Alaska Airlines’ acquisition of Hawaiian Airlines has quietly received Department of Justice approval. After two extensions of the deadline for DOJ to file an anti-trust suit, that looked as though there were ongoing negotiations that would have led to a possible settlement – and DOJ filing an appearance in court in Honolulu in case there wasn’t – the government allowed the time to file to lapse.
No Conditions Required For Approval
The Biden administration’s DOJ, which sued to block JetBlue from acquiring Spirit and to break up the JetBlue-American Airlines partnership, allowed Alaska’s deal for Hawaiian to pass anti-trust review. And they did it without asking for any concessions such as service guarantees on inter-island routes in Hawaii, giving up gates, or competition remedies outside of key Hawaiian and Alaska cities.
The Department of Transportation still needs to sign off on the deal. Traditionally that’s come quickly following DOJ review, and DOT has been less likely to attempt to block combinations.
What’s unique here is that:
- While both Alaska and Hawaiian are big players between Hawaii and the mainland, this is a competitive market where United has been largest and both Delta and American are significant.
- Alaska doesn’t currently compete with flights between the islands, so there’s no increased concentration.
- Hawaiian politicians, including its governor, have been supportive. There’s been no active union opposition.
Still, it is very odd that DOJ simply approved the deal after multiple delays rather than demanding anything in exchange. If they were going to approve it, it would have seemed that what they would have done a couple of weeks ago. Alaska’s political operation deserves a lot of credit here.
Strategic Opportunity For Frequent Flyers
Alaska Airlines Mileage Plan remains one of the most valuable loyalty programs. It’s hard to imagine points from HawaiianMiles being combined at anything other than a 1:1 ratio. So you may want to:
- Apply for Hawaiian Airlines credit cards, while you still can. There’s a window in which there are cards you can get that you won’t be able to get later where you’ll be able to get more Alaska Airlines miles.
- Transfer American Express Membership Rewards to Hawaiian, as a backdoor to an ultimate Amex to Alaska transfer
We’ll certainly lose American Express to Hawaiian (Alaska) transfers as part of this deal, due to presumed exclusivity on the Alaska-Bank of America co-brand contract. It’s not yet clear what will happen to existing Hawaiian cobrand cards in the event of change of control.
However HawaiianMiles, at a 1:1 transfer ratio into Alaska Airlines, will become more valuable. Alaska’s award chart is better and gives access to many more partners. The only losses here are that Hawaiian has better award space between Hawaii and the mainland, as well as better upgrade availability and a unique two-tier upgrade inventory and pricing system that makes space highly available. We’ll almost certainly lose that.
oneworld frequent flyers, be it members of American AAdvantage, British Airways Executive Club, or Qantas Frequent Flyer, will benefit from Hawaiian’s route network.
Alaska-Hawaiian Going Forward
Alaska has promised to keep the Hawaiian brand but the two carriers will fly under the Alaska Airlines operating certificate. It will be based in Seattle, with a significant presence in Honolulu. Make no mistake, Hawaiian Airlines is expected to become subsumed by Alaska.
That means it will be run by Alaska executives. Members should be transitioned to the Mileage Plan frequent flyer program.
We probably do see, over time, fewer seats between the Hawaiian islands because there genuinely is too much capacity on these routes – although that reduction could simply be a pullback by Southwest. Hawaiian outperforms Southwest within the state both in terms of load factor and average fare. As Boeing 717s are retired we presumably see smaller aircraft like Embraer 175 regional jets on some of these routes.
oneworld airlines will be able to offer better earning and redemption on more routes, including connections between Hawaiian islands (though there are reportedly fewer people visiting multiple islands when they travel).
But perhaps the major change stems from the asset that Alaska is really buying. They are getting a widebody fleet and experience flying to a number of 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 those widebodies may get moved to Seattle, with Alaska becoming a long haul international carrier.
It’s not clear what future the American Airlines-Alaska “West Coast Alliance” which was supposed to support a Seattle long haul hub for American has, since it never developed and Alaska will be able to operate some long haul service of its own.
Meanwhile, Alaska just finished disposing of the Airbus planes it acquired with Virgin America. Hawaiian is a mostly Airbus airline. They do have 19 aging Boeing 717s, which will be retired. They have 2 Boeing 787-9s in service and 10 more on order. But they fly 18 Airbus A321neos; 24 Airbus A330-200s; and they have Airbus A330 freighters as well. It’s hard to envision Alaska buying an airline that brings them widebodies and then disposing of most of the aircraft. This deal makes Seattle-based Alaska no longer an all-Boeing company, once again.
We will see if this is over. The government has backtracked on agreements before, such as the JetBlue and American Airlines one.
JetBlue and AA was different. Slot swapping was a major problem, though frankly, it was the wrong decision for both carriers and hobbled their abilities to compete in the Northeast. AS and HA is a strange combo (AS and B6 would make more sense) but there isn’t much overlap and HA likely cannot survive long term as an independent carrier.
But but but Tim Dunn said it was unlikely this merger was to be approved and then said yesterday it was doubtful it would pass without conditions!! Also Alaska was supposed to choose between this and OneWorld…
lol what a slap on the face for Tim – now once Alaska integrates it should apply to join the AA transatlantic venture and transpacific venture. If it’s able to join Delta is in big trouble on many of its Seattle international routes sans Amsterdam and Paris.
@JNS – completely different issues… in the NEA case DOT approved, but DOJ opposed. In this case, DOJ has let the deadline to oppose pass. They can’t backtrack.
@OCTinPHL, that is not my understanding. The DOJ is a sub branch of the the executive branch of government. Under Trump, there was no objection to the NEA by the DOJ. It would not have been clever for the DOJ to actively go against the Trump regime while it was in power. After Biden took over, he placed people in charge who were aligned with his regime and his regime’s objectives. That is when the DOJ opposed and filed the lawsuit to undo the NEA. I’m sure that DOJ can backtrack any number of ways that I cannot even begin to come up with. Lawyers can be very clever.
Please use these widebodies on transcons out of SFO!
Good info here and appreciate the perspective on the miles swap…Have to wonder if SWA will stay. They have a questionable reputation in Hawaii. They entered the market like someone moving to Hawaii and started speaking Pidgin when they can’t even pronounce the street names. Their aggressive attack focused on Hawaiian was seen by many as an attack on the people that live there. With 7000 employees and many more working for companies that depend on Hawaiian it means a lot of people are directly affected or have friends and relatives that are…In some ways SWA mirrors the original missionaries that did so much harm. Their inter island business model can’t compete with Hawaiian’s and why would anyone choose their TransPac service when you can fly Alaska/ Hawaiian’s for the same price? Theirs a reason for SWA’s lower load factors, I don’t think their short haul/high frequency business model translated well into Transpac flying
Wow, my son was wrong? Are you serious? Will he admit it?!?!?!!?!?
What’s this I hear? Tim Dunn was wrong? There is hope for humanity after all I say!
More to Love!
Doug,
you and the faceless, cowardly mockers simply prove that you are not only incapable of reading but you are hellbent in eliminating an accurate voice about the airline industry which is not afraid to call balls AND strikes.
Feel free to post exactly where I said that the AS/HA merger was unlikely to be approved. I didn’t.
Gary actually posted an article in which he SUGGESTED a number of possible requirements some of which I agreed to – and HE suggested that choosing between AA and HA might be a choice that AS might have to make. Feel free to call him a liar – he is a big boy – but don’t you dare manipulate the narrative in order to try to call me wrong unless you are going to accurately do it to all you that said the same thing
And, btw, the last legacy carrier merger – AS and HA are both legacy carriers – that was approved without condition was DL/NW. the notion that the DOJ is incapable of seeing the merits of mergers because of politics is yet another internet myth.
AA/B6 and B6/NK were rejected because they were anticompetitive. DL/NW and now AS/HA were allowed to proceed because they are basically end on end mergers; AS/HA has much more overlap than DL/NW did but Hawaii is a very competitive market.
And your wet dream that AS will ask to be added to AA’s JVs is all about saving AA’s backside while providing very little benefit to AS even if it added longhaul widebody flights from SEA. AS flies to most AA hubs so it would only gain beyond AA traffic that is not served by AS from SEA and most of that traffic can and does fly over other carrier interior US hubs including ORD, SLC DFW, DTW, MSP and ATL.
AA has shrunk to irrelevance on the west coast and brings little to AS. DL has grown to the position it has in LAX because of AA’s strategic failures.
And the DOJ itself is likely to not allow AA and AS to join the same JV just as was the case with AA/B6.
But let’s be clear that speculating is not predicting and neither Gary or I predicted the AS/HA merger would be denied.
But when your hellbent on silencing voices, facts and accuracy are irrelevant.
Any thoughts on how long we may have to apply for the Hawaiian card? I’m working toward a couple other SUBs at the moment so I’d like to wait a bit before starting the clock on another one if possible
in a sense, the news is also good for Jetblue in the Northeast as the merger apparently leaves in tact the Alaska-Hawaiian codeshare with Jetblue thus avoiding and giving alternatives to the congested OneWorld hubs when weather craps out in places like DFW ORD and PHL
It’s hard to imagine that AS doesn’t have a very specific plan in mind for the widebodies. If not, it would have made very little sense to even buy Hawaiian. I suspect some will be retained for transpacific flights out of HNL to places like Japan, but maybe they’ll cut back on Aus/NZ, also downgauge PPT (but it’s only once a week on A330 now, so that won’t free up much widebody capacity), and instead deploy some widebodies from Seattle to perhaps Japan.
@Sco
I’m also thinking of hitting up the HA biz card. I would think Barclays will be very happy to take applications as long as possible. There’s probably also some contractual obligations, so I don’t think apps would be cut off in the near term.
@Mantis – you do have to wonder what the end-game is for AS here. It will likely rationalize some capacity to/from the West Coast, but UA, DL and AA will still have plenty. AS could have bought widebodies on their own if that was the plan. And AS now becomes an A321 operator again…lol.
I just hope this wasn’t a mistake on the part of AS.
John W
I doubt Southwest is going to leave. Why would anyone fly SW to Hawaii instead of HI/AK you ask? Companion passes. Most Hawaii flights are probably for leisure. You spend your year flying SW to get companion pass and then you basically get a BOGO on flights from that year and the following calendar year. Between that and free checked bags you can’t beat it. Without the companion pass I don’t think SW is competitive (other than free bags). If you get enough points for a companion pass then you are probably A-list as well which makes flying SW a lot more tolerable since you always get a pretty good boarding number for yourself and everyone on your reservation (as long as you don’t book Business Select).
With that said, I still think I’m going to get the 20% transfer bonus on Hawaiian from American Express. These will be handy as Alaska miles.
“As Boeing 717s are retired we presumably see smaller aircraft like Embraer 175 regional jets on some of these routes.”
In the investor acquisition deck AS said the “717 fleet has nearly half its cycle time remaining, and could be eventually be replaced by the 737”
I kinda remember someone saying the E175 isn’t the best for short hop/quick turn/high cycle days but I could be wrong.
Makes sense Ken, although I have to wonder if they can justify the low yield they are getting with the expense of their operation, sounds like a lot of passengers are flying for free? I have the HA card and the AS card so the free bags are available using them. I guess if you are a family traveling with a lot of bags SWA would be attractive….
They are changing that boarding process I believe but will likely carry that baggage(no pun intended!) as having the Hunger Games boarding deal for some time.
I guess we’ll see what those so called new activist shareholders think and none of them have called me! 🙂
@JohnW. I suspect SWA started flying to the Hawaiian Islands because 137,300,000 fare paying passengers demanded it for their Rapid Rewards.
@Ken. Yes, the companion pass and Rapid Rewards are huge with SWA frequent flyers. I think SWA sat down and worked the equation of how much money will we lose flying to Hawaii verses how much will we lose if we don’t. I suspect that not everyone wants to use their Rapid Rewards for Mexico or the Caribbean but most will for Hawaii. For most people it just doesn’t get any better than a free trip to Paradise . . . Hawaii.
Agreed Juan, I mean one….saw a presentation that said SWA has lost a billion dollars so far flying to Hawaii, and safe to say it will be a cash drain for a long time. Just like inter island, they can’t get the yield other carriers can…a billion here and a billion there and it starts to add up!
Does the Biden called off campaign explain the delays followed by no conditions? Democrat politicians often struggle when a decision is, in their mind correct, but the anti-business factions of their party just won’t like it (based on appearances, not analysis typically). Biden’s DOJ does the “right” thing, and Kamela can deflect any blowback from the decision (“it wasn’t my admin.”). Presidents and givernors regularly issue controversial pardons before leaving office.
After nearing 4 years of treating airlines and companies like they are the enemy, Biden is finally letting this go through. We MUST vote for VP Harris because she will lower the cost of groceries. She will prevent price gouging. Maybe she will lower airfares by demanding that airlines lower fares. She MUST win in November. She will make my groceries cheaper!
It will be interesting to see what Alaska “Proudly All Boeing” Airlines does with the Hawaiian Airbus fleet. I hope they don’t get rid of them, they are far more comfortable airplanes.
Time to play both the Hawaiian and Alaska Air credit card games before the time runs out on doing that.
I doubt that even Lina Khan @ FTC is strongly opposed to this merger. But I will try to find out her take on this.
Lina Khan @ FTC is one of the most hated people in American government when it comes to the billionaire class , wannabe billionaire class and their hanger-ons across the country. That is indicative enough of why Khan is about as good as it gets for America and America’s consumers subject to paying the price directly and indirectly for competition-undermining mergers/acquisitions and such.
I understand Bilt had already dropped Hawaiian as a transfer partner in anticipation of this.