Come April 1, Hawaiian Holdings will lose one of its key competitors for inter-island service. Source: go! Airlines.

Shares of Hawaiian Holdings (HA -3.72%) moved more than 4% higher in intraday trading after Mesa Air Group announced plans to shutter its Hawaiian operations on April 1.

The plan specifically eliminates go!, a Mesa subsidiary that's flown some 5 million passengers along inter-island routes since 2006, and leaves Mokulele Airlines and Island Air as Hawaiian Airlines' remaining competition for inter-island travel. (The airline operates more than 165 inter-island flights daily via an extensive fleet of Boeing 717 aircraft.)

Paradise, lost
Why the change? Mesa cited plans to support regional flights for United Continental (UAL -2.52%) and American Airlines' (AAL -2.18%) US Airways brand across the mainland.

"While this was an extremely difficult decision to reach, we believe it is in the best interest of Mesa's long term strategic objectives," said Jonathan Ornstein, Chairman and Chief Executive Officer, in a press release. "Mesa will be placing into service 30 Embraer 175 aircraft with United beginning in June 2014, and is adding 4 CRJ-900 aircraft with US Airways in 2014, having added 9 CRJ-900s in 2013."

Travelers who've booked tickets for flights departing after April 1 but before June 30 will be rebooked on Hawaiian. Those who can't be rebooked, or who have reservations for travel after June 30, can expect a refund.

The irony? Aloha Airlines -- a carrier that had been doing business in Hawaii since 1946 -- opted for liquidation, shuttering operations in 2008 after a costly fare war with none other than go! amid rising fuel prices.

Aloha Airlines was once a fierce competitor in the Hawaii travel market. Source: Wikimedia Commons.

A short course in awful economics
Mesa didn't announce specific layoffs, but there are sure to be plenty. Hawaiian, meanwhile, gets room to raise fares, which explains why the stock is rallying today. Yet investors needn't rush in. Hawaiian is in the midst of a restructuring of its own.

Just recently, the airline decided to end service between Honolulu and Fukuoka, Japan, by the end of June. Earlier, the airline abandoned service to Manila and Taipei in favor of concentrating on serving traffic to and from the U.S. mainland.

There's good reason for this. North America accounted for 47% of passenger revenue in the fourth quarter. Total passenger revenue per available seat mile (PRASM) for the region rose 13%, all while flying with fewer travelers on board. (Load factor dipped 1.5%.)

Whether we can expect inter-island changes based on go! leaving is unclear at this point, but investors aren't wrong to sense a catalyst. In Q4, Hawaiian's "Neighbor Island" routes accounted for 23% of PRASM, which improved 12.7% on a slight increase in load factor. (Up 0.5%, according to the report.)

Flying at reasonable (if risky) heights
So, is the stock a buy? Over the long term, perhaps, especially if it can find a profitable mix of mainland, inter-island, and long-haul international flights without bumping wings with the major legacy carriers. And yet, trading at nearly twice the long-term earnings growth rate analysts expect and no dividends for investors to cash, it's probably still fair to call Hawaiian a risky bet at present levels.