Aloha Airlines halts passenger service

Long-troubled Aloha Airlines, saying it was unable to find a buyer or financing to stay in business, will end passenger service today, grounding the only carrier offering nonstop flights from Orange County to Hawaii.

The Honolulu-based carrier, which had filed for Bankruptcy Court protection less than two weeks ago, announced the move on its website Sunday and said it had canceled today’s flights from Hawaii and several cities in California and Nevada, including service to John Wayne Airport.

United Airlines, which is a code-share partner with Aloha, said it would rebook customers flying on a United ticket at no charge and would offer a one-way discount through April for customers with an Aloha ticket.

“This is an incredibly dark day for Hawaii,” said David A. Banmiller, Aloha’s chief executive. “Despite the groundswell of support from the community and our elected officials, we simply ran out of time to find a qualified buyer or secure continued financing for our passenger business.”

The move does not affect the carrier’s air cargo business, which will continue to operate while a Bankruptcy Court reviews potential bids for that operation. The airline is a subsidiary of closely held Aloha Airgroup Inc.

The airline began offering nonstop flights from Orange County to three cities in Hawaii in 2001 but was immediately hit with slumping air travel in the aftermath of the Sept. 11 terrorist attacks. It filed for bankruptcy protection in 2004 and emerged from bankruptcy reorganization in 2006.

The airline said it was forced to file the latest bankruptcy case because of high fuel costs and unfair competition from Mesa Air Group Inc.

Aloha sued Phoenix-based Mesa Air in October 2006, accusing the competitor of using predatory pricing to gain market share in Hawaii. The suit is scheduled for trial in October. Mesa began offering inter- island service in Hawaii in June 2006.