Hawaiian Air’s Matheny on adding capacity where it counts

Perhaps best known for its role in connecting commodity flows between the contiguous United States and the Hawaiian Islands, Hawaiian Air Cargo is doubling down on its intra-island cargo service with the introduction of dedicated freighters. Driven in part by booming e-commerce demand spurring demand for perishable flows into and off the islands, last summer Hawaiian put two ATR 72-200 freighters into service with its affiliate carrier, ’Ohana. By year’s end, this fleet will double. Air Cargo World sat down with Brad Matheny, Managing Director, Hawaiian Airlines, to discuss how the freighters fit into the carrier’s cargo strategy and what’s next for Hawaii’s home carrier.

Q: How is e-commerce impacting the Hawaiian air cargo market?

Matheny: Certainly, with more e-commerce coming in, there’s a lot that moves in on the express carriers. We happen to partner with them on that business, and hope to grow. The perishable market — bringing in products for the hotels, and the resorts here, is a big push for us off the West Coast. About 80% of what we carry from the West Coast is perishable.

Q: What kind of impact are these growing verticals having on Hawaiian’s cargo operations?

M: One of the figures we’re really proud of is the percentage of revenue that we add to the bottom line of the parent. Among our fellow cargo operators in the U.S., we actually put forth the largest percentage of revenue towards the airline – just under 4%, which is well above our U.S. competitors.

Our operation has grown tremendously over the past seven years as our business has almost tripled. A lot of that had to do with our transition from 767s to A330- 200s, which provide better opportunities for cargo.

Q: How will your operation respond to the projected expansion of Hawaiian’s passenger business?

M: In 2021, we begin to take delivery of the Boeing 787 and we’re set to take up to ten over the next two years. The interesting thing with the 787s coming in is that they will expand our widebody fleet. We won’t be retiring A330s at that time, so the widebody fleet will actually be expanding. For us on the cargo side, that certainly means more space and more range.

Q: How did Hawaiian Air Cargo cater to intra-island demand prior to the arrival of the first two ATR 72-200s and why did Hawaiian find it necessary to add freighters?

M: We do have about 170 flights a day with 717 aircraft to the various islands. Over the past couple of years we have expanded the cargo footprint on those aircraft to also include shipments that would tend more to ride on overnight [express] service.

We started using the ATR 42 aircraft on the passenger side of the business to get to the smaller islands and provide better service to those communities and smaller destinations. We were hearing from our cargo customers that they would like to stay on our network, and be able to continue onto our international network and domestic network. Obviously we weren’t able to do that as well with the 717 aircraft type. So we started looking into the opportunities and found that the ATR 72 which has a lot of similarities to the ATR 42, really was a good aircraft to allow us to get into the all-cargo side of the business and to increase our product offering.

Q: How might the freighter operation evolve in the coming months?

M: We began the all-cargo operation last year, and are flying to two destinations out of Honolulu – Hilo and Lihue – which has gone very well, and we’ll be expanding that service later this year with the addition of aircraft number three and aircraft number four. With the third aircraft, we’ll begin flying to Maui and Kona on the Big Island. The fourth aircraft will allow us some incremental, additional flying during the day, as well as providing back up when our planes go through heavy checks.

Q: What other projects are in the pipeline at Hawaiian Air Cargo?

M: A number of innovation initiatives that focus on increasing customer-facing and warehouse-facing mobility. So on the customer side, remote booking capabilities and things such as kiosks at our warehouses location. These will enable customers to come in and either initiate or complete the airway bills, cutting down the time that they need to wait or improving interaction with our cargo agents. On the warehouse side, we’re increasing utilization of handheld devices to be able to update our system at the point where the work is taking place, which removes paper transactions.

We utilize SmartKargo for our cargo operating system. They have a number of these technology features and we’re working very closely with them to adopt these. We migrated to the new platform last year to get ready for those new applications.