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Home / Business / Companies / Airlines

Hawaiian Airlines returns to New Zealand: What's powering the post-Covid comeback?

Grant Bradley
By Grant Bradley
Deputy Editor - Business·NZ Herald·
7 Apr, 2022 04:00 AM7 mins to read

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Video interview with Captain Merle Clawson, who pilots the 1929 Bellanca CH-300 Pacemaker aircraft, it was the actual aircraft that started it all for Hawaiian Airlines, 89 years ago. / Brett Phibbs

Hawaiian Airlines is benefiting from growing links to the United States mainland as it builds back from the pandemic - and by the end of the year the airline could be bigger than it was before Covid.

After a gap of 834 days, the airline will resume services between Auckland and Honolulu on July 4, as part of its international rebuild.

Hawaiian's president and chief executive Peter Ingram told the Herald the airline now had strong momentum.

New Zealand flights return after services to Australia resumed late last year and in its other international markets, South Korea's restrictions were easing and although Japan remained largely closed, he hoped this would change soon.

But it is the domestic US market that is powering the recovery of the airline that had about 7400 staff and flew 11 million passengers pre-pandemic, making it about two-thirds the size of transpacific rival Air New Zealand.

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Hawaiian has also gained from a big backstop loan from the US federal government and last year used its loyalty programme, brand and intellectual property as collateral to raise over $US1 billion ($1.45b) of debt.

The airline flies to 16 US destinations - adding three during the pandemic - and during the past two years passenger numbers have at times exceeded what they were pre-Covid. Those numbers are now running strongly with a bumper northern summer in the islands.

Ingram said the past two years had been challenging and bumpy for the airline, which gets about 55 per cent of passenger traffic from the US mainland.

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"I'm pleased with how our recovery is progressing," he said.

"We had we had a very deep trough in 2020 when Hawaii, in similar fashion to New Zealand, had an apparently strict quarantine that reduced our flying to only a handful of essential flights."

That involved some flights between the islands within the state, just one daily flight through the early part of 2020 to Los Angeles and one daily flight to San Francisco carrying more cargo than passengers.

Planes were parked up on the runway at Honolulu.

But over the course of 2021 there was a good recovery in the domestic mainland-to-Hawaii travel market after Hawaii's quarantine was lifted for people who were vaccinated.

That peaked in July, when the islands were getting more US domestic visitors than before the pandemic.

"But we had some setbacks in the back part of the year with first the Delta variant causing the wave of cases in the United States and here in Hawaii, and then Omicron at the end of the year.

"But as we've come into 2022 and the Omicron cases have gone down, we've seen a strong recovery again."

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Hawaiian Airlines president and CEO Peter Ingram. Photo / Supplied
Hawaiian Airlines president and CEO Peter Ingram. Photo / Supplied

Domestic demand had spiked over the last year and the airline was experiencing some of its strongest booking weeks ever.

"As we get into this month, we're going to be running load factors that are very comparable to where we were [pre-pandemic] and that's how the next few months are shaping up now."

The airline's international network is about 25 per cent of its business, with Japan accounting for the biggest part of that.

"The final piece for us is really seeing a broader reopening in Japan where things as of this moment remain constrained [but] we're feeling very positive about the direction we're going in."

Inter-island travel was strong, said Ingram.

"Post that Omicron surge of cases, we've really seen the enthusiasm for travel come back very strongly."

Hawaii has fared better during the pandemic than other parts of the US, but the state of 1.44 million people has recorded 1376 deaths. However, case numbers have dropped to a seven-day rolling average of 150 and many restrictions have been eased in the state.

Wing tip to wing tip

Changes to self-isolation requirements in New Zealand persuaded Hawaiian to return, Ingram says.

"We've been eager to get back in as soon as conditions allowed. The recent evolution of policy is now putting us in a place where people are going to be able to have the confidence to buy tickets and travel."

He was confident, based on travel trends from the US mainland, that people's desire to travel for leisure and to travel to Hawaii had not been dampened by the pandemic.

"If anything, I think the extended periods of staying at home and living a relatively confined lifestyle has made people have a greater appreciation for getting out and experiencing nature and enjoying the different experiences that they've missed from the last couple of years," he says.

The Omicron outbreak meant the Australian restart had been rocky, but there was now good momentum in that market.

"And I think we'll see very strong demand from New Zealand as the Kiwis have the ability to start venturing beyond their own borders again."

The Duke Kahanamoku statue in Waikiki, Honolulu. Photo / Grant Bradley
The Duke Kahanamoku statue in Waikiki, Honolulu. Photo / Grant Bradley

Hawaiian started flying to New Zealand in March 2013 and will resume hot competition with Air New Zealand, which will also be flying to the islands three times a week using a Boeing 787 Dreamliner. Intense competition forced ticket prices to below $500 at times but fares in the market now are around twice that.

Ingram said further discounting was possible.

"Obviously Air New Zealand, like all airlines globally, has faced very difficult conditions over the last couple of years. We expect they're eager to get up and operating again and it'll be a competitive market and I think that creates an opportunity for guests to benefit from some value out there."

The New Zealand service has been primarily northbound out of Auckland to Honolulu with the option to connect to the mainland network, where the airline last year added Austin, Orlando and Ontario, California.

The strength of the US dollar would help fuel tourism into New Zealand as well.

"There's really strong demand from the US for leisure travel and for new experiences so I think you're very likely to see some of the people from our country coming down to visit us as it becomes more possible with the policy changes."

Increasing flight frequency would be considered if there was sufficient demand.

Ingram said the airline had restored full food and beverage services on planes and although face coverings were still required in the cabin, there are moves in the US to relax these rules.

'It doesn't ever get easier''

Despite the improving demand outlook, fuel prices are a challenge, says Ingram.

"I've been in the airline business for going on 28 years. It's always interesting and it doesn't ever get easier."

Russia's invasion of Ukraine had driven up oil prices and jet fuel was now 137 per cent more costly than it was 12 months ago.

"It's not only a high level of your prices, but there's a lot of day-to-day volatility in the prices so it's hard for us to plan."

Hawaiian was exploring the use of drop-in sustainable aviation fuel for its longhaul flying and alternative technology for aircraft on shorter island hops.

Today it launched a new carbon offsetting scheme where it will match all passenger offsets during April.

Hawaiian Airlines will return to the NZ market with Airbus A330-200 aircraft.  Photo / Supplied
Hawaiian Airlines will return to the NZ market with Airbus A330-200 aircraft. Photo / Supplied

Ingram said the airline entered the pandemic in good financial shape and during the past year it had been able to staunch earlier, heavier losses.

For the full 2021 year it reported a loss of $US145m in non-adjusted net income, on total revenue for the year of US$1.6 billion, down 44 per cent down on the 2019 full year. Capacity was 29 per cent lower than before the pandemic.

It runs a fleet of 24 Airbus A330s, 18 A321neo planes and 19 Boeing 717s. It has 10 Boeing 787-9s on order, although it has delayed delivery of the first of them until next year. Hawaiian was now hiring about 600 staff after numbers dipped to 6700.

Ingram said the airline had been working on new contracts and conditions for staff.

"We have signed new contracts over the course of the last two years with some of our employee groups to ensure that we're going to have competitive wages and benefits and offerings for people.

"We want to encourage people that aviation is a great long term career."

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