Well, it seems like it has been a very long time since we had a merger in the aviation industry, especially in North America. However, it seems Alaska Airlines is at it again after its 2016 merger with Virgin America. However, this time around, Alaska announced that it will be merging with Hawaiian Airlines, subject to regulatory approval. So, what are both airlines saying about the merger, and what do we know and expect to happen?
What do the Airlines say?
Obviously, both companies are highlighting the benefits of the merger and how good it will be for the consumer. According to Alaska Airlines CEO Ben Minicucci:
“This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for West Coast and Hawai‘i travelers…We have a longstanding and deep respect for Hawaiian Airlines, for their role as a top employer in Hawai‘i, and for how their brand and people carry the warm culture of aloha around the globe. Our two airlines are powered by incredible employees, with 90+ year legacies and values grounded in caring for the special places and people that we serve. I am grateful to the more than 23,000 Alaska Airlines employees who are proud to have served Hawai‘i for over 16 years, and we are fully committed to investing in the communities of Hawai‘i and maintaining robust Neighbor Island service that Hawaiian Airlines travelers have come to expect. We look forward to deepening this stewardship as our airlines come together, while providing unmatched value to customers, employees, communities and owners.”
While Hawaiian Airlines President and CEO Peter Ingram added his own spin, stating:
“Since 1929, Hawaiian Airlines has been an integral part of life in Hawai‘i, and together with Alaska Airlines we will be able to deliver more for our guests, employees and the communities that we serve…In Alaska Airlines, we are joining an airline that has long served Hawai‘i, and has a complementary network and a shared culture of service. With the additional scale and resources that this transaction with Alaska Airlines brings, we will be able to accelerate investments in our guest experience and technology, while maintaining the Hawaiian Airlines brand. We are also pleased to deliver significant, immediate and compelling value to our shareholders through this all-cash transaction. Together, Hawaiian Airlines and Alaska Airlines can bring our authentic brands of hospitality to more of the world while continuing to serve our valued local communities.”
What We Know about the Merged Company
Unsurprisingly, the details are a little thin on the ground this early in the announcement. However, the press release has let some details out of the bag. Accordingly, the new company will maintain both airline brands or at least that is the plan. If you remember, the last big merger Alaska went through was with Virgin America, and when was the last time you saw a Virgin America Plane flying around?
Although the new company will maintain both brands, there will only be one new loyalty program. This has some exciting potential and adds even more to the value of the Alaska Mileage Plan, our favorite Oneworld program. Interestingly, even though the brands are separate, the Hawaiian network will be added to the Oneworld destinations.
The new combined airline will now have one major hub on the islands in Honolulu. The hub will aim to connect the islands to the continental US, Asia, and other regions across the Pacific. This will mean an expansion of the route network with the addition of new destinations from Honolulu.
What We Don’t Know about the Merger
Needless to say, with such a big announcement, there is a huge number of questions that come to the fore. On one level if you are an Alaska Mileage Plan member, you want to know things like:
- What will the earning rates be on Hawaiian flights?
- How will redemptions work?
- Which program will be folded into the other?
- What will the new status levels be?
That is just a few simple questions about one aspect of the merger. There are tons more on the list, although we should not expect any answers soon. This is because one of the most salient questions about this press release is when the merger will happen. The simple answer is we don’t know if it could be 2024, 2025, or even 2026. However, if we had to guess and assume that the merger goes through without any legal opposition, sometime early in 2025 seems like a reasonable time frame.
Airline mergers are both exciting and disappointing at the same time. On the one hand, mergers tend to drive new routes and new opportunities. They improve use of a given loyalty program with enhanced earning and burning options. Conversely, the opposite is also true. More often than not, certain features of one of the loyalty programs amalgamated tends to disappear.
In almost every merger, the new program is not equal to the sum of both of its component programs. Often, its sum is slightly less than the sum of both programs involved. That said, until we find out more and see how the new program shakes out, we will continue to use Alaska Airlines Mileage Plan. Since it is one of our favorite programs. Not to mention is has some excellent value like awards across the Pacific with JAL in both First and business class. Not to mention all the other Oneworld partner redemption sweet spots.