Alaska Airlines Seals Hawaiian Airlines Deal: Surprising Concessions And Their Impact On Your Travel – View from the Wing

Alaska Airlines Seals Hawaiian Airlines Deal: Surprising Concessions And Their Impact On Your Travel

by Gary Leff on September 17, 2024

The Department of Justice didn’t oppose Alaska Airlines buying Hawaiian. That meant the Department of Transportation would allow it, but it was clear they were going to require specific concessions. That’s all happened. Alaska can now close the transaction to acquire Hawaiian Airlines.

• This is an incredible deal for Hawaiian shareholders.
• It’s a pretty good deal on net for Hawaiian’s customers, although they could see fewer long haul services from Honolulu in the future (which might have happened anyway – Hawaiian was a financially weak carrier).
• It’s of questionable value to Alaska, which will acquire an incompatible fleet and experience in long haul operations.

In introducing conditions that the Department of Transportation was extracting from Alaska in exchange for approval, Transportation Secretary Pete Buttigieg referred to the “BIden-Harris” administration, underscoring that this is very much political and part of a campaign of middle class pocketbook issues.

• Maintain service levels where Alaska and Hawaiian compete, but there are plenty of exceptions and loopholes.

  Ultimately there are a handful of West Coast – Hawaii markets that both airlines serve. Today United is the biggest carrier between the mainland and Hawaii, and Delta, American and Southwest are all big players. There’s no lack of competition on vacation routes to Hawaii, and few barriers to entry. This is just not a real competition concern.

• Commit to current intra-Hawaii flights. This means continuing losses for Southwest Airlines. If Alaska could cut seats on some of these routes, it might be sustainable for Southwest to continue to compete. But since Alaska won’t be allowed to cut back, maybe Southwest will? The irony then is that this could eliminate much intra-island competition.
• Keep interline agreements, which is something United wanted. United can fly their own planes between the islands, but they’d rather sell space on their flights to Hawaii and then flight segments on Hawaiian. This, too, may ultimately limit competition. Once Hawaiian and Alaska do merge onto a single operating certificate it will be interesting to see whether the interline is limited to legacy Hawaiian Airlines routes or systemwide.
• Miles must transfer from Hawaiian to Alaska at a 1:1 ratio. This was always going to happen anyway. They are also requiring that they do not devalue miles, status or benefits earned through either program. This is largely posturing.
• Require that Hawaiian Airlines adopt the more consumer-friendly customer protections that are in place on Alaska, including free guaranteed family seat assignments and flight delay and cancellation compensation. They will also reduce the cost of checked bag fees and change fees for active duty military and their families while traveling on orders. These are minor items to Alaska in the context of getting the deal done, and are small ball pickups that the Administration can claim victory over.

One Mile at a Time “impressed by how thoughtful and reasonable these requirements are from the DOT.” I’m surprised by how petty and milquetoast some of them are.

They wanted to put teeth into the intra-Hawaii service guarantees. That’s the only piece of this that really matters, although it could wind up backfiring depending on Southwest’s competitive response. Beyond that are several taxes on the deal, but I wonder whether DOT got the right things.

No expiration of miles? That may or may not be the right business policy, but it shifts program spending from savvy frequent customers to infrequent ones. Family seating guarantees on Hawaiian flights as a condition of the deal? That would happen once they’re ultimately on the same operating certificate anyway.

As Alaska says, “these commitments do not impact the synergies of the deal.” They are either the things Alaska was already on board with to begin with, and was going to do anyway, or are immaterial.

It’s the final green light, though, to go for Hawaiian Airlines miles either as a transfer partner or via new credit cards, with a far firmer footing that those points will eventually become Alaska miles. And don’t forget that Hawaiian co-brand credit card customers can transfer points between accounts for free, so get your friends and family to sign up too… move the miles into your Hawaiian account… and they will eventually be your Alaska miles.

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