Kauai may have become a little more remote.
Island Air announced that it will discontinue service to the island starting June 1, leaving Hawaiian Airlines as the only major interisland passenger carrier left that would operate at Lihue Airport.
The announcement came in the form of a letter from Island Air CEO Dave Pflieger that was sent to employees Wednesday evening.
That letter cited a record financial loss of $21 million and stiff competition among the reasons for the decision, and said that the airline would reduce the number of flights and reduce its overall workforce by 20 percent in order to cut costs.
“Our new course of action will consolidate our operations to a smaller number of markets, so that we can fix our cost and revenue structure and become strong enough to grow in a sustainable manner,” Pflieger wrote.
Island Air currently operates an average of six round-trip daily flights to Lihue and approximately 2,300 round-trip flights annually. The airline was not able to say if or when it might return service to Kauai, although in his letter Pflieger expressed optimism for the airline’s future.
“Downsizing our airline is not what any of us wanted, but regrettably we have no other choice as we continue our work to fix our airline, so that we can one day grow it, achieve sustainable profitability and remain Hawaii’s needed second carrier,” Pflieger wrote.
Passengers who have already purchased tickets for flights after May 31 will be offered full refunds or accommodations on other airlines.
Island Air employs 21 Kauai residents, but it is unclear at this time how many of those jobs will be affected or if some will be offered employment with the airline on a different island.
Pflieger said that the airline has tried to reduce costs over the past seven months by reducing the management team by 20 percent, attempting to negotiate lower prices on new aircraft, and pursuing partnerships with other airlines.
“We always knew that to remain Hawaii’s number two airline in the face of overwhelming competition from another local airline, which is 60 times our size in revenue and controls nearly 90 percent of the intra-island market, would not be without its challenges,” Pflieger wrote.
Unknown is whether the loss of Island Air’s service to Kauai will affect the number of tourist who visit the island, or whether residents can expect to see higher ticket prices in the future.
According to Hawaii Tourism Authority figures from February 2015, the most recent available, the number of visitors to the island is actually up this year by more than 5 percent compared to the same time last year.
Alison Croyle, a spokeswoman for Hawaiian Airlines, said that the airline will evaluate whether it will increase flights to Kauai as a result of Island Air’s decision to discontinue service. Hawaiian Airlines currently provides an average of 17 round-trip flights to Lihue Airport per day.
Island Air was originally founded as Princeville Airways in 1980. It has been operating out of Lihue Airport since 2004. In 2013, the company was purchased by Oracle Founder Larry Ellison.
In addition to canceling the route between Honolulu and Kauai, the airline will reduce service from Honolulu to Lanai, and those flights that remain will include a layover in Maui to pick up additional passengers.
Pflieger’s letter also said collective bargaining agreements harmed their financial outlook, leading to the decisions. Negotiations for “modest changes” with their representatives were unsuccessful.
“To be clear, we did not ask for job cuts, wage reductions, or benefit or retirement concessions. Instead, we simply asked for changes that would improve productivity,” he wrote.
Union representatives couldn’t be reached for comment on Thursday.