Mesa Chairman Says Go! Launch This June Will Turn A Profit, $39 Fares Included

Approximately once a year a few venture capitalists, clad in freshly creased Aloha shirts, emerge on to the Hawaii scene with claims of launching new inter-island air service, thus undercutting the existing majors. From hence forward, that ever-so-familiar phrase, "I remember when it was, like, $50 round-trip to fly outer island..." would cease to be uttered.

And like a Kona wind in late August--they are gone.

This time, it's different, says Jonathan Ornstein, Chairman and CEO of Mesa Air Group. He would know--his company has approval to deploy six CRJ 200 regional jets on June 9, each with a 50-seat capacity. To prove he's not messing around, Ornstein says defiantly: "And we've already begun taking reservations.?"

Mesa will launch "go!" with $39 one-way tickets between Honolulu and Kahului, Kona, Hilo and Lihue. The fares, which, upon announcement, have already been "matched" by what Ornstein calls his "head to head competitors", Aloha and Hawaiian airlines. It is unconfirmed at this time whether or not the two current carriers will offer enough $39 tickets to make it feasible for residents to actually attain one, a problem that won't be an issue on go!, according to Ornstein.

"Our planes will run full. If we don't sell out the $39 seats, which is highly unlikely, we'll drop the prices. I can't speak for the pricing structures of our competitors," he added, with a hint of skepticism over the number of seats the reduced fare the carriers will offer.

During a time when airline stock might not be the safest bet (Mesa's go! acquired the lease on the inbound jets from now defunct Independence Air, which lasted a mere 18 months on the scene), Ornstein is confident.

"The difference is that we have small ambitions and a lot of money," he says. "Our Hawaii venture will be 1.5% our total business--it's a small amount. We've recently added 9 aircraft during one month with partner United Airlines. We added 30 aircraft with our Delta partners in Orlando and JFK."

When questioned as to the financials, Ornstein puts to rest any doubt.

"We will fly 3,000 seats per day. Aloha and Hawaiian fly approximately 26,000 seats between them. If we fly full--even at $39 per seat--we stand to make a nice profit. I'm not sure our competitors can maintain those prices and remain profitable," Ornstein adds.

"If we have a successful first 3 or 4 months, we might introduce a few 90-seat jets. They cost 20% more to operate, but we stand to earn a much higher profit margin per flight. The numbers all work in our favor," Ornstein concludes.

"It will be a very interesting study in a contained market," Ornstein says. "It's been a very intellectually stimulating project--so much so that I will move my family out to Hawaii for a month, just to oversee the launch."

Ornstein, who started with Mesa and went to Virgin for a 4-year stint in 1995, will take a page from Virgin CEO Richard Branson's marketing strategy. Ornstein will position go! as a young, hip brand geared at the adventurous traveler.

Mesa Air Group codeshares with U.S. Airways, United, Delta, America West and Midwest airlines. Go to www.mesa-air.com for more information.

www.mesa-air.com

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