Mokulele’s move into inter-island Hawaiian flying in late 2008 has again disrupted the competitive balance in a market that’s proven its inability to handle three carriers vying for a historically price-sensitive market share.

After Aloha Airlines filed for Chapter 11 bankruptcy protection and ceased operations in April 2008 Hawaiian Airlines stepped in to fill some of the void, but its CEO Mark Dunkerley explains the carrier had no desire to completely fill the gap as too much capacity existed in those markets prior to Aloha’s exit.

Hawaiian and upstart go! Airlines remained competitors once Aloha disappeared, and with a 19% drop in interisland capacity during the first through fourth quaters of 2008, Dunkerley notes there was some rationality in the region’s supply.

The landscape changed when Mokulele partnered in November of last year with US regional operator Republic Airways Holdings for the operation of four Embraer E-170s on interisland operations, st

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