Hawaiian Airlines said it is losing $40 million to $50 million a year as a result of the interisland fare war started by go! airlines and will likely raise its fares if go! leaves.

Hawaiian is suing Phoenix-based Mesa Air Group, go!'s parent, for $173 million in damages, alleging that Mesa used confidential financial data from Hawaiian to set up go! airlines. If Hawaiian wins its case, Mesa may be forced to shut down go!, according to airline analysts.

Under questioning from U.S. Bankruptcy Judge Robert Faris yesterday, Hawaiian CEO Mark Dunkerley said he expects fares to rise if Mesa leaves the interisland market. Dunkerley said he couldn't say how much fares would rise, but said the $19, $9 and $1 one-way offers by go! don't cover the cost of flying and are predatory.

"If Mesa left, I think we'd get back to a ... more rational market and prices would go up," he said.

Mesa Air Group's launch of the new interisland carrier go! took a heavy financial toll on Hawaiian's interisland business, Hawaiian said.

"Pricing actions, specifically the low fares that started at $39, then dropped to $29, then $19, then $9 and then $1 ... had a significant impact," said Hawaiian Chief Financial Officer Peter Ingram.

Ingram and Dunkerley spoke at a hearing on Hawaiian's lawsuit against Mesa.

Hawaiian executives said not only did the fare war hurt, but it also kept Hawaiian from adding new routes on its Mainland operations.

The $40 million to $50 million loss estimate comes on the heels of Judge Faris' ruling last week that Mesa based its decision to start go! on confidential information obtained from Hawaiian while the local carrier was in bankruptcy and seeking a buyer.

Hawaiian alleges that Mesa misused information about Hawaiian's finances, which Mesa was given when it expressed an interest in buying Hawaiian.

Hawaiian also has alleged that Mesa Chief Financial Officer Peter Murnane deleted hundreds of pages of computer records that would have shown that Mesa misappropriated the Hawaiian information.

LOSSES 'SELF-INFLICTED'

Max Blecher, an attorney for Mesa, disputed Hawaiian Airlines' $40 million to $50 million loss estimate, saying much of the local carrier's recent financial woes were "self-inflicted."

In an effort to keep go! out, Blecher said, Hawaiian increased capacity 10 percent and matched the startup's low fares. "Whose fault is that?" he said.

Mesa's chief executive officer, Jonathan Ornstein, previously has argued that he started go! because he believed he could undercut fares charged by Hawaiian and Aloha airlines and still make money.

Mesa has denied it used any of Hawaiian's confidential material, saying it relied on publicly available data about Hawaiian and other local carriers when it planned the startup of go!

Hawaiian's $173 million damage claim covers several years of losses at $40 million to $50 million a year, said Dunkerley, the Hawaiian CEO. go! started its interisland service in June 2006.

OTHER COSTS SOUGHT

Dunkerley also said that Hawaiian is asking Mesa to pay for costs associated with new interisland flights to match go!'s schedule. Hawaiian said it added late-evening flights to each of the Neighbor Islands to match go!'s schedule.

Last year, Hawaiian Airlines' parent company, Hawaiian Holdings Inc., posted a net loss of $40.5 million.

Due to Faris' ruling, the two-week trial is focusing on how much confidential material was used and how much in damages, if any, Mesa must pay.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.