Hawaiian Airlines Begins Its Basic Economy Rollout
Over the past two years or so, Hawaiian Airlines parent Hawaiian Holdings (NASDAQ: HA) has suffered severe margin compression from rising competition in many of its markets. The carrier is on track to post a full-year adjusted pre-tax margin between 9% and 10% in 2019, down from a peak of around 18% in 2016 and 2017.
To its credit, management has been working hard to shore up Hawaiian Airlines' business model to ensure its long-term competitiveness. On Monday, Hawaiian started to roll out one of its most important profit growth initiatives: a Main Cabin Basic fare option. This -- along with some of the carrier's other recent strategic moves -- could help Hawaiian Holdings return to profit growth next year.
Basic economy pricing was introduced to the U.S. market by Delta Air Lines in 2012 as a tool to make it easier to compete against budget carriers. By creating a fare type with additional restrictions -- most notably, no advance seat selection -- Delta found it was able to capture price-sensitive travelers with low fares while coaxing most customers to pay more for tickets with fewer restrictions.
Source Fool.com
