The inventor of the DigEplayer wants to transform a two-plane Part 135 charter operator in Hawaii into a scheduled carrier flying 10 Piper Chieftains around the islands.

Bill Boyer, the former ramp attendant at Alaska Air [ALK] who invented the portable video player that is appearing on many airlines as an inexpensive alternative to live TV programming, purchased on Oct. 1 Mokulele Flight Service, based in Kialua-Kona, Hawaii. On Nov. 7, Boyer filed an application with the U.S. Department of Transportation (DOT) for a certificate to operate a scheduled airline providing inter-island travel.

Boyer and his partner, James Walden, formerly an attorney in the Seattle area, are the second party to take steps to launch a new regional carrier in the islands. In October, Mesa Air Group [MESA] announced plans to form a separate unit, which would fly regional jets on the heavily traveled inter-island routes (RAN, Oct. 3; Oct. 31).

Four commercial carriers currently serve the islands: Aloha Airlines, Hawaiian Airlines [HA], Island Air and Pacific Wings.

Walden told Regional Aviation News that Mokulele would compete head-to-head with Pacific Wings on nearly every one of its routes.

Mokulele faces a major obstacle before its takes to the air - a non-compete agreement Boyer signed with Pacific Wings on March 3.

Convinced that Boyer's plans for Mokulele violates the agreement, Pacific Wings president Greg Kahlstorf has turned the matter over to Washington, D.C., attorneys Patton & Boggs to determine his next step. Pacific Wings may file suit to stop Mokulele, Kahlstorf told Regional Aviation News, or at least file an objection with DOT against Mokulele's application.

Walden had expressed confidence that his application would gain quick DOT approval so that Mokulele could begin flying by Jan. 1. Walden could not be reached for further comment.

Kahlstorf said that Boyer last spring offered to buy Pacific Wings. When the overture was rebuffed, Boyer detailed his plan to fly used 50-seat RJs in the Hawaiian market under the Pacific Wings livery. So that they could discuss a potential venture, Kahlstorf insisted that Boyer sign a confidentiality and non-compete pact, which he allegedly did. Over the summer, Kahlstorf said, he freely disclosed his carrier's trade secrets.

"Our 17 secret herbs and spices were in a PowerPoint presentation and I gave it to [Boyer] after they signed a three-page agreement," Kahlstorf said. "I sent him a route map with proposed jet and Caravan routes."

While Kahlstorf said he did not shut the door on the venture, the next thing he heard was that Boyer purchased Mokulele, a charter and tour operator founded in 1999 by Rebecca Inaba. According to the DOT filing, Inaba will remain with the firm.

Kahlstorf doubts that the Hawaiian inter-island market can support two new operators. Walden and Greg Stevens, the chief operating officer of the yet-to-be named Mesa unit, both contend there are growth opportunities for all in the 50th state.

Mokulele now has two Chieftains, but Walden said it has enough business that it could handle eight to 10 aircraft. Mokulele will fly its initial routes from Kona to Honolulu and Kahului. By March 1, Mokulele will have service to 10 airports within the islands. Most destinations will be served with three or four daily round trips.

Mokulele is currently flying two leased Chieftains. There are four more leased Chieftains en route to Hawaii from the mainland, which have been painted in the Mokulele livery. Walden would like the carrier to have 10 planes on duty with four more in reserve for maintenance periods. "The Chieftain is the least expensive aircraft we can lease for that size," he added.

With the 9-seat Chieftains, Mokulele would be able to service airports that Island Air and Mesa will not be able to with their larger aircraft.

"We see Wings as our primary competition. Most, if not all, the routes will overlap. We think we can offer a better product. We will offer the seats for 20 to 30 percent less than what they do. We think we can be profitable and continue those types of fares throughout the islands," Walden said, noting the charter operator is now profitable.

"Island Air already undercuts Pacific Wings' fare by two-thirds," Kahlstorf said. "We have held the line on price. The people who fly Pacific Wings are not flying on price. "

>>DOT Docket: OST-05-22935. Contacts: James Walden, Mokulele, (808) 756-0395; Greg Kahlstorf, Pacific Wings, (808) 873-0877; Greg Stevens, Mesa, (316) 944-2511.<<