To say this has been a heck of a news week for Mokulele, which rarely makes the news, is an understatement. Its recent announcement of its deal with Republic and a brief grounding was capped off last week with a lawsuit filed against it by Mesa Air Group. Related Story
Mokulele was grounded for several hours last week by the FAA which found that the airline allegedly failed to provide training for use of life preservers and fire extinguishers during a routine inspection. The airline was forced to cancel eight roundtrip flights, according to Pacific Business News. The discovery was made on Tuesday and Mokulele ceased operations Tuesday night and conducted the training overnight completing it at 5:40 a.m. Wednesday.
Saying Mokulele Airlines owes it $400,000, Mesa Air Group filed suit in U.S. District Court in Arizona against its code-share partner operated its Cessna 208B Caravans as go!Express. MAG charged that Mokulele failed to pay its June and July fuel costs at $171,819.94 and $219,520.16, respectively, according to the Honolulu Star Bulletin.
"We had what I thought was a pretty good partnership with them, but it became clear to us it wasn't quite as good as we thought," Mesa Chief Executive Jonathan Ornstein told the Star Bulletin. "When we do a little digging, we find out that he hasn't paid us for fuel for two months, and we just need to be paid. As everybody knows, at Mesa, we have our own issues. We are not in the position to be another airline's bank. Something like this happens and you really feel like you are getting taken advantage of."
Mokulele President Bill Boyer, during the Republic announcement in which he was asked about unpaid fuel bills told the press, “Jonathan should look at his own operation before talking to other people about their past-due bills." However, he did not comment last week, but said he is working with his legal team on the lawsuit.
Fuel payments have been an issue for some time and Mesa, according to court papers, said that it recently switched from a deal affording Mokulele the ability to pay monthly after being invoiced by Mesa for fuel already used. It then changed it to a pay-at-the-pump plan. Mesa, on the other hand, was paying for fuel seven days before use. During the dispute, Mesa said it would no longer supply fuel but could arrange a short-term agreement if the Hawaiian carrier made good its bills.
In an October 14 letter, Mesa demanded payment by October 15, the day of the Republic announcement, for the June/July invoices but said it never received a response to either the October 14 or a letter sent October 16, according to Ornstein.
The Mesa/Mokulele contract contains a six-month notification clause to terminate the relationship but Mokulele said it expected to continue as a go!Express during the Republic announcement. Mesa has options for replacing the Mokulele service since it still has 10 Beech 1900s which it recently grounded along with Air Midwest subsidiary.
Although Mokulele Airlines President and CEO Bill Boyer insisted to Regional Aviation News that it would continue as a go! Express, Hawaii’s KHON reported that Mesa Ornstein is seething over Mokulele’s new deal with Republic Airways Holdings which puts it into competition with go!.
Ornstein was reportedly blindsided by the new deal. "This was a partner of ours, this is a guy who sat at my table who knew my family who came to my house for parties," Ornstein told KHON. "He owes us almost $400 dollars for example for fuel he hasn't paid for that we fronted him. Here's a guy that when we met had never flown in schedule service, we put him into business, our brand, our marketing, our technology, our money and he sort of built up his business and decided to I guess, I presume, effectively abandon our franchise.”
KHON suggested the Mokulele action is a lesson in what goes around comes around. Airline Analyst Peter Forman noted that Mesa’s actions against Hawaiian and Aloha in which it offered financing and then used confidential information to position itself to complete with the two Hawaiian carriers, makes any complaints against Mokulele weak. Mesa lost a lawsuit brought by Hawaiian Airlines charging breach of a confidentiality agreement and is facing a similar suit by Aloha which was forced out of business with the competition by go! and high fuel prices, paving the way for the Mokulele/Republic deal.