Island Air, a Honolulu-based interisland carrier, announced Thursday it would cease operations on Nov. 11.
The announcement comes after the airline, officially known as Hawaii Island Air Inc., filed for Chapter 11 bankruptcy protection in October following threats of legal action from its aircraft lessors.
The airline will ground its fleet following Friday's flights. Island Air operates more than 400 flights weekly between Oahu, Maui, Kauai and Hawaii Island. In a statement announcing the shutdown, passengers booked for Nov. 11 or later are advised to make alternative travel arrangements.
As of Thursday evening the Island Air website was no longer taking reservations, and the typical display had been replaced with a message thanking passengers for their support and referring customers to their credit card company for refunds.
Island Air's aircraft lessors moved to ground and repossess Island Air's
fleet, and the company was unable to secure new investment or loans to
provide sufficient funding to keep the company operating through a
reorganization, according to the statement.
Hawaiian Airlines responded
quickly to the Island Air closure with an offer to assist ticket holders of its
former rival. Travelers who had been scheduled
to fly Island Air between Saturday and next Friday can standby for coach class
seating on regularly scheduled Hawaiian flights between Honolulu and either
O’ahu, Maui, Kona, Hawaii Island or Kauai. Island Air ticket holders who prefer
a confirmed booking on Hawaiian flights over the coming week can purchase
tickets for $71 each way.
"Island Air has taken every measure possible to avoid this tremendous
hardship to its passengers," David Uchiyama, Island Air president and
CEO, said in the release. "Island Air appreciates the loyalty and
support its customers, management, employees and vendors have shown the
airline, especially during the last few weeks of this bankruptcy
Island Air, which was in the process of expanding service and converting its fleet from ATR-72s to Q400 turboprop aircraft, has gone through various ownership changes, service adjustments and reorganizations since 2013. In February 2016 PacifiCap LLC purchased the airline from Ohana Airline Holdings, a company controlled by Oracle CEO Larry Ellison.
Island Air kicked off 2017 announcing an aggressive expansion, increasing operating expenses by 44% in the first quarter of the year compared to 2016 while doubling revenue. Still, the company continued operating in the red. In the second quarter of 2017 Island Air lost $8.2 million, its largest loss since the final quarter of 2014, and the airline has lost money for 17 straight quarters, according to data from the U.S. Department of Transportation.
"The news of Island Air ceasing flight operations is truly unfortunate, especially for the 400 employees whose families depended on the airline for their livelihood," George D. Szigeti, president and CEO of the Hawaii Tourism Authority, said in a statement. "With Hawaii's strong economy, we are hopeful they will find new opportunities to re-start their careers in travel and other industries locally."