No strings attached: Justice Department greenlights Alaska Airlines’ acquisition of Hawaiian Airlines – what that means for you
Alaska Airlines’ acquisition of Hawaiian Airlines received tacit approval from the Justice Department. After extending the deadline to file an antitrust lawsuit twice, it looked as though there were ongoing negotiations leading to a possible settlement – and the department would appear in court in Honolulu in the event that no settlement was reached – the government let the deadline to file the antitrust lawsuit pass.
No conditions required for approval
The Biden administration’s Justice Department, which had sued to prevent JetBlue from acquiring Spirit and to break up the partnership between JetBlue and American Airlines, allowed Alaska’s deal with Hawaiian to pass antitrust scrutiny. And they did without asking for concessions such as service guarantees on connections between the Hawaiian islands, the waiver of gates or competition clauses outside major cities in Hawaii and Alaska.
The Department of Transport still has to sign off on the deal. This usually happens quickly after the department’s review, and the Department of Transport is less likely to try to block mergers.
The special thing about it is:
- While both Alaska and Hawaiian are major players between Hawaii and the mainland, it is a competitive market with United having the largest market share and both Delta and American playing significant roles.
- Since Alaska does not currently represent competition to inter-island flights, there is no increased concentration.
- Hawaii politicians, including the governor, supported the campaign. There was no active opposition from the unions.
Still, it is very odd that the Justice Department simply approved the deal after several delays rather than asking for something in return. If they wanted to approve it, it seems they would have done so a few weeks ago. Alaska’s political effort deserves a lot of credit here.
Strategic opportunity for frequent flyers
The Alaska Airlines Mileage Plan remains one of the most valuable loyalty programs. It’s hard to imagine HawaiianMiles points being able to be combined at a ratio other than 1:1, so you may want to:
- Apply for Hawaiian Airlines credit cards while you still can. There is a window of time when you can get cards that you can’t get later, but they will allow you to earn more Alaska Airlines miles.
- Transfer American Express Membership Rewards to Hawaiian, as a backdoor to an ultimate Amex transfer to Alaska
As part of this deal, we will certainly lose transfers from American Express to Hawaiian (Alaska) as the co-branding agreement between Alaska and Bank of America is considered exclusive. It is not yet clear what will happen to Hawaiian’s existing co-branded cards in the event of a change of control.
However, HawaiianMiles transferred to Alaska Airlines at a 1:1 ratio become more valuable. Alaska’s award chart is better and offers access to many more partners. The only losses here are that Hawaiian has more award space between Hawaii and the mainland, as well as better upgrade availability and a unique two-tier upgrade inventory and pricing system that ensures high availability of space. We’re almost certainly going to lose that.
Oneworld frequent flyers, whether members of American AAdvantage, British Airways Executive Club or Qantas Frequent Flyer, benefit from Hawaiian’s route network.
Alaska-Hawaiian Future
Alaska has promised to protect the Hawaiians brand but the two airlines will fly under the operating license of Alaska Airlines. The base will be in Seattle, with a significant presence in Honolulu. It is safe to say that Hawaiian Airlines will be acquired by Alaska.
That is, it is run by Alaska executives. Members should be switched to the Mileage Plan frequent flyer program.
We will likely see fewer seats between the Hawaiian Islands over time because capacity on these routes is really too high – although this reduction could simply be a retreat by SouthwestHawaiian outperforms Southwest in both load factor and average fare within the state. As Boeing 717s are phased out, we’ll likely see smaller aircraft such as Embraer 175 regional jets on some of these routes.
The oneworld airlines can offer better earning and redemption opportunities on more routes, including connections between the Hawaiian Islands (although fewer people are reportedly visiting multiple islands on trips).
But perhaps the biggest change is what Alaska is actually buying. They are getting a widebody fleet and experience flying to numerous international Pacific destinations from Japan to Australia. Currently, Hawaiian serves:
- Auckland and Sydney
- Fukuoka, Tokyo Haneda and Narita and Osaka in Japan
- Seoul
- Papeete, Pago Pago and Raratonga
Some of these wide-body aircraft could be relocated to Seattle, making Alaska a long-haul international carrier.
The future of the “West Coast Alliance” between American Airlines and Alaska, which was supposed to build a long-haul hub for American Airlines in Seattle, is unclear, as it never came to fruition and Alaska will be able to operate its own long-haul services.
Meanwhile, Alaska just completed the divestment of the Airbus planes it acquired from Virgin America. Hawaiian is a primarily Airbus-based airline. It has 19 old Boeing 717s being retired. It has two Boeing 787-9s in service and 10 more on order. But it flies 18 Airbus A321neos, 24 Airbus A330-200s and also has Airbus A330 freighters. It’s hard to imagine Alaska buying an airline that supplies them wide-body aircraft and then divesting most of the planes. With this deal, Seattle-based Alaska is once again no longer a pure Boeing company.
