Andrew WattersonVice-President – Planning and Revenue Management
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Network And Pricing
Investor DayNovember 17, 2011
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Agenda
• Network and Pricing Overview
• Geographies
– North America
– Neighbor Island
– International
3
Network Planning And Pricing Reflect Three Main Elements Of Hawaiian Airlines’ Strategy
• Our role as a destination carrier
• Diversification of origin markets
• Modest volume / price premium for superior product and service
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Sydney
HNL
San Francisco
Los AngelesLas Vegas
HNL
Kaua‘i
Maui
Neighbor Island Routes
Pago PagoPapeete
Portland
PhoenixSan Diego
SacramentoOakland
San Jose
Maui
2008 Route Network Seattle
Manila
Kona Hilo
In Recent Years, We Have Expanded Our Network Significantly, Especially In International Markets
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In Recent Years, We Have Expanded Our Network Significantly, Especially In International Markets
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Sydney
HNL
San Francisco
Los AngelesLas Vegas
Pago PagoPapeete
Portland
PhoenixSan Diego
SacramentoOakland
San Jose
Maui
2010 Route NetworkTokyo (Haneda)
Seattle
Manila
Route Development2010 Tokyo (Haneda)2010 Oakland - Maui2010 Las Vegas - Maui
HNL
Kaua‘i
Maui
Neighbor Island Routes
Kona Hilo
2011 Route Network
Sydney
HNL
San Francisco
Los AngelesLas Vegas
Pago PagoPapeete
Portland
PhoenixSan Diego
SacramentoOakland
San Jose
Maui
Tokyo (Haneda)
Seattle
Seoul
Osaka (Kansai)
Manila
Route Development2010 Tokyo (Haneda)2010 Oakland - Maui2010 Las Vegas - Maui2011 Osaka (Kansai)2011 Seoul (Incheon)
HNL
Kaua‘i
Maui
Neighbor Island Routes
Kona Hilo
In Recent Years, We Have Expanded Our Network Significantly, Especially In International Markets
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In Recent Years, We Have Expanded Our Network Significantly, Especially In International Markets
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Manila
Seoul
Tokyo (Haneda)
Sydney
Osaka (Kansai)
Fukuoka
HNL
San Francisco
Los AngelesLas Vegas
Pago PagoPapeete
Seattle
Portland
PhoenixSan Diego
SacramentoOakland
San Jose
Maui
2012 Route Network
Route Development2010 Tokyo (Haneda)2010 Oakland - Maui2010 Las Vegas - Maui2011 Osaka (Kansai)2011 Seoul (Incheon)2012 Sydney (daily)2012 Fukuoka2012 San Jose - Maui2012 New York
New York
HNL
Kaua‘i
Maui
Neighbor Island Routes
Kona Hilo
8%27%
92%73%
0%
25%
50%
75%
100%
3Q08 3Q11
International Domestic
Hawaiian Now Derives A Substantial Portion Of Its Business From International Service
Hawaiian Airlines Passenger Revenue: Domestic vs. International
Source: HA data
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0
1000
2000
3000
4000
5000
6000
7000
2006 2007 2008 2009 2010 2011
UA/COHADL/NWAAASUS/HPTZAQOther
Change In Avg. Seats / Day Over 5 Years, 2006-2011
Carrier%
changeAbs.
change
HA 21% 722
Other Airlines -19% -3,276
Domestic Capacity To Hawai‘i (Excluding Neighbor Island)Average Daily Seats
Aside From Hawaiian, Only Alaska Airlines And US Airways Have Increased Mainland-Hawai‘i Capacity
Source: Official Airline Guide (Data pulled from source on October 10, 2011)
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International Capacity To Hawai‘iAverage Daily Seats
0
200
400
600
800
1000
1200
2006 2007 2008 2009 2010 2011
JO/JLDL/NWHAKEWSOtherNHACQF/JQUA/CO
1500
2500
International: Hawaiian Has Been The Leader In Service And Capacity Growth
Source: Official Airline Guide (Data pulled from source on October 10, 2011)
JO/JL not on same scale
Change In Avg. Seats/ Day Over 5 Years, 2006-2011
Carrier%
changeAbs.
change
HA 464% 746
Other Airlines -8% -515
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1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 2Q2011 3Q2011
Hawaiian Airlines ASM & PRASM(Year-Over-Year Change)
1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 2Q2011 3Q2011
Hawaiian Has Maintained PRASM Growth Despite Capacity Growth
ASM
PRASM
Source: HA data
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Agenda
• Network and Pricing Overview
• Geographies
– North America
– Neighbor Island
– International
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North America Network And Pricing
• Widebody product advantage
• Schedule timed for local passengers
• Share and fare premium over competitors
• Connections to Neighbor Islands
• Connect largest, multi-frequency markets to International markets
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0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80% 100%
In Most Mainland-Hawai‘i Markets Where We Compete, We Get Share And Price Premiums
Market Market O&DHA O&D
shareHA Fare
Premium1
HNL-LAX 934,810 31% $5 HNL-SFO 464,035 22% $17 HNL-LAS 374,502 81% $15 HNL-SEA 371,770 40% $13 OGG-SEA 262,273 51% $36 HNL-PDX 191,093 57% $22 OGG-PDX 187,377 63% $25 HNL-SAN 168,966 64% $24 HNL-PHX 145,646 63% ($42)OAK-OGG 117,102 50% $29 OGG-SAN 115,662 25% $44 HNL-SMF 104,438 82% $31 HNL-SJC 98,161 90% ($40)HNL-OAK 96,181 96% ($23)LAS-OGG 58,419 64% $22
Total 3,690,435 49% $14
Traffic, Seats & Fares At Hawaiian’s Mainland Gateways, YE2Q2011
O&
D S
hare
Nonstop Seat Share
HNL-SFO
LAX-HNL
OGG-SAN
HNL-SEA
HNL-PHX
OGG-SEAOAK-OGG
HNL-PDX
OGG-PDXHNL-SAN
LAS-OGG
HNL-SMF
HNL-LAS
HNL-SJC
HNL-OAKGreater passengershare than seat share
Less passengershare than seat share
1 Over other airline average fare
Source: USDOT O&D survey, OAG schedules15
12.7 12.712.1 11.9
12.5
10.8 10.6 10.910.4
13.5 13.1 12.711.7 11.4
10.6 10.3 109.2
United Airlines Delta Air Lines AmericanAirlines
US Airways Alaska Airlines JetBlueAirways
HawaiianAirlines
SouthwestAirlines
Allegiant Air *
RASM CASM
Domestic RASM & CASM (Excluding Transport-Related), YE1Q2011Stage Length-Adjusted To 1,000 Miles, Ranked By CASM
(No Hawai‘i Service)
Our Costs Are Competitive With All Other Carriers Serving Hawai‘i, And With LCC’s That Could Enter The Market
(No Hawai‘i Service)
(No Hawai‘i Service)
* No “Transport-Related” exclusion for Allegiant
Source: USDOT Form 4116
New York City
• Largest U.S. metro area
• 7th largest Mainland-Hawai‘i market
• Current service limited to just one daily EWR nonstop
• Excellent connections to the rest of the eastern U.S.
East Coast
• 2nd largest origin region
• Over 1,900 Hawai‘i PDEW (including NYC)
• Current service limited to just two daily nonstops (EWR and ATL)
We Recently Announced New Daily Nonstop Service Between
Honolulu And New York JFK
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Agenda
• Network and Pricing Overview
• Geographies
– North America
– Neighbor Island
– International
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Hawaiian Airlines’ Neighbor Island Markets Are Among The Busiest In The U.S.
Rank Market O&D PDEW* Rank Route Daily Departures1 JFK-LAX 3,265 1 LAX-SFO 472 LGA-ORD 2,589 2 LGA-ORD 423 LAX-SFO 2,491 3 LAS-LAX 374 JFK-SFO 2,315 4 JFK-LAX 335 ATL-LGA 2,044 5 BOS-LGA 326 FLL-LGA 1,910 6 ATL-LGA 307 HNL-OGG 1,816 7 ACK-HYA 298 LAS-SFO 1,608 8 LAX-PHX 299 MCO-PHL 1,593 9 HNL-OGG 29
10 EWR-MCO 1,517 10 PDX-SEA 2811 SAN-SFO 1,435 11 MSP-ORD 2712 HNL-LAX 1,430 12 DCA-LGA 2713 JFK-MCO 1,428 13 ATL-DFW 2714 DEN-PHX 1,395 14 LAX-SAN 2615 LAX-ORD 1,392 15 LAX-ORD 2616 LAX-SEA 1,388 16 BOS-DCA 2617 HNL-ITO 1,348 17 DFW-ORD 2518 DEN-LAX 1,345 18 ANC-ENA 2519 BOS-SFO 1,320 19 ATL-ORD 2420 LAS-LAX 1,312 20 ATL-MCO 2421 DEN-LAS 1,254 21 LAS-SFO 2422 SEA-SFO 1,235 …23 HNL-LIH 1,233 25 HNL-LIH 24… 30 HNL-KOA 2330 HNL-KOA 1,197 69 HNL-ITO 16
* PDEW = Passengers Per Day Each Way
Source: USDOT O&D survey and T100, OAG schedules19
0%
20%
40%
60%
80%
100%
HNL-OGG HNL-LIH HNL-KOA HNL-ITO KOA-OGG* LIH-OGG ITO-OGG HNL-MKK HNL-LNY
Hawaiian
Other
Island Air
Go! Mokulele
Hawaiian Airlines Has Established A Solid Presence In Its Neighbor Island Routes
0%20%40%60%80%
100%
HNL-OGG HNL-LIH HNL-KOA HNL-ITO KOA-OGG LIH-OGG ITO-OGG HNL-MKK HNL-LNY
Hawaiian
Other
Island Air
Go! Mokulele
OnboardPAX Share
(YE1Q2010)
Average Daily Freq. Share (Oct. 2011)
1,952k 1,450k 1,322k 1,138k 219k
29 24 23 16 18
* For KOA-OGG route, ‘Other’ refers to Pacific Wings
Source: USDOT T100, OAG schedules20
Our Neighbor Island Network Is A Source Of UtilityFor The Entire Industry
Virtually every airline serving Hawai‘i has significant interline traffic with us
Seven codeshare partnerships include several of our long haul competitors
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VFR / In-StateLeisure
Origin Dest. Flight # Depart Arrive
Business Travelers
HNL OGG 206 5:05 5:41HNL OGG 106 5:17 5:53HNL OGG 114 6:34 7:10HNL OGG 156 7:33 8:10HNL OGG 116 7:59 8:36HNL OGG 146 8:32 9:09
OA Asia / Pacific Connections
HNL OGG 520 9:35 10:12HNL OGG 256 10:41 11:18HNL OGG 126 11:06 11:43HNL OGG 328 11:30 12:07
HA Connections
HNL OGG 166 12:40 13:18HNL OGG 336 13:23 14:02HNL OGG 136 14:07 14:46HNL OGG 226 14:45 15:24
OA (AA/UA/CO/DL) Domestic Long-haul
HNL OGG 334 15:24 16:01HNL OGG 544 16:23 17:00
Business Travelers
HNL OGG 236 17:14 17:51HNL OGG 266 17:38 18:15HNL OGG 194 18:15 18:52HNL OGG 556 19:37 20:14HNL OGG 596 20:16 20:53HNL OGG 516 21:55 22:32
Example: HA Honolulu-Maui Schedule – October 11, 2011
Each Neighbor Island Route Serves Multiple Customer Segments
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• For most cities beyond narrowbody range, nonstop Neighbor Islands flights are difficult to support economically (for us and competitors)
• Our network provides an attractive connection option for these itineraries
OGG LIH KOA ITO
YVR YVR YVR
DFWORDLAX LAX LAX LAXSFO SFO SFO SFODEN DEN DENOAK OAK OAKPHX PHX PHXSEA SEA SEASJC SJC SJCPDXSANSMFSNA
-- -- -- --
-- -- JAL tried, cancelled --
Hawai‘i Visitors1 Non-Stop Service2
YYC
Our Neighbor Island Network Is An Anchor For Longer-haul Routes - Our Own And Other Carriers’
1 YEAug2011 2 All carriers
Source: Hawai‘i DEBDT, OAG schedules (Oct. 2011)
US West
US East
Japan
Canada
Other
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
in T
hous
ands
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Agenda
• Network and Pricing Overview
• Geographies
– North America
– Neighbor Island
– International
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While Some International Markets Have Matured, Other New And Existing International Markets Provide Attractive Growth Opportunities
• Widebody service
• Rising affluence will drive new sources of visitors
• Gradual loosening of visa requirements facilitates visits
• Weaker US Dollar makes Hawai‘i more affordable
• Our efficient twin-engine aircraft are well suited for these markets
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* CAGR = Compound Annual Growth Rate
Source: Hawai‘i Tourism Authority
-3% 12% -1% 11% 2% 22% 8%CAGR*
‘06-’11(p)
1,174
466
374
178116 95 74
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
Japan Canada Other Australia Europe Korea China
in T
hous
ands
International Visitors To Hawai‘i, YE3Q2011
Hawai‘i Is An Established Destination For International Visitors, But Many Source Markets Are Far From Mature
1,174
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
0
500
1,000
1,500
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(p)
Visitors Seats
Japan-Hawai‘i Visitors And Scheduled Seats
Annual Visitors(in Thousands)
Average Daily Seats
The Long-term Decline In Japan-Hawai‘i Demand Has Stabilized And Airline Capacity Is Tighter
Source: Hawai‘i DEDBT, OAG Schedules (Oct. 2011)
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
OtherNagoyaOsakaTokyo
Japan-Hawai‘i Average Daily Seats
Carriers Have Consolidated Hawai‘i Capacity At Tokyo, Leaving Regional Japan Cities Underserved
Note: Chart does not reflect launch of new HNL-FUK services (DL beginning Dec 28, 2011, HA in Apr. 2012)
Source: OAG schedules (data pulled October 2011)28
0.90
0.95
1.00
1.05
1.10
1.15
1.20
JPY CNY AUD CAD KRW
1.00
Currency Appreciation In Visitor Source Markets Provides Additional Support For Market Entry
Dollars Per Foreign Currency UnitsIndexed To 10/25/09 = 1.00
A weaker dollar boosts the value of foreign point-of-sale revenue and makes Hawai‘i a more attractive foreign tourist destination
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Manila
Sydney
Hnl
San Francisco
Los AngelesLas Vegas
Pago PagoPapeete
Portland
PhoenixSan Diego
SacramentoOakland
San Jose
Maui
Seoul (Incheon)
Tokyo (Haneda)
Osaka (Kansai)
Fukuoka
Pago PagoPapeete
Seattle
Oakland
San Jose
Taipei
Hong Kong
Singapore
Melbourne
Brisbane
Shanghai
Sapporo
Beijing
2010 Metro Population
1m 3m 5m 7m 20m
Major Markets With Limited Or No Nonstop Hawai‘i ServiceToronto
Montreal
Washington, DC
Boston
MinneapolisDetroit
Philadelphia
St Louis
Top US Markets With NoNon-stop Service
Auckland
New York
HNL
Large Markets With Limited Or No Nonstop Hawai‘i Service Provide Ample Growth Opportunities
Source: The Economist, US BEA, Board Of Trade Metropolitan Montreal, Govt Of Japan, Govt Of Australia, Calgary Economic Development
* Destinations Are Within Operating Range Of Existing HA Aircraft
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Visa Restrictions Play An Important Role In Several High-Potential Hawai‘i International Markets
• Australia, Japan, Korea, New Zealand and Singapore are Hawai‘i’s only Asia Pacific source markets in the U.S. Visa Waiver Program (VWP)
• Korean visitors to Hawai‘i increased 60% after Korea’s VWP entry, and are projected to grow by more than 26% in 2011
• With low visa refusal rates, Hong Kong and Taiwan are on the State Department’s VWP “roadmap”
• China is unlikely gain VWP status in the near term, but declining visa rejection rates point to its eventual inclusion
– In the meantime, the U.S. is expanding visa processing capacity at its China consulates
U.S. VISA REFUSAL RATE
Country 2006 2010
China 24.5% 13.3%
Hong Kong 4.2% 5.4%
Taiwan 3.1% 2.2%
Indonesia 35.1% 16.4%
Malaysia 11.4% 5.9%
Philippines 37.7% 37.9%
Thailand 12.9% 13.5%
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In International Markets, We Are Selective In Our Partnerships
• Mutual codeshare on both carriers’ HNL-ICN flights• Codeshare on HA neighbor island flights• Codeshare on KE ICN-Asia flights
• NH code on HA neighbor island flights• HA code on NH HNL-Japan and intra-Japan flights
• DJ code on HA HNL-SYD and neighbor island flights• Interline on DJ’s Australia/NZ flights beyond SYD
• Recently signed SPA* provides HA entry into several China markets from other Asia points
* SPA = Special Prorate Agreement
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MahaloQuestions?
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