Well, this isn’t something I was expecting: Alaska Air is acquiring Hawaiian Air. There’s no doubt that Hawaiian Air is struggling to recover from the pandemic. Such a combination could provide great synergies for both, though critical considerations, such as disparate fleets, led me to believe such a combo wouldn’t happen. I was wrong.
Seriously. I woke up to a barrage of messages about the news on Sunday morning. And, honestly, I was, and still am in a bit of shock over the announcement. I knew Hawaiian wasn’t in a good place, and, honestly, there doesn’t seem to be a lot of options for them to dig themselves out – at least not in the near future. The declining quality of service doesn’t necessarily help, either. So an acquisition or merger wasn’t a surprise to me, but it happening with Alaska is.
Alaska Air is Acquiring Hawaiian Air
As these things go, the decision for Alaska Air is acquiring Hawaiian Air is just that. While we know a little bit about what’s going on, it’ll be quite some time before we learn the full details – both airlines probably don’t even know how things will completely play out. And that’s totally normal. However, there are some critical piece of info that we do know.
Hawaiian Airlines Brand Will Go On
What was made abundantly clear in the press release is that Hawaiian Airlines will survive the merger as its own brand. Alaska Airlines likely sees that there is far too much brand equity there to toss out the door. Of course, that’ll make things interesting if and when they start cross-fleeting. Can you imagine seeing a Hawaiian A321neo bouncing around pre-merger Alaska’s network as an “Alaska Air” flight?
Of all the news that Alaska Air is acquiring Hawaiian Air, I’m sure this piece of it is the one that concerns the traveling public the most. What is going to happen to HawaiianMiles? And the answer to that is that HawaiianMiles, along with Alaska Mileage Plan, are both going away. According to the FAQ:
The expanded airline will maintain both industry-leading Alaska Airlines and Hawaiian Airlines brands while integrating into a single operating platform and loyalty program, enabling the remarkable service and hospitality of each to be enjoyed by passengers into the future with continued excellence in operational reliability, trust and guest satisfaction for which both companies have been consistently recognized.
Of course, this means that the value of your miles in either program may change. Will that be for the better or worse? It’s hard to say at this point. That’s why, if you have any plans to use your points in either of these programs, you should do so before the programs combine – just in case. That’s not to say the value couldn’t improve, but why chance it?
As a point of comparison, here’s what award redemptions look like between Hawaii and the Continental U.S.:
- Alaska Mileage Plan
- Economy: from 30,000 miles roundtrip
- First Class: from 80,000 miles roundtrip
- Hawaiian Miles
- West Cost
- Economy: from 40,000 miles roundtrip (35,000 for HA World Elite cardholders)
- First Class: from 80,000 miles roundtrip
- Economy: from 50,000 miles roundtrip (43,750)
- First Class: from 80,000 miles roundtrip
- East Coast
- Economy: from 60,000 miles roundtrip (52,500)
- First Class: from 80,000 miles roundtrip
- West Cost
As you can see, there are some similarities here, so I don’t think we’ll see too drastic a change. However, the more I think about the fact that Alaska Air to acquire Hawaiian Air, the more predictions I come up with for HawaiianMiles. But covering them all here would make this already long post exceedingly so. Be on the lookout for a future post from me delving into this in more detail.
Again, though, I wouldn’t putt all of your hopes on a net positive change, so if you have an opportunity to burn miles, especially in sweet spots with either airline, you may want to do so soon.
What happens to both airlines’ co-brand credit cards is probably the vaguest part of this topic. Per the FAQ again:
The transaction will connect Hawaiian Airlines’ loyalty members with enhanced benefits through an industry-leading loyalty program for the combined airline, including the ability to earn and redeem miles on 29 global partners and receive elite benefits on the full complement of oneworld Alliance airlines, expanded global lounge access and benefits of the combined program’s co-brand credit card.
My take is that as Alaska Air is acquiring Hawaiian Air, we may see their credit card offering reduced down to one. This is often what happens in airline mergers, though American did end up retaining both of their pre-merger issuers. Can that happen again, here? Sure. But I wouldn’t hold your breath.
Since Alaska Air is acquiring Hawaiian Air, I’d fully expect to see Hawaiian Airlines become a full fledged Oneworld member. And why not? They’re already closely aligned with Japan Airlines, and they used to be very close with American. Hawaiian can even keep on partnering with Korean Air through all this, as Alaska continues to do so, too. So I wouldn’t expect to see any significant changes here. This might be one area where we see an entirely positive change.
Fleet & Network
This is the part of the news that Alaska Air is acquiring Hawaiian Air that trips me up the most. Alaska Air just finished disposing of its last remaining Virgin America Airbus aircraft, returning it to an All Boeing airline once again. But, now, they’re buying a mostly Airbus airline, and will be reintroducing the A321neo to their fleet, along with the Airbus A330. Again, we don’t know for sure if Alaska intends to cross-fleet, especially since each airline will keep its own identity. If they don’t, then this point is fairly moot. But if they do? That’ll be something, won’t it?
As much as the differing fleet type confounds me, one thing is for certain – the merger will give Alaska Air Group much farther reach that it ever has before. For the first time in its history, Alaska Air will be able to fly guests on its “own” widebody aircraft, and to destinations such as Australia, Japan, Aotearoa, Korea, Rarotonga, and Tahiti. The combine airline will also give Hawaiian customers direct access to destinations destinations in Canada and Latin America. Bringing aboard Hawaiian’s fleet will also give Alaska Air customers access to lie-flat seats on their “own metal” for the first time.
However, mergers are all about creating synergies. The combined airline will own over 50% of all flights between the continental U.S. and Hawaii. That means the Department of Justice could order them to divest some frequencies to preserve competition. Outside of that, though, Alaska may seek to reduce overlaps if the demand isn’t there, or they could (and this is what I’m hoping) change the schedules to spread departure times across different times of day. It’s also worth noting that Honolulu will become a primary hub for Alaska post-merger, joining Seattle, Portland, and Anchorage.
Alaska does also seem to think that, together, the two airlines will be able be “more relevant” in California. That’s something I thought their merger with Virgin America was supposed to do, but didn’t.
Of course, the biggest fleet question as we learn Alaska Air to acquire Hawaiian Air is the 717. In its investor presentation, Alaska states that “[the] 717 fleet has nearly half its cycle time remaining, and could even be replaced by the 737.” Say what, now? I thought Hawaiian said the 717 fleet was close to cycling out, and that they’d need to begin replacing them by 2030? This also flies in the face of Hawaiian’s current research, as they excluded the 737 from consideration. That said, Alaska Air is constantly bringing on new 737 MAXs, which means they could easily reassign outgoing 737 NGs to Hawaiian for inter-island ops.
Personally, I think inter-island ops would be better served with Embraer E195s – similar to the E175s Alaska uses with regional subsidiary Horizon.
Alaska also notes that, as reported on earlier, Hawaiian’s leased A330s are all coming up on renewal, giving them “flexibility” in widebody capacity planning. They also note that the combined fleet gives them the opportunity to cross-fleet wide-body aircraft on high-demand routes. Again, that’ll be interesting.
One a final fleet note, Alaska notes:
We are evaluating the unit economics of each type and the potential costs of fleet exit—any decision will ultimately be rooted in maximizing customer experience and economic returns for our shareholders.
Since Alaska Air is acquiring Hawaiian Air, it makes sense that the surviving corporate entity will be headquartered in Seattle Washington, headed by Alaska Air CEO Ben Minicucci. However, they state that Hawaiian’s Honolulu headquarters will remain with “local leadership,” but in what capacity remains to be seen. That’s because Alaska also states that an opportunity for the merged company is improving $60 million in labor dis-synergies, while also stating that they plan to retain and grow union jobs in Hawaii.
My take on this is that redundant corporate-level jobs will be cut at Hawaiian. Sure, as alluded to above, some positions will remain. But I think positions in IT, HR, accounting, and more, are all likely at risk. In fact, I hear that Hawaiian is warning non-contract employees that their job security isn’t guaranteed. Of course, this makes sense and is expected in any merger, though I feel for the people that fall into this category.
Another concern regarding labor post-merger is how things like seniority and benefits will change. That’s an argument for the unions to hash out, though, and is a fight that may become public sooner than later, so stay tuned.
I will say, since Alaska Air is acquiring Hawaiian Air, I seriously hope that they get rid of Hawaiian’s Philippines-based call center. Speaking with that call center is always beyond frustrating. They can never seem to understand me, and I always have a hard time understanding them.
Though the decision has already been made, the fact that Alaska Air is acquiring Hawaiian Air isn’t a done deal. While we know that Hawaiian shareholders will be voting on the acquisition in Q1 2024, I don’ think that’ll be an issue. After all, Alaska Air is offering to pay nearly 4x more than Hawaiian’s shares were worth on Sunday. The larger hurdle, then, is the Department of Justice.
While I touched on the DOJ earlier, that was assuming that they approve the purchase at all. But the Biden Administration’s DOJ is anti-merger, and for good reason – consolidation has wiped out a lot of competition. That said, Hawaiian is bleeding to death, so they could be forced into a merger at some point anyway. I’m not saying that would necessarily happen, but Hawaiian hasn’t been able to break even for the past three years. It’s not looking so good.
Of course, as I mentioned earlier, since Alaska Air is acquiring Hawaiian Air, their unions will need to approve the terms of the merger. This can be just as complicated as dealing with the DOJ, as you need to appease every single employee group, which means lining up work rules, benefits, seniority, etc.
As I’m sure everyone already knows, this isn’t going to be a quick process. Though we know Alaska Air is acquiring Hawaiian Air – or, plans to at least – we know there are a lot of hurdles ahead. As a result, executives estimate that it’ll take 12 to 18 months for the acquisition to close. That’ll place us in Q4 2024 to Q2 2025. So if you want to burn miles under the current programs, you’ll want to do it within the next year.
This is a bit more difficult to discern, but I suspect there are several reasons why Alaska Air is acquiring Hawaiian Air. On Hawaiian’s side, they’re continuing to bleed money, even as all their competitors are returning record profits. While this is partially due to depressed Japanese demand, along with increased operating costs, I’m sure another big reason is Southwest Airlines. After all, Southwest has been doing an excellent job of opening new routes in direct competition with Hawaiian.
But the focus isn’t all on Hawaiian. Alaska was likely looking for an acquisition target to help it better compete with Delta. After all, Delta came into Seattle guns blazing, to take Alaska’s spot as Seattle’s hometown airline. And they’ve done an excellent job of that by aggressively building a global hub in Seattle, while also becoming the airline of the Seattle Seahawks.
Another reason Alaska Air is acquiring Hawaiian Air is to grow. They are primarily a North American airline today, which is mostly due to flying only narrow-body aircraft. But by picking up Hawaiian, they instantly gain access to a wide-body fleet with enough range to fly across the Pacific. The 787 even opens up direct routes to Europe. So you can see how larger aircraft could be a game-changer for Alaska. However, as I covered above, there are a lot of considerations for this to happen.
Alaska Air is Acquiring Hawaiian Air, Final Thoughts
With news that Alaska Air is acquiring Hawaiian Air being such fresh news, there’s a lot of questions that we don’t have answers for yet. And the reality of the situation is that we won’t have answers to these questions for quite some time. However, as I’ve said a couple of times before, if you have plans to use HawaiianMiles or Alaska Mileage Plan miles between now and mid-2025, you might want to put those plans into motion as soon as you’re able to. Again, while we could get a fantastic new loyalty program, we may also get one that offers far less value, so why take chances?
That said, we’ll likely find out more bits of info here and there throughout the 12 to 18-month process. And, again, that’s even if the merger gets regulatory approval, which is far from guaranteed.
Personally, I’m excited that Alaska Air is acquiring Hawaiian Air. I’m hoping that they can finally give Hawaiian the management and resources they need to become a truly great airline. Does Alaska have its own problems? Sure. But I think they do much better on so many levels. So we’ll see. I do genuinely worry, though, about non-union employees at Hawaiian, and wish them the best.
At any rate, stay tuned, as I’ll be writing more posts on this topic soon.