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Southwest Airlines’ expansion into Hawaii’s market won’t be complete until early next year, but the state’s biggest carrier, Hawaiian Airlines, is already starting to feel a hit.

Stock of the airline’s parent company, Hawaiian Holdings Inc., has dropped nearly 43% in the past year, to about $23 per share from a peak of about $41 in early September 2018. The concern among investors: competition from Southwest.

The Dallas-based discount carrier is known for having a broad impact on fares in markets where it operates, and it seems Wall Street expects Honolulu will experience “the Southwest Effect” as well. Southwest will reportedly offer $29 interisland fares in January, .

The specter of such low fares, while potentially good for consumers, seems to be weighing on the stock price of one of the state’s largest employers.

“Southwest management believes that passenger fares to Hawaii are too high, and has typically reduced fares by 15-25% when entering new markets,” John Staszak, an equity analyst with Argus Research Co., wrote in a recent analysis. “In addition, Hawaiian Holdings’ costs have recently been rising at a 6-7% pace.”

The Motley Fool’s Adam Levine-Weinberg concurred, saying Hawaiian’s profitability has been hit by a “surge in capacity on mainland-Hawaii routes and more recently, on interisland routes.”

“With Southwest Airlines planning to resume its growth in Hawaii in early 2020, shares of Hawaii’s hometown airline recently fell to a multiyear low near $23,” Levine-Weinberg wrote.

Will Another Shoe Drop Soon?

There’s another unknown that has Wall Street asking questions: the effect that Honolulu’s recent measure cracking down on short-term vacation rentals will have on the tourism market.

In June, Mayor Kirk Caldwell signed a bill allowing the city to impose fines up to $10,000 a day on people who advertise the illegal vacation units on sites like Airbnb. Although the number of such rentals is difficult to estimate, the city has estimated there are 8,000 to 10,000 on Oahu.

Other islands have also implemented new restrictions on short-term rentals.

Hawaiian has acknowledged that the illegal rentals have significantly contributed to the surging numbers of tourists visiting Hawaii, which is expected to reach 10 million in 2019.

Asked what impact the bill could have on Hawaiian during a with analysts on July 30, the company’s chief executive, Peter Ingram, said the company simply didn’t know because the unlicensed vacation rental market is “a fairly opaque market.”

The new bill could reduce demand from North America, Ingram said.

But Ingram added, “We’re optimistic that, based on our strong position in the market and our revenue premium and the breadth of our service and how strong our brand is that we will be able to withstand any of that pressure better than any one of our competitors.”

Tourism data show the bill has had little effect on tourist traffic so far. The measure took effect Aug. 1.

For the month, there was no discernible drop in passenger traffic, according to data from the . Likewise, an for September and November produced by the Hawaii Tourism Authority shows no major decline in seats.

But such data have limits, said Jennifer Chun, the HTA’s director of tourism research. For example, she said, the seat outlook is based on information from the airlines and could change.

“If they make a decision tomorrow to change what they’re doing, we’re not going to see it here,” she said.

Passenger numbers, Chun said, do not necessarily tell the whole story. They only show the numbers of people who came, not people who were discouraged from coming to Hawaii.

“We will never see that in the passenger count,” she said.