodoxy is important for maintaining competition and consumer choice. We think the answer to that is clearly yes.
“If policy makers also think the answer to that question is yes then it is really important that they provide a foundational operating environment for independent airlines where they can compete on a relatively level playing field.”
Also speaking at IATA, Qantas International chief executive Gareth Evans declined to put a timeline on when a decision might be handed down.
“Yes, of course we would have liked it to have been approved earlier,” Evans told reporters on the sidelines of the IATA AGM.
“But the Americans are working through the process and we are looking forward to hearing something in the not too distant future.”
Asked for his observations on the cheap fares out of North America to Australia, Evans described Australian outbound demand to North America as “very robust”, with business travel strong and leisure travel “remarkably resilient in the face of a weakening Australian dollar”.
“It’s great to see we’ve got that demand strength at the Australian end of the route,” Evans said.
“With Australia becoming more affordable, that takes a little time to seep into the American psyche so you don’t see an immediate reaction from the US end, but we are starting to see that start to take place now.”
“Overall demand is reasonable strong from both ends of the route and strengthening from the US end of the route.”