American and Alaska are partners again. The previously-announced March 1 breakup isn’t happening. Alaska Airlines is joining oneworld. And American will fly from Seattle to Bangalore, India (and Seattle – London).
Alaska And American’s Relationship Is Back On
The American Airlines – Alaska Airlines partnership had gotten downright cold. Alaska seemed pretty unhappy when the relationship between the two airlines started scaling back January 1, 2018. And it was only just October that the ability to use miles on each others’ flights was announced as ending March 1.
At the time American was claiming it wasn’t much of a benefit to AAdvantage members, because American had a 97% route overlap with Alaska and Alaska members redeemed for American travel far more than American members redeemed for Alaska travel.
Now less than five months later there’s a total reversal. Mileage redemption between the carriers won’t end after all. And the two carriers will be getting much closer, as partners in the oneworld alliance and as codeshare partners as well.
Alaska Is Joining The oneworld Alliance
In the fall of 2018 Alaska Airlines talked publicly for the first time about joining oneworld though they talked about a more modest Connect member.
Alaska, though, is now working towards full membership and it has American’s support. Officially joining will happen “by summer 2021” – and indeed it generally takes 18 months to join the alliance – but it sounds like they’ll be working diligently and the actually joining date could come earlier in 2021 if all goes as planned.
That will provide for earning and redemption across the oneworld alliance for Alaska Airlines members. Already Alaska partners with British Airways, Cathay Pacific, Japan Airlines, Finnair and Qantas. It will also provide some reciprocal status recognition like priority check-in and boarding and extra baggage allowance, along with lounge access.
It will also provide American AAdvantage members, and other oneworld members, mileage-earning and redemption on Alaska. Alaska flights will once again count towards American Arlines elite status.
American Will Start International Flying From Seattle
American will launch two new international routes from Seattle:
- Seattle – Bangalore beginning October 2020 using Boeing 787-9 aircraft
- Seattle – London Heathrow in March 2021 using Boeing 777-200 aircraft
American views London Heathrow as a hub thanks to their revenue-sharing joint venture with British Airways which currently operates two London – Seattle flights. It’s not clear to me whether this will be a third flight as part of the joint venture, or whether American will be taking over one of the British Airways frequencies.
The big news of course is American Airlines India service, which we haven’t seen since the airline ceased Chicago – Delhi service March 1, 2012. India is a challenging destination: American doesn’t have a connecting partner in India, so they’re relying largely on U.S. traffic looking to go to the city they serve. It requires a lot of expensive aircraft time. And fares to India have been low.
However there’s no non-stop service from the U.S. to Bangalore, but there is software business travel, and from most U.S. cities Bangalore takes two connections. Today American sells Bangalore travel only through their British Airways joint venture with a connection at London Heathrow.
A year ago American’s CEO Doug Parker told employees that executives have been talking more about India and by September it was absolute that American would fly to India. However I expected a flight from Dallas to Southern India, and I didn’t think it would happen until 2023 then they have planned to take new Boeing 787-9 aircraft.
I spoke to American’s Senior Vice President of Network Planning, Vasu Raja who offered that American has loved the idea of India and settled on Seattle because “Seattle – Bangalore is the only U.S. market [they] can truly make work with a reasonable payload.”
What Drove The American-Alaska Rapprochement?
I asked Vasu Raja what brought about the Alaska codesharing relationship and the new international routes from Seattle. He suggested that as they were “winding down” the relationship with Alaska, executives on both sides “looked at it and said, …forget the historical way both companies have done business and let’s look at through the lens of both [companies’] customers.”
This move is clearly good for someone like me in Austin who flies American regularly, but also uses Alaska’s network occasionally to get to San Francisco and to Seattle (foregoing American through Dallas). My in-laws are from a town that’s only served by Alaska’s regional subsidiary Horizon Air. It’s nice to earn elite qualifying miles and have status recognition when I take those flights.
And it’s good for the airlines – Alaska has a great regional operation in the Pacific Northwest, and has very loyal customers, but doesn’t have long haul international flying. That’s why they’ve partnered with so many varied airlines. More international service to offer their customers helps keep Alaska customers from straying over to Delta which has built a large Seattle operation. Heavy flyers out of Seattle need a big route network in order to stay loyal
Raja explains that “If this is amazing for customers, we had to figure out how to make it amazing for shareholders. All sides had a true north approach of forget past, figure out how to deliver something amazing for customers.”
Since my understanding is that Alaska hadn’t been happy to lose the partnership, my theory is they offered something lucrative to American to expand it. Seattle – Bangalore is an interesting route to start with, but there are big tech companies in Seattle like Amazon and Microsoft that do a lot of business with Alaska and Bangalore offers American an in with Alaska’s big corporate customers.
Meanwhile American’s codesharing with Alaska will go beyond just Seattle. They plan to pair Alaska flights to Los Angeles with their international route network, and Vasu Raja specifically called out how the LAX partnership “will help with [American’s new flight to] Christchurch” and that they “could extend seasons of [seasonal] flights” and that while “Los Angeles – Europe works but connectivity from Alaska will help.”
What Does Seattle International Flying Mean For American’s Network Strategy
American is fixing some of the problems with their domestic first class and looking at a new international business class product. They’re building up their premium offerings, and seem to be getting much more aggressive with new routes.
American is launching Dallas – Auckland and Los Angeles – Christchurch. They’re trying non-hub routes from Austin and building up Boston. That’s on top of new flights to Tel Aviv and Casablanca (their first foray into Africa).
This seems to be a very different American Airlines from the one that shied away from competition and retrenched back only to its hubs and eschewed ultra long haul flying. I asked Vasu Raja what had changed.
Over last several months to year or two the airline business has changed so much. For years and years it was struggle to survive then to merge then to do integration. [We have] profitable organic growth opportunities in every hub. It’s greater in place like Charlotte than in other places but no less significant.
For a long time we’ve talked about..opportunities to go fly longer and longer haul. When we first talked about India people thought it was nuts because we were taking out [flying from Chicago to] China. But if true north is if our customers want it, the job of the airline is to figure out how to go and deliver at a quality that makes sense and a profitability that makes sense for shareholders.
…What you see is slow evolution rather than sudden change, starting with increasing long haul, started Prague, Dubrovnik, seasonally but they started working, we extended seasons more and …expanded Prague to Chicago. Tel Aviv was the most asked for market among top customers. We figured out a way to do it from Dallas Fort-Worth. From bookings coming in, we’re optimistic.
…That brings us to a deal with Alaska. We have an amazing network for customers outside of West Coast big 5 cities. Alaska has an amazing network within those big 5 cities on the West Coast. ..Alaska has as many flights in Seattle as American has in Miami but doesn’t have international and is not seamless with anybody. They can have elite reciprocity from oneworld, by adding American flights long haul they can sell to corporate and high value travelers the best way to get to India. For American and American customers there are 70 destinations we can connect to India via Seattle.
American is being more aggressive with routes and they’ve done a 180 on partnering with Alaska. Raja mentions corporate contracts, no doubt access to Alaska’s big hometown corporate customers is a part of this. Whatever the economics, this looks like a win for customers. If there’s a downside here, it’s that Alaska’s clubs in Seattle are about to get even more busy.