Southwest Airlines burst into the Hawaiian market on Monday with one-way fares from California as low as $49, less than a quarter of the price for the same route on competitors.
Shares of Hawaiian Holdings, parent of Hawaiian Airlines, were down more than 10 percent in early afternoon trading. Hawaiian Airlines serves the islands from the West Coast and offers service on routes between islands similar to those Southwest has planned. Southwest shares were down 1.5 percent.
Southwest flights between Oakland, California, and Honolulu start on March 17, and already the promotional rates are selling out. Service from San Jose, California, to Honolulu and Kahului will start in May, Southwest said.
The low-cost airline last week announced it had finally received the green light from the Federal Aviation Administration to operate its Boeing 737 jets on the long overwater routes, where planes will be far from diversion airports.
Southwest had revealed it would start flying to Hawaii in October 2017 and aimed to start selling tickets in 2018, but the partial government shutdown delayed those plans, as it awaited FAA approval.
The new addition is a big part of Southwest's plan to increase flights 5 percent in 2019. Half of that will come from Hawaii, the airline said in January.
The low-cost airline's debut in the Aloha State could drive down costs for vacations to Hawaii. In markets where the airline has nonstop service, average one-way fares are $45 lower than in cities without those routes, in what's been dubbed the "Southwest Effect," a University of Virginia study found.
The lowest fares are going quickly. While one-way fares start at $49 for the Oakland-to-Honolulu service, a flight search showed some fares in March on that route have already gone up to $99. In comparison, a nonstop on Hawaiian was $218 one way for a connecting flight on the same route on the same day and close to $275 for a nonstop flight.
Southwest plans to fly to the islands from four California cities: Oakland, San Diego, San Jose and Sacramento and fly to Honolulu, Kahului on Maui, Kona, and Lihue on Kauai. The airline will also offer flights between the islands, starting April 28 between Honolulu and Kahului on Maui, and starting May 12 between Honolulu and Kona, with fares starting at $29 each way.