Alaska Airlines has agreed to purchase Hawaiian Airlines. The premium they’re paying is great for Hawaiian shareholders. This deal should be as good as any airline merger for customers. But Alaska is overpaying and not getting much of value for $1.9 billion.
Hawaiian Airlines has submitted a filing with the Securities and Exchange Commission that outlines what will happen to HawaiianMiles miles and elite status under the deal.
What Happens To HawaiianMiles Under The Alaska Airlines Deal
Alaska Airlines plans to buy Hawaiian Airlines, keep operating the Hawaiian brand but do so under a single airline operating certificate, and transition HawaiianMiles into the Alaska Airlines Mileage Plan program. They expect much of the upside from the deal to come from their Bank of America co-brand deal picking up Hawaiian customers.
Here’s what Hawaiian told the SEC that customers can expect.
- HawaiianMiles don’t expire
- The program’s earning and redemption, including with Hawaiian’s co-brand credit card, continues until it’s folded into Mileage Plan
- Miles will be transferred into Mileage Plan
- Elite status will be matched into Mileage Plan
- Applications for the co-brand are still available, even though the card will go away assuming the deal closes
- They’re pitching Mileage Plan as a better program, which it is, but still surprising to see Hawaiian admit it officially.
How You’ll Be Able To Play The Miles Merger
The airlines haven’t communicated the ratio at which HawiianMiles will be combined into Alaska Airlines Mileage Plan.
- Alaska miles are worth far more than HawaiianMiles
- But it would be a marketing bomb to tell the new customers you need to stay loyal (and switch to your Bank of America credit card) that their balances are worth ‘less’. Most Hawaiian members don’t understand the nuance of relative value, and will be furious to see their mileage balances shaved as part of the deal.
So I have to think that miles will convert 1:1, and this also presents an opportunity to transfer points from American Express and Bilt into Hawaiian to eventually become Alaska miles (none of the card programs transfer directly to Alaska) and also to apply for Hawaiian Airlines credit cards, since those products are expected to go away with this deal.
Of course, in addition to the bet on 1:1 conversion, this all hinges on the deal closing (especially that the Department of Justice doesn’t stop it) so it may be wise to wait on executing these strategies.
Not so sure why you think the Hawaii and Transpac market is of little value to Alaska? They acquire the new HA terminal in HNL. AK’s new gates and facilities will be a huge competitive edge.
Hawaiian still owns inter island despite SWA’s best efforts. HA has twice the flights as SWA 40% higher load factor and 30% higher yield on tickets sold. Passengers are loyal to the Hawaiian name. Which is a lot of what AK paid for and is my theory as to why no one had bought them yet. A traditional merger with the loss of HA’s identity is of less value because much of HA’s value is in it’s Hawaiian roots and image….keeping the Hawaiian name as AK is doing is a smart move.
Pre Covid Hawaiian’s most lucrative flying was Japan/ HNL, (back when HA’s stock hit 60 a share!) that market is slowly coming back. That said there is huge potential for growth in the Transpac market. With the 787’s already on order and the simulator HA already has it’s a cheap way for AK to expand into widebody flying in a market that’s ripe for non stop flights to Europe and Asia…I could go on but you get the point..I believe AK sees this as a path to substantial growth.
JohnW
I don’t see why you are using “AK”. Air Asia?
AK is an abbreviation for Alaska the state. Is that what you are talking about?
Yes, my bad…I’ll use AS going forward! (Thanks for the correction, I find this deal fascinating and will be following it closely)
Minor correction to this report—though the number of users may be slight, those who’ve stockpiled Diners Club points can still transfer directly to AS Mileage Plan.
Where is Alaska getting all this money to overpay for Virgin America and Hawaiian? Why aren’t Alaska shareholders objecting to the waste?
For Hawaii travel, Hawaiian miles are far superior. Not only are the easier to earn, but upgrades are available like 90% of the time. You can very often get 13 hour flights from the east cost for 300$ and 50,000 miles which is a steal considering how easy HA miles are to earn. And who the heck wants to sit 5+ hours in a recliner first class seat? Alaska needs to stop ruining other airlines. Hope this deal is blocked
Another item to keep an eye on is what they do with “tenure”. When Alaska took over (and killed off) Virgin America, they gave us 3x our existing miles balance and forced us to reapply for their B of A credit card, but they also eliminated our years flying with VA and made us start all over for lifetime miles/status. Would have been close to MM between VA and the miles with Alaska since.
@nsx at FlyerTalk
The merger is a defensive move on the part of HA and AS for long term survival. Should the administration charge or its mindset change (the judge is making noises in favor of B6) either could be put into play and end up as a target. Since the big four have ~70% to 80% of the market, being a niche player is no longer a defense. All are looking for a dance partner they can live with.
HA is feeling the pinch via COVID, WN invasion of the islands, and Maui fires. Most of its PAX sitting in the front are cashing in FF points or alliance credits. The islands are leisure attractions, not business hubs with business premiums. The biggest single employer on the islands is the US government.
AS needs long legged airframes to garner premium revenue from SEA and gets front row slots via the HA order for B787 as opposed to placing an order today and waiting 5 to 6 years for delivery.
Agree with Paper Boarding pass…HA/AS is a defensive move, not “anti competition”…
They only overlap on 12 routes total, combining the two creates a stronger, more competitive airline for both. They are talking about serving MKK and LNY which if you live in Hawaii you know how big that is politically…it”s a big win for the State and means more service, not less if they merge. Can’t see anyone successfully arguing that fares would go up as a result of this. The only place the two overlap is West Coast to Hawaii, hardly lacking in competition.
@Benji, agree HA is outstanding, however Covid hit HA particularly hard..Japan was their most lucrative market and the slowest to recover. The runway closures, NEO engine problems that resulted in grounding some much needed aircraft a a crucial time, predatory inter island fare wars by SWA, none of it HA’s fault but it racked up $900 million debt since 2019. A burden like that means their is no assurance the great HA service was going to survive in it’s present form anyway, if the potential of combining these two is realized it will be a good thing.