UPDATE 1-Hawaiian Airlines pilots reach a deal on new contract -union

(Adds more details, background)

CHICAGO, Jan 19 (Reuters) - Pilots at Hawaiian Airlines have reached a tentative agreement with the company on a new four-year contract, their union said on Thursday.

The union, the Air Line Pilots Association (ALPA), said the agreement included an average 32.9% pay increase during the period of the deal. The pilots would also get an average 16.6% pay increase on the date of signing.

ALPA said the agreement also offered a signing bonus, higher company retirement contributions and a new health reimbursement account, and it improved the quality of life for pilots.

A scramble among carriers to staff up to capitalize on booming travel demand has enhanced the bargaining power of pilots.

Analysts at Jefferies estimate the United States is short of 10,000 pilots. This supply-demand gap is projected to last until 2027.

With the industry returning to profitability, pilots argue airlines can pay them more to cover their increased costs of living.

Hawaiian's contract will cover 1,000 pilots. ALPA said its members would vote on the offer for two weeks beginning Jan. 27.

If ratified by the pilots, the contract will become effective on March 2. (Reporting by Rajesh Kumar Singh; Editing by Leslie Adler and Bradley Perrett)