When American Airlines issued a release saying they weren’t interested in a merger with United Airlines I pointed out a curious statement that they made – they were careful not to say that all new mergers and airline partnerships were bad. And I wrote that they were clearly interested in pursuing one.
It turns out that American Airlines and Alaska Airlines were discussing a merger. Those talks reportedly haven’t developed, but the two carriers are discussing a revenue-sharing arrangement.
- American Airlines and Alaska are already close partners, beyond just oneworld membership and codesharing. Their ‘West Coast Alliance’ includes reciprocal elite upgrades, access to extra legroom seats, and other benefits. They even have access to higher-priced awards with more seats on each others’ flights.
- The two nearly cut ties before becoming close partners. American saw Alaska as increasingly a competitor. But they were thinking about things all wrong.
American Airlines is weak in Northern California and the Pacific Northwest. These are important markets for their credit card, which is the driver of profits. Alaska Airlines gains global relevance with an American Airlines partnership. American certainly learned with JetBlue that this drove AAdvantage signups and card acquisition.
When American lost the Biden administration’s antitrust suit against its partnership with JetBlue, the judge in that case highlighted the deal American had with Alaska as precisely something that would pass antitrust muster.
A deal that involves revenue-sharing, and perhaps schedule and price coordination, might have a higher bar – at least it would have under the previous administration. Although without slot restrictions in markets where they overlap, issues are carving up markets between them might not be as prominent an issue.
Further consolidation in the US airline industry is going to happen. AA and AS may not be in merger talks now, but if this development moves forward (revenue share, increased cooperation, TATL and TPAC JVs) it likely eventually will and it kind of makes sense. B6 only fixes AA’s NY problem. AS gives AA more ways to scale and compete in the spaces the article above references.
JetBlue, Spirit, Frontier, Allegiant, and Southwest won’t last as independent airlines. They all will eventually fold or be broken up into what will ultimately be the US3 (AA, DL, UA). Oh, and the Hawaiian Airlines brand? That will be gone in 12-18 months.
In an AA/AS merger I am just curious who would be acquiring who lol
Post pandemic, AS has been making good decisions for AS. A linkup with B6 is tempting with the HA integration now complete.
@Principal
That’s a deal that I would like to see – to get to both coasts and perhaps some international flying.
As I look at the various airline networks, it seems to me that all three major legacy carriers have a “hole” in their systems. American in the northwest, United in the southeast, and Delta between Atlanta and Los Angeles. That isn’t a crime. Or … Is it???