Republic Airways Holding Inc. said it will write off more than $5 million from its investment in Mokulele Airlines.

The Indianapolis-based carrier said it will take a non-cash charge in the fourth quarter as its distances itself from the interisland market.

Last month, Republic agreed to merge Mokulele with Phoenix-based Mesa Air Group's go! airline. The deal left Mesa with a 75 percent ownership stake in the joint venture and Mokulele's investors, which included Republic, with 25 percent.

Republic's $5 million writedown underscores financial toll of the recent fare wars, in which Mokulele, go! and dominant carrier Hawaiian Airlines fought tooth and nail over marketshare in the interisland market.

Shares of Republic dropped 13 cents, or 1.6 percent, to close at $8.04 on the Nasdaq market yesterday. Republic yesterday reported a 6.7 percent decline in its third quarter earnings.

Hawaii's slumping economy is leading to an upturn in one area: M&A activity.

Last week's merger between struggling interisland carriers go! and Mokulule Airlines was just the latest in a string of high-profile consolidations brought on by the bleak economy

On Monday, television stations KGMB9, KHNL and K5 will kick off the merger of its newsroom and business operations.

Owners of the the stations, Raycom Media of Alabama and MCG Capital Corp. of Virginia, said the so-called shared services agreement was brought on by a $20 million, or 30 percent, decline in the local television advertising market.

Ownership of  bankruptcy local clothing retailer Hilo Hattie also changed hands earlier this summer while Times Super Markets recently acquired Star Market, in a deal that allows the Times chain to better compete with market leaders Safeway Stores and Foodland.

With Hawaii's economy continuing to struggle, expect to see more mergers and acquisitions. That may mean further consolidation and downsizing.

Interisland fares jumped by more than 43 percent last year in wake of the demise of Aloha Airlines and volatile fuel prices, according one study.

Using data provided by the airlines to the U.S. Department of Transportation, travel industry consultant and aviation buff Kiley Tahara was able to calculate an average annual fare for Oahu to Neighbor Island flights for the past several years.

According to Tahara's study, the typical interisland passenger paid $71.24 each way in 2008.

That was up more than $21 from $49.66 in 2007 when the interisland fare war was in full gear.

In 2006 when Mesa Air Group launched go!, the average interisland fare was $62.09, Tahara said.

(In first quarter 2006 -- or prior to the launch of go! -- average interisland fares were about $73.99, Tahara said.)

Airlines only submit about 10 percent of their itineraries to the DOT so the numbers aren't absolute.

Still, it's the broadest measure we have about how much consumers are paying to travel between the islands.

(Airlines never give you their average fares. When carriers cut fares or raise them, they usually mention the highest or the lowest fare.When they lower prices, they also don't tell you how many seats are available at the low price.)

The findings underscore what local airline executives and rank-in-file employees were warning about the 2006-2008 fare wars: That ticket prices would soar if one of the carriers went belly up.

It also allows you to extrapolate the economic toll of the demise of the fare wars.

About 8 million people fly interisland each year, although a portion of them are what the industry calls non-revenue passengers.

Even if we assume that 7 million of those seats are for revenue passengers, that $21 per person increase translates into nearly $150 million in increased costs for consumers last year.