Go! Can fly, but must pay Hawaiian $80million

KHON 2 TV News
Oct 30, 2007 at 10:27 PM HDT

By Gina Mangieri

The parent company of the go! airline has been ordered to pay $80 million to Hawaiian Airlines, but go! will be allowed to continue flying.

The ruling has implications for Hawaii's fierce airfare wars, and the future of the competitive landscape in air travel.

Hawaiian sued Mesa Air Group for using confidential information obtained in what was essentially a sales-pitch during bankruptcy proceedings several years ago.

Mesa opted not to bail out Hawaiian but instead went ahead and started its own airline – go! -- as a competitor. The judgment reflects on that move.

"There's an admonishment that we don't stand for this type of practice," said Sen. Kalani English, chairman of the Senate's transportation committee, who has kept a close eye on the proceedings. "But it's also saying let's level the playing field and let all the carriers go."

Hawaiian Airlines was hoping for about double the amount of damages and wanted go! grounded for one-year. Bankruptcy Court Judge Robert Faris denied the injunction and says $80 million is enough to cover the harm suffered.

Hawaiian also stands to gain millions in attorneys fees.

The judge agreed Mesa got a competitive advantage by using the information and breaching a confidentiality agreement.

"Today's ruling is a triumph for fair competition and ethics over dishonesty and illegal behavior," said Mark Dunkerley, Hawaiian Airlines president and CEO.

The judge also says Mesa's added capacity and rock-bottom fares as caused significant losses for Hawaiian.

Industry observers say it's a balanced judgment that keeps the market competitive while teaching go! a lesson about being too aggressive in the fare war.

"I think the judge made a very wise decision not granting the injunction because we need many carriers in Hawaii," English said. "If we don't have the competition then the prices rise artificially high."

Hawaiian said in a statement that Mesa is trying to drive local competition out of business and later raise fares.

Go's president was en route to the mainland from China when the ruling was issued. He was in China to launch a commuter airline that uses the same type of fleet as in Hawaii.

"I hope they do continue to operate in Hawaii," English said of go!. "I hope they learn to be a good corporate citizen and to play fairly and to compete fairly."

The $80 million is close to go's annual revenue here. Aloha has sued go for other competitive reasons and that trial is expected in the spring.

Meanwhile today Hawaiian said quarterly operating profits were double that of the same time last year at $25.6 million. Quarterly operating revenue was $273 million.

©2007 KHON-TV. All Rights Reserved.

Original article URL: http://www.khon2.com/news/local/10908351.html

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