Island Air sale to give local travelers more options, future owners say

Island Air

Larry Ellison’s Ohana Airline Holdings (OAH) announced Wednesday that it plans to sell a controlling interest in Island Air.

The sale, which is subject to U.S. Department of Transportation approval, would transfer majority ownership to PaCap Aviation Finance and Malama Investments, two investment companies managed by PacifiCap, Hawaii’s largest, locally based venture capital investment firm.

A decision could happen in 60 to 90 days.

PacifiCap officials say the transaction will give local travelers more flight options, especially since for many, interisland travel is not a luxury, but a necessity.

“If you live on the neighbor islands and you have to go to Queen’s or a major hospital here for a procedure, that’s a necessity,” said PacifiCap founder and managing director Jeffrey Au.

Right now, Island Air has five aircraft and services Honolulu, Kahului and Lanai. Au says the sale would allow the airline to add seats and flights, possibly to airports it doesn’t currently service.

“What will this mean for travelers? Will it mean lower airfares?” KHON2 asked.

“What we hope it means is access to seats and remember, when you talk about lower airfares, it’s not only lower or higher fares, it’s availability of seats,” Au said.

Au says an expansion could mean more jobs and affordable airfares, though he would not say how much prices could be.

“As for the specifics, it’s not appropriate for me to talk about it, because that will be management’s decision once we can put our management team in place,” Au said.

The airline has plans to add additional ATR-72 aircraft to its fleet.

“It’s really too big a plane to effectively serve Molokai, Lanai and the smaller destinations, yet it’s really not a nice enough airplane to go head-to-head against Hawaiian Airlines on the more popular routes,” said aviation analyst Peter Forman.

Forman believes this deal could trigger a price war, but is skeptical about the new owners’ plans.

“They’re going to try some creative pricing strategies, which I don’t think they’ll get away with in the long run,” Forman said.

The U.S. Department of Transportation still needs to approve this deal, which could happen in 60 to 90 days.

OAH would retain a non-controlling interest in Island Air and would continue to partner with the new local owners as they move forward with expansion plans.

To further ensure business continuity, a transition team comprised of Au, Island Air CEO Dave Pflieger, and former Island Air executive Les Murashige will ready the airline for its next chapter.

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