Hawaiian Airlines has a problem: the 717 is very good at its job, it’s getting old, and Douglas doesn’t make airplanes anymore. The 19 717-200s small fleet, aged 18 to 23 years, has been the mainstay of Hawaiian’s interisland fleet since 2001. With few exceptions due to repositioning flights from the mainland, the 717 carries the entirety of the Hawaiian interisland load.

What started with the Douglas DC-9 in 1966, Hawaiian’s interisland jet fleet has relied entirely on legacy Douglas designs. The two Rolls Royce BR715 engines mounted on the aircraft have lived up to the venerable JT8D’s reputation of operating in the ultra-high-cycle environment of the islands – a critical feat not easily matched by today’s engines. Creating one of the highest cycle networks in the world, older 717-200s have already racked up over 75,000 cycles at the airline. Still, the 717 can handle over 100,000 cycles (in true Douglas fashion), leaving room for the airframes to continue service in typical conditions.

Unfortunately for Hawaiian, the salty sea air of the island environment in which the 717s exclusively operate is not considered typical conditions. Further complicating matters is the dwindling fleet of 717s worldwide, limiting spare parts availability for both the aircraft and the engines. Regardless of Hawaiian’s ability to keep the rugged 717s in the air, eventually, they will need to be replaced.

Therein lies Hawaiian’s second interisland problem: No other aircraft can accomplish the combined frequency, turn times, and reliability of the 717. Regardless, the replacement need is inevitable, creating a new aircraft campaign with only two logical options: Embraer’s E195-E2 and Airbus’s A220-300.

This analysis looks at the new aircraft campaign from all angles and deploys our internal deal model to determine which aircraft is expected to have an edge. We then offer our take on other options that are also likely being considered, which do not involve new aircraft at all.

How the model works

The deal comparison model attaches a 12-year net present value difference between two competing aircraft. Each calculation is modeled independently to attribute the category's distinct pricing advantage or disadvantage. Looking over a 12-year horizon, the timeframe is chosen to include various maintenance checks and overhauls, typical financing terms, and to provide sufficient time to allow a proper economic comparison of operating the two aircraft in a realistic operating environment. The numbers are then considered in present values, directly attributed to the value of the overall deal in front of Hawaiian Airlines today.

What the model does not know is any financial offerings attached to the aircraft. Whether these be differing aircraft prices, guarantees, deposits, spare parts, simulator and training offers, etc., this model looks only at the intrinsic value of the aircraft itself. Put another way, the deal comparison model attributes how much better an offer from one OEM will need to be to win the campaign.

For the 717 replacement at Hawaiian, the A220-300 can command a higher price over the E195-E2, but only by the slimmest of margins. Based on our calculations, Embraer must place an offer only $97,000 per aircraft below Airbus's A220 to win a new aircraft deal at Hawaiian Airlines. Based on aircraft values provided by Collateral Verifications, the A220-300 traditionally maintains a value advantage of over $2.3 million over the E195-E2 - a number that aligns with the current backlog.

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