Hawaiian/Southwest earn less than $25/flight: pullback is imminent

Hawaiian and Southwest battle over everything: flights, pilots, fuel

In the battle of the Hawaii flights, things continue to go downhill. Both in terms of price and profitability. How long can this last? We don’t know for sure, but we have some fascinating insights to share.

1. Analysis of a $39 plane ticket.

When you look at the current price of inter-island fares at $39, did you know that only $26 goes to the airline? The remaining $12+ is a combination of taxes and fees they don’t participate in. But the $26 is before advertising costs.

2. Cost of Google advertising.

We were in Google Search, looking for flights to bring you more airline reviews when we came across this competing pair of Hawaiian and Southwestern Google listings. According to our estimate, carriers pay between $2 and $15 for each click on one of these advertisements. That’s a huge percentage of their $26 share on a $39 plane ticket.

3. Aggressive expansion has yet to benefit Southwest.

As one financial analyst put it this week, “Southwest is losing money in the inter-island market. Southwest Airlines will likely wind down its inter-island ambitions eventually, but that may not be soon. In terms of blood, Southwest has a lot more than they can afford to lose than Hawaiian.

4. Southwest Hawaii flights have been adjusted by rapidly adding and removing flights.

First, we announced in July that Southwest had cut 10 routes. Then we reported that they nearly doubled their daily inter-island flights from 38 to 60. After that, Southwest canned the previous plan and added back 4 previously removed mainland routes.

5. Hawaii mainland routes seem to work for both airlines, but not between islands.

We recently paid $188.50 for our flight from Southwest Hawaii to San Jose. And we’re paying about the same for a Hawaiian Air flight next week. At these prices, Southwest and Hawaiian lost no money. On the other hand, we’ve flown and will fly for $39 on both airlines, and that’s not sustainable, as we’ve said before.

6. Island hopping has never been easier or cheaper.

Even at $39, there seems to be insufficient demand to fill the flights, further compounding the financial loss. If you’re traveling to Hawaii this fall, now is the best time to consider adding another island to your itinerary. Flights are readily available and the prices are unbeatable.

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