Mesa Settles Aloha Lawsuit, Wants to Use Aloha Name

There was an odd ending to the long-standing case of Aloha Airlines against Mesa over the weekend. You may remember that Aloha went out of business earlier this year, but their case against Mesa was still in litigation until now. Now that it’s been resolved, Mesa is going to try to use the Aloha name for its go! subsidiary in Hawai’i. This is a very bad idea.

If you haven’t been following the ongoing interisland saga, you can catch up on it with some of my musings on this subject on The Cranky Flier. In short, Mesa saw an opportunity to do some interisland flying and jumped on it under the name “go!.” I don’t know anyone who thought there was room for three interisland players, so the weakest one, Aloha, ended up folding (not entirely due to go!’s entry, but that played a significant part). There were lawsuits flying around the islands as both Hawaiian and Aloha ended up suing Mesa for the way it entered the market. The Hawaiian lawsuit was settled for a large sum of money and now the Aloha one was been settled as well.

The terms of the Aloha agreement are pretty simple. Mesa agreed with the former controlling shareholder of Aloha to the following:

• Mesa will not admit any wrongdoing
• Mesa will pay $2 million in cash
• Mesa will issue common stock worth 10% of the airlines existing market capitalization
• Mesa will provide pass travel benefits to former Aloha employees on interisland routes
• If the shareholder is able to purchase the Aloha name in bankruptcy, it will be licensed to Mesa

As you can see, most of these were concessions from Mesa with the exception of the last piece. It’s very clear what Mesa wants to do with that name. As CEO Jonathan Ornstein says, “We are extremely pleased to resolve all claims put forward in this litigation and look forward to re-branding service under the Aloha name in the near future.”

I cannot figure out why Mesa would ever want to do this.  go! is already reviled by many Hawaiians who see the airline as an outsider that came in to kill the local airlines. It’s an image that go! has had to battle ever since it started. The absolute last thing that Mesa could do to try to heal old wounds is to pick apart the carcass of its former rival and slap that name on its planes.

I can understand the idea. Aloha was a popular airline around Hawai’i, and go! is not. So why not try to co-opt that previous halo around the name and use it for good? The problem is that it almost never works. New airlines that have used defunct airline names have nearly always failed. (Frontier may be the only exception.) Remember the new Pan Am (#2 and #3)? How about Braniff (#2 and #3 as well)? The names always conjure of feelings about the old airline and the new experience rarely if ever lives up to that name.

So, go! can try to rebrand itself as Aloha, but it won’t meet the expectations that are tied to the name. To make things worse, all the bad blood that already exists between Aloha loyalists and go! will now be boiling with anger. In addition, all the costs of rebranding have to be incurred by an airline that is not exactly the picture of financial health right now.

I just can’t see how this move makes sense.