Grounded for good

LIHUE — Island Air announced Thursday it will close operations at midnight tonight.

The move ends 37 years of service in Hawaii, leaves passengers scrambling to find flights for interisland transportation and puts 400 employees out of work.

“Island Air has taken every measure possible to avoid this tremendous hardship to its passengers,” said David Uchiyama, Island Air president and CEO.

Earlier this month, Island Air filed for Chapter 11 bankruptcy protection in an effort to continue operations following threats of legal action by the lessors of Island Air’s aircraft to ground and repossess the company’s fleet.

Island Air said it was unable to locate a new investor or lender to provide funding to support airline flight operations and a successful reorganization.

Uchiyama said Island Air is proud of its 37-year history of service to Hawaii.

“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 process,” he said.

It was just in February when Island Air announced it was increasing its flights to and from Lihue Airport.

The airline said it would be offering eight daily round trips between Lihue and Honolulu, two more than previously available. This was after Island Air returned its service to Kauai in March 2016.

Island Air offered about 200 flights each week between Oahu, Maui, Kauai and Hawaii Island.

But it has been facing financial challenges.

Island Air recorded a $2.6 million loss during the first quarter of this year, which was an improvement from a $4.3 million loss during the same time period last year. It was the airline’s 16th straight quarterly loss.

Island Air’s operating expenses increased to $14.8 million in the first quarter, a 44 percent increase from $10.2 million in the first quarter of 2016.

Founded in 1980 as Princeville Airways, the company was renamed Island Air in 1992.

In January 2016, Hawaii-based investment company PacifiCap acquired controlling interest in Island Air from Ohana Airline Holdings, LLC, which is wholly owned by Oracle corporation founder Larry Ellison.

The airlines will be missed, according to numerous press releases sent out Thursday.

“I want to thank Island Air for its decades of service to our communities,” said Gov. David Ige. “For 37 years the company and its employees have played a big role in connecting island families and supporting our business community. The closure will have a tremendous effect on 400 employees and their families, and the state will be working with Island Air to help the employees apply for unemployment insurance and provide assistance with job searches and training opportunities.”

George D. Szigeti, president and CEO of the Hawaii Tourism Authority, said Island Air’s service was appreciated by residents and visitors needing to travel between the islands.

He called the news of Island Air ceasing flight operations “truly unfortunate, especially for the 400 employees whose families depended on the airline for their livelihood. With Hawaii’s strong economy, we are hopeful they will find new opportunities to re-start their careers in travel and other industries locally.”

Hawaiian Airlines announced it was working quickly to provide flight relief for travelers who have been displaced by the shutdown of Island Air operations.

Starting Saturday through Nov. 17, Island Air guests holding a confirmed reservation to Hawaii islands can standby for coach class seating on Hawaiian’s regularly scheduled flights between the same origin and destination cities on the ticketed day of departure.

Hawaiian has increased its customer service staffing at airports statewide.

Hawaiian will be offering a special $71 one- way fare to Island Air customers holding tickets for flights between Saturday and Nov. 17.