Airline’s Warning on Fares Signals Cheaper Flights to Hawaii 

(Bloomberg) -- Hawaiian Holdings Inc. cut its outlook for a key revenue measure, citing low fares and sluggish demand -- the second U.S. airline to issue a gloomy forecast in as many days.

“Year-over-year visitor growth from North America to Hawaii remains positive, but at a slower pace than industry capacity growth,” the parent of Hawaiian Airlines said Wednesday. Revenue for each passenger flown a mile, a gauge of pricing power, will decline 3 percent to 5 percent this quarter, the carrier said. It previously estimated that the figure would drop no more than 2.5 percent.

The update came a day after Delta Air Lines Inc. said so-called unit revenue would increase 3.5 percent, pared from a previous outlook of as much as 5 percent.

The twin warnings stir uncertainty about how the quarter will play out for the industry. Delta's statement Wednesday pushed its shares down the most in two years, carrying other airlines down amid a broad market rout. Fuel costs have been swinging wildly, however, and were down almost 20 percent in November. Alaska Air Group Inc. and Spirit Airlines Inc. recently gave boosts to investors with bullish outlooks.

Hawaiian is bracing for more competition, meanwhile. Southwest Airlines Co. plans to begin flying to the islands from California next year, which could further depress fares. The stock market was closed Wednesday to honor the late former President George H.W. Bush.

Hawaiian said fourth-quarter unit costs are likely to decrease 1 percent to 3 percent. That would be slightly better than previous expectations, owing to nonrecurring items and lower-than-expected benefit and administrative expenses.

To contact the reporter on this story: Justin Bachman in Dallas at jbachman2@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson

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