Airlines hope for takeoff in proposed joint venture

  • Hawaiian Airlines inaugural flight from Hanada, Japan lands at Ellison Onizuka Kona International Airport at Keahole in December 2016. (Laura Ruminski/West Hawaii Today)

  • Passengers board a Japan Airlines flight at the Ellison Onizuka Kona International Airport at Keahole in September 2017. (Cameron Miculka/West Hawaii Today)

KAILUA-KONA — A proposed partnership between Hawaiian Airlines and Japan Airlines would potentially bring more visitors to Hawaii, reduce air fares and generate as many as 4,000 jobs without significantly reducing competition, say the airlines in filings submitted to the U.S. Department of Transportation.

That’s according to the airlines’ application for antitrust immunity, approval of which would allow the two companies to move forward with their proposed alliance. With the antitrust immunity, the application states, the companies would be able to set up agreements to share certain costs and revenues, work together on marketing, advertising and goals to boost sales as well as coordinate flight schedules.

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Such ventures aren’t uncommon in the airline industry. The three largest are Star Alliance, which includes United Airlines; oneworld, which includes American Airlines; and SkyTeam, which includes Delta Air Lines.

Two of those alliances are currently operating in the Hawaii-Asia market, the filing states. Star Alliance members United and All Nippon Airways have cooperated in the market for years, while SkyTeam members Delta and Korean Air implemented a “comprehensive revenue-sharing, metal-neutral” joint venture at the beginning of May.

While American Airlines and Japan Airlines also have a joint venture alliance, Hawaiian Airlines and Japan Airlines said in their filing that there would be no overlap, because American doesn’t serve the Hawaii-Asia market.

The airlines in their filing argued that their proposed alliance would give them both the chance to improve services and compete with the Star Alliance’s anticipated increase in capacity, referencing ANA’s announcement to more than double flight capacity between Narita and Honolulu starting next spring.

“The applicants do not fear competition from anyone,” states the filing, “but respectfully submit that they should have the opportunity to competitively respond to the huge capacity surge by the immunized United/ANA (joint venture), as well as to the newly-implemented Delta/Korean Air immunized (joint venture).”

The application says immunization would “dramatically increase seamless service options for the traveling public,” allowing the two companies to link operations in the region by offering online service between cities that aren’t currently served, opening up 34 new destinations to Hawaiian Airlines passengers. That includes 28 within Japan and six other destinations, such as Guam, Hong Kong and Ho Chi Minh City in Vietnam.

Likewise, the venture would also open up six locations in Hawaii to passengers of Japan Airlines, including Hilo and Maui.

If approved, the joint venture would be Hawaiian Airlines’ first as well as the first in the nation that doesn’t involve one of the country’s largest carriers, according to an airline press release.

“Hawaiian, a relatively small carrier, has encountered difficulties trying to break into international markets as a new entrant,” states the filing. “The Department’s grant of (antitrust immunization) in this proceeding would allow Hawaiian to overcome these obstacles, leading to increased competition and more choices for consumers.”

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The news release said the two companies estimate the partnership would bring an additional 162,000 to 350,000 passengers to Hawaii and contribute anywhere from $184.5 million to $402.3 million to the American economy every year, generating between 1,855 and 4,049 jobs in the United States.

The airlines hope to win approval later this year and launch the joint venture next year, the release stated.

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