When Aloha Airgroup Inc. landed in bankruptcy court yesterday it was of little surprise to those who've tracked the interisland airline business over the past 25 years.

Any time three airlines try to compete with each other in the interisland market, it typically results in a bankruptcy.

"It just seems the marketplace cannot support three no matter what," said Bonnie Gutner, owner of Kailua's Travel Inc. and a travel agent here for 30 years. "It's been tried so many times before and it's never worked."

In Aloha's case, the entry of go! airlines in the middle of 2006 and ensuing fare wars, plus record high oil prices, hastened its filing.

Aloha and Hawaiian each have taken trips to bankruptcy court during the past 15 years, while they've watched competitors fly in and out of their marketplace.

Mid Pacific Airlines lasted seven years in the 1980s before succumbing to financial problems, while Mahalo Air lasted four years before filing Chapter 11 bankruptcy in 1997. Discovery Airways flew for a short period in the 1990s before having to fold because of regulatory problems.

Then came go!, backed by Arizona-based Mesa Air Group Inc., offering one-way tickets at $39 at a time when Aloha and Hawaiian had been charging about twice as much. Aloha and Hawaiian have had to chop fares to remain competitive.

"It shouldn't be particularly surprising," said Mitch D'Olier, who headed Hawaiian Airlines for two years during the early 1990s and now is president and chief executive officer of Kane'ohe Ranch Co.

He said that beyond the three-carrier competition the list of negatives for the airlines include a slower economy, a downturn in tourism, higher fuel prices and more and more direct flights by Mainland carriers to the Neighbor Islands.

D'Olier said he expects the market will eventually go back to two carriers and that Aloha might shed leases on some of its older, less-efficient Boeing 737s through the bankruptcy.

"I just feel bad for all my friends at Aloha," D'Olier said. "There's a lot of good people that run that airline every day."

Tourism arrivals are forecast to shrink this year, while over the past 12 months New York spot prices for jet fuel have risen 78 percent, according to Bloomberg L.P. data. Only recently did go! give way to surging fuel prices by raising its standard one-way fare to $49.

And, while there has been an increase in local interisland travel because of the low fares, the market has shrunk from what it once was. State Department of Transportation figures show the number of interisland passengers reached 10.6 million in 1996 and then declined every year until 2005.

Between 1996 and 2006 the number of interisland travelers fell about 22 percent.

Much of this is blamed on the direct Mainland-Neighbor Island flights. That's one reason why Hawaiian and Aloha have expanded with their own Mainland flights.

In the midst of this decline in interisland travel, go! arrived and started a fare war.

"What's happening here is the direct result of go! entering the market place and charging fares that all of the competitors are losing money on interisland," said Peter Forman, a local aviation industry historian and author of the 2005 book "Wings of Paradise: Hawai'i's Incomparable Airlines."

"This is a matter of who's running out of money first."

Forman said he believes that pushing Aloha out of business is go!'s strategy.

"My feeling is Aloha has a viable business here in Hawai'i provided that interisland fares return to a rational level. And at this point Mesa airlines is determining what those fares are," he said.

Gutner, of Kailua's Travel, said some customers will be scared off by the bankruptcy filing, particularly if they are booking flights several months out. She said some of these could be attracted back through low prices.

"I'm sorry to hear that about Aloha," she said. "They have a whole army of loyal customers and we just hope they aren't scared away by the term bankruptcy."

Reach Greg Wiles at gwiles@honoluluadvertiser.com.