Fuel Costs, Rivals Push Aloha into Chapter 11

This may look like a headline from 2004, but sadly, it's accurate once again. Aloha Airlines has filed for Chapter 11 bankruptcy protection a mere two years after its last trip to bankruptcy-land ended. What does this mean for the airline? Well, things aren't looking good. Let's review the current situation in a nutshell.

Since Mesa Air Group's go! entered the interisland market, airfares have plummeted
Oil is ridiculously expensive
Flights from Hawaii to the Mainland need a lot of oil

I think that sums it up nicely. The $64,000 question is this . . . will anyone throw money into this airline? My guess is that we won't see Aloha exist as a separate airline any longer. Instead, the vultures will swoop down and pick at the carcass. There are a few attractive pieces. The 737-700 aircraft with the ETOPS certification could be attractive to someone (*cough*, Southwest, *cough*). The cargo business might find some interested buyers as well. But the inter-island market? It's worth just about nothing right now.

Everyone said there wasn't room for three airlines flying the main routes in Hawaii, and they are now proving to be right. Fares are way too low right now, and the only way that will change is if an airline goes away. While I know that most people in the islands would be happy to see Mesa Air Group's go! be the one to disappear, they have slightly deeper pockets than Aloha, and they may succeed in outlasting the airline. Oh, and Aloha's 737-200 aircraft that fly the interisland flights? Not much interest in those - maybe Anheuser-Busch will buy them to make beer cans.

This isn't likely to be the last time we see an airline file for bankruptcy this year. People kept calling for consolidation in this industry, and it looks like me might have that. It just won't be achieved via mergers.

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