Southwest Mulls Island-Hopping From Oahu, and Hawaiian Air Tanks

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(Bloomberg) -- Southwest Airlines Co. intends to offer island-hopping flights within Hawaii after it ramps up service to the state from California, boosting the competitive threat to Hawaiian Airlines.

Inter-island flights will “eventually” be added to complement new service from the U.S. mainland, Southwest said in a statement Thursday. The carrier named San Jose, San Diego, Sacramento and Oakland as the first California cities that will get nonstop flights to Hawaii.

The lucrative inter-island market is a mainstay for Hawaiian, which derives about 94 percent of its in-state revenue from the five largest routes in that network. Competition on those flights from Southwest would be “a fairly significant headwind for Hawaiian,” Joseph DeNardi, a Stifel Financial Corp. analyst, has said.

Hawaiian dropped 6.5 percent to $38.25 at the close in New York, the biggest decline in six months. Southwest was little changed at $52.24.

The Dallas-based airline, which plans to start ticket sales for flights to Hawaii later this year, is awaiting regulatory approval to begin the routes from California to airports in Honolulu, Maui, Kauai and Keahole.

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