Spirit of Aloha | Message of Aloha | July/August 2005

More with Less

Aloha and welcome aboard. Like other airlines, Aloha has undertaken many initiatives to become energy-efficient. From its inception, our advanced-technology Boeing 737-700 aircraft was designed with energy efficiency in mind. Then, two years ago, we added blended winglets to the wingtips of our aircraft to further increase fuel savings. We’ve also asked our pilots to make operational changes whenever possible to save fuel.

Even so, we find ourselves in the same boat with nearly every air carrier reeling from the exceedingly harmful impact of high oil prices. According to our industry trade group, the Air Transport Association, the price of jet fuel on spot markets averaged 85.8 cents per gallon in January, 2001. In May, 2005, airlines were up against an average price of $1.65 cents a gallon. That’s an increase of 87 percent. With fuel as the second-largest expense behind payroll, the economic hit on the industry has been enormous.

According to the ATA, the U.S. airline industry paid $21.4 billion for jet fuel last year, $5.5 billion more than it would have paid at 2003 prices, and a dizzying $8 billion more than it would have paid at 2002 prices. At the rate things are going, airlines will pay $6.8 billion more for jet fuel this year than last year, pushing the increase from 2001 levels to 91 percent.

If you pay $2.50 a gallon for gas and fill up your car with 20 gallons a week, your gas bill comes to $200 a month. But if, through no fault of your own, the price of fuel shoots up by 91 percent, all of a sudden you would be paying $382 a month. What would you forego from your household budget to make up for the extra money you’d be spending on gas? Always a tough decision.

At Aloha, we paid $24 million more last year for fuel than we paid the year before, and, sad to say, our operating loss for the year was just about $24 million. That just goes to show how the sharp rise in the cost of fuel has hurt our business.

As a result, we’ve had to be more nimble and cut costs in order to remain competitive. The belt-tightening began at the corporate level, where we’ve learned to stretch our resources by doing more with less. Because labor is the only cost that’s even greater than fuel, we were forced to ask our hard-working employees to accept pay concessions. I applaud the dedication of our Aloha employees, who strive to provide our customers with the best possible service. They are helping us become a low-cost carrier capable of taking on the competition.

While we have had to cut costs, we’re investing in technology to bring you greater convenience. We’ve recently added a new look and feel to our Web site, www.AlohaAirlines.com, and upgraded the booking engine that enables you to search for and book flights online.

Despite the need to economize and work more efficiently, we’re committed to maintaining our high safety standards and the high quality of Aloha’s customer service and the tradition that is the Aloha spirit. Please let me know how we’re doing.                                                                                                  

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