Island Air is no longer isolated, with its service limited to the Hawaiian Islands.

The regional carrier has begun a charter unit offering corporate jet service to the U.S. mainland - or anywhere in the world.

Within three days of giving away a charter trip in a charity auction, Island Air is pricing out nine potential trips, said Rob Mauracher, the carrier's CEO.

The start of the high-end charter service coincides with the imminent arrival of the first Bombardier [BBD] Q400, the activation of nine self-serve check-in kiosks, a Web reservation system and an updated livery.

"We are trying to develop our own brand and recognition for Island Air," Mauracher told Regional Aviation News. "There is some perception in the community that we are nothing more than a puddle jumper. We are flying Dash 8 100s, Q400s. We are flying 92 flights a day. We are trying to bring to the community's attention that we are not a small little airline. It is all part of the re-branding we are involved in."

After more than 15 years operating as part of Aloha Airlines, the regional unit was sold in December 2004 to Gavarnie Holding, a family-owned company. The final details were wrapped up in December 2005 as Aloha began its final preparations to exit bankruptcy. Island Air functioned in 2005 as an independent operation even as the final sale terms were being renegotiated.

Island Air's charter, a Bombardier Challenger business jet, is owned and operated by TWC Aviation and the aircraft is based in Oakland, Calif. "We are the point of sale," Mauracher added.

As part of its new charter operation, Island Air will pick up passengers in a limo and deliver them to the airport. The nine-passenger Challenger can operate out of all the airports served by Island Air, except Kapalua on Maui.

While Island Air introduced the Challenger for trans-Pacific flights, Mauracher said the carrier has already had three inquiries to fly the plane between Hawaiian locations. "We are trying to see how it fits into the flow of the aircraft itself. We only have one aircraft. I was pleasantly surprised to receive these request in the last two days."

If the high-end charters are in demand within the islands, Mauracher said he has been studying the yet-to-be certified very light jets. "I want to see what develops with the Eclipseand Mustang and to see if there is a market here for a high-end air-taxi operation."

At least two young companies are ordering the Eclipse to be the basis for new air-taxi services in the East and Midwest.

There are established charter operations in Hawaii that can arrange corporate jets to the mainland. "We have an advantage," Mauracher said of his new service. "We are very entrenched in the community. We have the structure in place to handle any issue that may arise. We have the market and sales force, which they don't. We have the tie-in with TWC and its business expertise in operating the craft. It is a nice marriage."

The first of two Q400s was expected to arrive in Hawaii this past weekend. Island Air anticipates it will enter service by March 25. The second Q400 is due to arrive in the first week of May.

"We are working with Bombardier to get a third one, but we will go anywhere to get one," he added. Because of the short stage lengths - the average flight is 32 minutes - Island Air ordered the two planes fitted with 78 seats but without two galleys.

At the same time, Island Air is replacing two older 37-seat Dash 100s with two newer ones. With the arrival of the second Q400, the carrier's fleet also consists of 10 Dash 100s.

The new planes will arrive with a new livery and new blue leather seats. Over the next nine months, the existing planes will be updated as they undergo C check engine maintenance.

The Q400s will be dispatched to those routes that now sell out.

"During our peak periods, I am actually spilling traffic to our partners and competitors. These planes will allow us to capture the traffic during the peak seasons," he said. Many flights on Thursday through Sunday are 100 percent sold. "If you looked at the load factors on a weekly basis, we are at a 60 to 65 percent load factor."

In the last year, Island Air broke out of its Aloha Airlines operating mold by abandoning the hub-and-spoke model; all of its routes are now point-to-point. Every month is a new peak with growth averaging 30 percent over the previous month, he said.

In 2005, Island Air had over 600,000 enplanements and it earned more than $43 million in ticket sales. "We were profitable," Mauracher said, without disclosing his profits.

In 2004, the carrier earned about $18 million in ticket sales while carrying less than 200,000 passengers.

With the six airports it serves in the islands, there are 28 possible point-to-point route combinations. At the moment, Island Air serves 12 of these routes. By summer, it will serve 16 routes. Mauracher said that by the summer of 2008, it would fly 21 of the 28 routes.

To reach out to smaller airports, such as those now served by Pacific Wings, Mauracher said Island Air is considering obtaining smaller, Part 135 aircraft.

About 56 percent of Island Air's passengers are Hawaiian residents while the other 44 percent are tourists. The carrier has code-share contracts with Hawaiian Airlines, Aloha, United Airlines [UAUA] and Continental Airlines [CAL].

With many of Hawaii's tourists coming from Asia, Mauracher said the carrier is talking with Asian carriers to establish interline agreements or full code-share pacts.

The new planes, new routes and new paint are not because of the impending arrival of Mesa Air Group [MESA], Mauracher said.

"I don't think Mesa will be a competitor for us. Mesa is really going after Hawaiian and Aloha. Mesa's proposed routes mirror their routes," Mauracher said. "We are now flying point-to-point so you don't have to go to Honolulu or Maui to connect.

"While we don't see Mesa as a competitor, I think they will have a definite impact on yields and drive them down. We are focusing on our expenses so we can be the carrier of choice."

Mauracher did not rule out striking a code-share arrangement with Mesa to carry its customers to some airports that may not be economical with Mesa's proposed 50-seat regional jets.

Mesa has not announced a start date for its Hawaiian service. It has said that it is shopping for used CRJ 200s so that a low lease rate will enable them to be flown profitably on the short stage lengths.

Mesa recently leased space at the Honolulu airport. It has retained Hendrix Miyasaki Shin Advertising and Bright Light Marketing Group to introduce its yet-to-be- named carrier to the state.

With pride, Mauracher noted that with 92 daily flights now, Island Air has fewer complaints than it did in 2004 when it was flying 60 daily flights. In addition, 85 percent of the flights are within five minutes of being on time.

Mauracher credits his employees with the improved customer service response.

In 2004, the carrier had about 200 employees and it had a 24 percent turnover. Today, he said, it has about 440 employees with a 4 percent turnover. To reduce the turnover, the carrier gave its customer service and maintenance personnel a 30 percent raise so they now make a "liveable" salary. "They realize we want them as part of our family. The employees are kept well informed. They know what it costs to operate. They are cognizant of every cost we have. There is now peer pressure to be efficient."

Last year, the flight attendants did not report a single day lost because of a health or safety issue, he noted.

>>Contact: Rob Mauracher, Island Air, (808) 840-2444.<<