Comedy of fares

Hawaiian Airlines, Aloha Airlines and Mesa Air's Go are archrivals seeking your interisland business. But today they have this in common: they're scratching their heads over what happened to their fares Wednesday evening. To understand what happened, you need to know that there is a single computer network for air fares and all the airlines plug in new fares all the time. They also study the fares in the system to see if their competitors do anything that they need to react to. Unless your rival makes an announcement or you have a spy working there, you don't know what Brand X is up to until the new fare appears in the system. Now, as you know, there has been an interisland fare war since the launch of Go turned the Honolulu routes to Lihue, Kahului, Kona and Hilo into a three-way market in the spring of 2006. Nearly all the time, it has been Go that announces cheaper fares, and the others who match. The thinking is that it's cheaper to match than to lose customers. So they fly at a loss, hoping something will happen to change the situation. The situation did change slightly this month when Go, struggling with soaring jet fuel costs, raised its minimum fares to Kona and Hilo to $49, the only time I can recall that Go has led the way on a price increase. Aloha matched and also applied the $10 increase to its other interisland routes. Go and Hawaiian then fell in line. An outside observer could easily have inferred from this that all three were ready to call a temporary ceasefire in the fare war to cover more of their growing costs. Fast forward to Wednesday. Aloha Airlines, facing the same soaring jet fuel bills that Go is, raises its Kona and Hilo minimum fares to $59. Still not enough to make a full-fledged profit but enough to cover the most important bills. But while Aloha was doing this -- and explaining the need for it in a press release -- Go was posting a $42 fare. At this point there are some conflicting accounts of what happened, but after talking to friends in low places at the airlines I believe it went like this. Go, seeing the Aloha increase, rescinded its increase and said it had been posted in error. It meant to stick with its $49 fare. But by the time it did this, Hawaiian Airlines had already matched the $42 fare. So by Thursday morning, Aloha was hanging out to dry at $59, still hoping the others would go along; Go was at $49, despite having posted another number entirely the day before; and Hawaiian was at $42 despite having initiated nothing at all. You can decide which one is rocks, which one is paper and which one is scissors. Update, around 9 a.m. Thursday: Hawaiian has rescinded its $42 fare and returned to $49.