UAUA Ual Corp. (MM)

The head of Hawaiian Airlines said a new Tokyo service is set to start on Oct. 31 despite the lack of formal U.S. government approval.

Hawaiian, a unit of Hawaiian Holdings Inc. (HA), was the surprise winner of one of four coveted slots to start services from the U.S. to Haneda. Tokyo's downtown airport is a favorite with business travelers and will reopen to international flights when a new runway opens in October.

Japan is the largest overseas market for Hawaiian tourism, and the airline's planned Honolulu-Haneda service is part of an international expansion by the airline with a new fleet of Airbus A330s.

"It's a little curious," Hawaiian President and Chief Executive Mark Dunkerley said of the limbo left by waiting for the Department of Transportation to formalize its tentative approval.

Dunkerley said final approval for the Haneda service had been expected before an annual industry meeting in June that allocates airport takeoff and landing slot times.

DOT said a decision is expected "shortly." One wild card is whether United Airlines' parent UAL Corp. (UAUA) and Continental Airlines Inc. (CAL) appeal after missing out on Haneda rights. Delta Air Lines. (DAL) and AMR Corp.'s (AMR) American Airlines picked up the other three slots.

Hawaiian Airlines has seen the number of inbound tourists rise for six straight months, and the airline suffered less during the recession than did U.S. peers hobbled by vanishing business traffic.

"They're looking fine," Dunkerley said of bookings, with the airline also benefiting from a near-truce in the inter-island market.

The short hops between Hawaiian islands have produced some of the most ferocious competition in the industry, with multiple operators coming and going amid ruinous price wars.

Dunkerley says there has been six to eight months of "capacity stability", and he is sanguine about the prospect of its market-leading position on flights from the U.S. west coast being challenged later this year by the arrival of low-cost specialist Allegiant Air.

Allegiant acquired six Boeing Co. (BA) 757s that it plans to fly from the west coast, most likely from smaller cities not currently served.

Dunkerley said Hawaiian is used to competition on the west coast routes, and some analysts believe Allegiant's entry could even help the carrier by providing it with passengers for its inter-island services.

Carrying other airlines' passengers between islands when they arrive is one reason Hawaiian hasn't joined one of the global alliances, though Dunkerley said it has been approached in some form by all three.

The "third leg" of Hawaiian's strategy alongside the U.S. mainland and inter-island markets is its international expansion.

Tokyo will be its fifth overseas destination, joining Sydney, Manila, Tahiti and American Samoa, and flights to Seoul will start in January.

The international expansion will be led by the A330s, though the two that have arrived already are being used on services to Los Angeles and Las Vegas. It plans to receive eight more through 2014 and also has six A350s on order for delivery from 2017.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com

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