Wednesday, September 20, 2006

Inter-Island Airfares

One cannot deny that the arrival of go! in Hawaii's inter-island market has lowered airfares. What there seems to be a lot of misconceptions about is just how high fares were before Go arrived.

Our tale starts in the good old days. The standard method of purchasing inter-island travel was the coupon. These were pre-paid vouchers that were sold primarily through travel agents. You bought the coupon, and then booked your reservation. Or not. If there was an open seat, you could just show up at the airport, hand the agent a coupon, and get on the plane. You could also book your reservation by calling the airline, then buy the coupon. It didn't matter. Hawaiian had them. Aloha had them. Island Air had them (but they were more expensive). Mahalo had them. Air Molokai had them. Coupon prices fluctuated; when there was more competition (such as Mahalo being in business), prices were down. Then they'd slowly go up. Different agencies sold them at different prices (Bankoh ATMs were usually a bit more expensive, but you couldn't beat the convenience of buying one at the Bankoh ATM in the Honolulu airport on your way from your flight from the mainland to your inter-island flight. I did that once.)

As you can imagine, yield-management, the practice of controlling price and inventory so as flights get fuller, prices go up, was basically impossible.

So what happened?

The same thing that wrecked everything else in the airline industry. 9/11.

Coupons went away. In its place came yield-managed e-tickets. Actually, they had yield-managed fares for inter-island flights before, the difference was that people who knew about them went the coupon route.

For the most part, the fares were a bit higher than what coupons left off at. But not always. But what really matters here is how it forced a changed in the way island residents had to travel. Instead of being able to get on the flight for a relatively fixed price, last minute travelers would generally end up paying more, because the more popular flights would have long sold out their lower fares. To get the lower fares, it became necessary to plan ahead and/or settle for a less desirable flight time. Which is how it works everywhere else in the country. Even on Southwest. People paying $200 or more to fly on a round trip inter-island ticket didn't plan ahead or insisted on taking a more popular flight time.

All the arrival of Go did was cause the bottom end of the fare range to fall back into places it hasn't been... well, since Mahalo was around. Go still has a range of fares, though to be fair their fares top out lower than Hawaiian's or Aloha's. If you pick the more popular flight or don't plan ahead, you'll have to pay more.

If you want the $39 flight, you'll have to plan ahead and be flexible. It doesn't matter whether you're doing Las Vegas to Phoenix with Southwest or US Airways, or Honolulu to Kahului with Hawaiian or Go.