Hawaii air fares expected to take off

HONOLULU -- The abrupt shutdowns of ATA Airlines and Aloha Airlines won't keep travelers off Hawaii's shores altogether, but they could make an already expensive vacation destination even pricier and potentially put the leis and luaus out of reach for many.

Flights to and from Hawaii had been a key part of ATA's business ever since the Indianapolis-based carrier scaled back its route network following a previous trip through bankruptcy in 2006.

On Thursday, the airline suddenly quit flying as it again headed for bankruptcy court. Aloha Airlines stopped passenger service just days earlier after also filing for bankruptcy.

ATA and Aloha's one-two punch, coming at a time when the airline industry is already straining under rapidly rising fuel prices, will likely prompt remaining carriers to push their fares higher, industry observers said.

"When you pull out a major carrier, it's going to create a lot of demand on the remaining carriers," said Robert Mann, an independent airline analyst in Port Washington, N.Y.

Although Hawaii is encouraging other airlines to increase capacity to the islands, state Tourism Liaison Marsha Wienert said she is expecting a loss of 511,000 tourists this year -- the number of people ATA was expected to bring to the islands in the remaining nine months of 2008. That's 7 percent of the 7.3 million people who visited the state last year.

Hawaiian Airlines, the state's biggest, could emerge as the biggest winner following its rivals' collapse. The carrier flies to nine cities on the mainland -- more than any other airline -- including all four markets where ATA operated. It also controls a hefty share of inter-island traffic.

Delta Air Lines and Continental Airlines competed against ATA on direct flights from Los Angeles, for example, while US Airways challenged the carrier in Phoenix. Northwest Airlines, United Air Lines, American Airlines and Alaska Airlines all also fly from multiple mainland destinations.

Flights between the islands could also grow more expensive. Hawaiian and Mesa Air Group, the parent company of inter-island carrier Go!, have each recently announced plans to add spare planes and flights on routes within Hawaii. Even so, experts doubt fares that have fallen as low as $49 or less one-way are sustainable.