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???
AA always wanted (at least post megamerger era) relationships with both B6 and AS. They poisoned the water with the NEA but B6 will probably be bailed out and won’t end up in UA’s hands as much as some want to believe.
AS is AA’s best hope for shoring up their western flank. and a JV can be done – it just has to be declared and asked for and not just done as was the case with B6.
AA has far bigger problems than their presence on the west coast but dealing w/ one problem at a time seems like a reasonable strategy.
AS didn’t exactly burn it up w/ their earnings report so they aren’t going to be moving forward w/ alot of growth they haven’t announced.
@Tim Dunn – “it just has to be declared and asked for and not just done as was the case with B6.”
Trump’s DOT literally blessed the AA-B6 NEA, before the presidency changed hands and the Biden DOJ sued to undo it. AA, B6 and the Trump administration entered into a settlement to allow it to go forward. So it was not “just declared.” (In fact, the settlement was entered into after the statutory deadline for DOT opposition had passed.)
I like finding affordable American Airlines flights using Alaska Air points; however, one assumes, if they coordinate further, it could eventually become monopolistic (and those deals would disappear).
@Desert Ghost — Wow, for once, you didn’t accuse others of not being airline CEOs. Thank you, that tired trope was getting old. Folks can and should have and share their opinions. The gatekeeping was silly.
Gary,
you continue to say that but the DOT does not have authority to grant domestic antitrust immunity and did not grant it and that is what the DOJ sued and won to block.
The DOT blessed the schedule coordination based on AA’s underuse of its LGA and JFK slots
An AA and AS merger looks great on paper but both are so heavily leveraged and laden with debt, you have to wonder what that would look like.
Coupled with Alaska still in the early stages of integrating Hawaiian, a merger would be crippling.
Would love to see UA merge with JetBlue and Delta with Alaska but pigs would probably fly before the latter happened.
AS wouldn’t want to take B6 and their close to $10B debt isn’t going to happen I been saying for at least 20 years that my company should acquire AS is a great fit for us and make us stronger and I am sure it will happen soon or later I always seen well on last 10-14 years B6 being folded into DL and UA and Scott talk to much Kirby with nothing or NK as consolation price if F9 don’t do another move to take them WN is going to keep growing organically or they will make a move on G4 as soon all those MAXES are operating and the Scarebus are out watch save this comments even if you don’t agree and let’s talk about them in 4/30/2031. To see how our industry is at that time
@Tim Dunn – i was simply pointing out that your characterization was inaccurate. changing the argument is therefore fine 🙂
I see a merger down the road if the regulatory environment is friendly towards airline mergers. AS has International aspirations but that’s hard to create organically.
I’m not a huge fan of domestic code sharing/ATI, however, AA has tried and failed many times on the west coast, so IMHO a revenue share with AS is the better outcome. For B6, though, I would like to see AA purchase them, or else they will get left out of the NYC market for the next 30 years. A B6 purchase by AA would create 3 viable competitors in the NYC market…as opposed to 2 if either DL or UA made the purchase.
Alaska Airlines would be a great choice for American to do joint revenue sharing with. This is a West Coast master in air travel to the Portland, Seattle, and Alaska cities.
So what’s going to happen with Alaska’s “Proudly All Boeing”? And what name will survive?
I am getting as low as 5k miles with AS from Cali to/from SEA. Some are even non-stops with a cash price at $214 for Main Cabin. Using miles instead of cash is a no brainer. AA also has some great low miles awards to/from DFW and, especially, Austin from Cali. A full merger and that likely changes for the worse.