Hawaiian bumps interisland fares, to charge $25 for 2nd bag on Mainland flights

Hawaiian Airlines announced a significant boost in interisland fares on Wednesday, along with increased service fees and a $25 charge for checking a second bag on Mainland flights.

The airline is raising interisland fares by $5 to $20 each way beginning Thursday. Hawaiian's lowest fare will increase from $49 to $54. The company said an additional $5 will be charged to customers flying between Honolulu and Hilo and Kona to cover the fuel costs for the longer flights.

The airline said it had to raise prices to help cover dramatic increases in the price of jet fuel. The move is the first since the shutdown of Hawaiian's primary interisland competitor, Aloha Airlines, on March 31.

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"The sudden shutdown of airlines locally and nationally these past few weeks shows how critically important it is for Hawaiian to cover its costs," said Mark Dunkerley, Hawaiian Airlines president and CEO.

Customers who choose to buy tickets over the phone through Hawaiian's reservations department will also pay an additional $5 each way, an effort by the airline to get more customers to book their flights online.

Hawaiian also announced it will begin charging passengers a $25 fee each way for checking a second bag on domestic flights between Hawaii and the Mainland. The fee will not apply to interisland flights or to transpacific international flights to the Philippines, Australia, American Samoa and Tahiti. The baggage fee starts June 10.

Hawaiian joins a number of its larger competitors in charging for the second bag, which is seen as a way of generating new revenue and cutting down on weight aboard flights, which saves fuel.

Also on Wednesday, Hawaiian Holdings reported a loss of $19.9 million, or 42 cents per share, on operating revenue of $251.2 million during the first quarter.

The parent company of Hawaiian Airlines (Amex: HA) cited record fuel prices as one of the reasons for the loss.

Aircraft fuel costs increased 53.5 percent year-over-year to $91 million and represented about 33 percent of operating costs, the company said.

"Like every other U.S. carrier, record fuel prices and excess capacity were the major negative influences on our first quarter results," Dunkerley said. "Since Aloha and ATA did not cease operations until after the quarter's end, our results for the period were not affected by these material developments."

Dunkerley said the airline is better positioned to meet the rising fuel costs now that capacity has been reduced by the Aloha and ATA shutdowns and demand for the company's services have not slowed. Hawaiian reported an operating loss of $22 million in the first quarter of 2008 compared to a loss of $16.1 million in the first quarter of 2007.

Shares of Hawaiian Holdings closed up slightly on Wednesday to $7.95.