United Airlines disclosed in a filing that they had a conversation with the Deputy General Counsel at the Department of Transportation regarding Alaska Airlines acquiring Hawaiian Airlines. United had to file this to avoid having had an improper ex parte communication over an active matter before the Department. They declined comment.
The airline pointed out to DOT that it currently has several forms of partnership with Hawaiian:
- interline agreement
- codeshare agreement
- prorate ticketing agreement
- loyalty program agreements
Generally speaking you can include Hawaiian Airlines on United tickets. That might continue post-merger, though United would love for the government to require it – and to lock in favorable terms for United. United wants to earn as much revenue from Hawaiian from its customers who continue on their travels between the islands once transported to the state.
- United is currently the largest airline between the mainland and Hawaii.
- The market for travel between the islands is saturated. Load factors and fares are low. Hawaiian and Southwest slug it out aggressively. Seeing a merger as bad for United doesn’t make it bad for competition.
- The fact that United views this as bad for them underscores that it likely strengthens competition.
While Alaska having the option of no longer working with United could make it harder for United to connect passengers between Hawaiian islands, Southwest Airlines has been looking into partnering with other carriers and could use help bolstering the economics of its flights between the islands. United has traffic rights to enter the market themselves!
When United intervenes in discussions surrounding approval of an airline merger by DOT, they aren’t speaking out on behalf of consumers. They want to get something for themselves. It will be interesting to see where DOT ultimately comes down in terms of any settlement conditions to allow Alaska’s acquisition of Hawaiian.
(HT: @crucker)
Hawaiian literally have all these agreements with every single big 3 airlines. Alaska also have interline agreements with all big 3. Axing loyalty agreement wouldn’t change anything in terms of balance. At worst it helps boost the 5th place up to be more competitive, exactly what DOJ and DOT want. UA is just being a bitch because it can and it’s free to.
This doesn’t rise to the level of concern for the DOJ but the DOT very well may require AS/HA to ensure that they continue the current codeshare relationships that are in place as well as allow any other carrier that adds service to Hawaii from outside the state to codeshare on intra-state flights if they want. Gary and I have both noted this concern before and it is likely part of why the DOT has not signed off on the merger.
Given that WN doesn’t codeshare with other airlines -they might want to jump into that market at some point – all kinds of parties including the state of Hawaii have reason to ensure that non-Hawaiian carriers have access to intrastate markets.
Given that AS codeshares w/ every foreign carrier that flies into SEA, their model is highly dependent on codesharing. All the DOT would be requiring aligns with the way AS operates at SEA with what HA currently does in Hawaii and ensuring its stays that way.
Loyalty program and lounge or other marketing relationships don’t matter. Codesharing does.
Surely the best airline in the history of the world (per soulless bean counter Kirby) can handle a bit of viable competition?
Why doesn’t UA open inter Hawaii flights if they are so worries? There’s nothing saying they can’t. Sounds like they want revenue without competing. The DOT should lay out 3 options,
1.) Partner with WN
2.) Start inter island flights themselves
3.) Fly more from the mainland and give up on low cost low yield fights between islands
What a weird argument. Last time I checked Hawaii is still a part of the USA, and United was still an American-flagged airline carrier. So…nothing is stopping it from flying interisland Hawaii on its own metal if it wants to. A partner is not necessary at all to accomplish such a goal. Just another case of UA being UA.
I work for USDA APHIS in Hawaii. The biggest challenge for WN is that when passengers travel from one island to another, they cannot bring whole fruits and vegetables onto the main cabin if there is a mainland flight operating from the terminal they arrive at. They would have to check in their fruits and vegetables. That is why so many passengers still use HA, due to the inconvenience. UA will face the same dilemma.
jim,
with all due respect, people don’t choose HA because of different APHIS regulations although those are real.
People have chosen HA because it is the dominant carrier and was largely unchallenged in the intrastate market for years.
Multiple mainline carriers have flown intrastate flights before. The sheer distance between the mainland and Hawaii makes it much more difficult to operate intrastate flights than even in Alaska where some carriers excluding AS have flown intrastate Alaska flights but have largely left that market to AS and intrastate carriers.
It is in Hawaii (the state’s) best interest to have as much air service into the state and as few carriers clogging up the skies within the state. The DOT likely will require AS/HA to maintain codeshare and interline capability with the big 3 – which they currently do with many foreign airlines now anyway.
UA is justified in making certain that the big 3 don’t become targets of selective dropping of codeshare or interline arrangements.
and the real beneficiary of all of this is Southwest – which is part of why HA is struggling. It is certain that AS will cut some of the capacity HA is flying which will help WN. The intrastate Hawaii market is likely bleeding money more than HA’s mainland flying. Their domestic system lost more money than their international system in 2023 which has been badly hit by the dropoff in Japanese tourism to Hawaii; there are lots of opportunities to turn the domestic system around including the intrastate operation.
UA is simply speaking up with the same message that AA and DL are thinking.
I can see the DOT requiring HA to maintain the status quo, but not in perpetuity. There is an end to these agreements and the combined airline should be free to renegotiate or walk away at the end of the term, as both parties should.
Tim Dunn,
I work at the airport and deal with 5,000+ passengers every day. I see the counts for Southwest Airlines (WN) and hear the complaints from the passengers. You don’t understand how many passengers who fly with WN during hours of mainland flight operations complain about not being able to bring their fruits and vegetables. WN needs a dedicated inter-island terminal for this very problem. UA can definitely beat SW to this, by building a dedicated inter-island terminal.
For instance, the passenger count for WN at 5 a.m. is 20–40 out of 175 empty seats. At 8 a.m., it is 60–80 passengers out of 175. At 1 p.m., it is 90–110 out of 175, and then it decreases again. In light of this data, it is evident that WN requires a dedicated inter-island terminal.
The passengers are upset about the agricultural checkpoint for inter-island flights.
@Jim, please expand on why people like to take fruits and vegetables on their flights. I can understand them not wanting those in checked luggage as many can be damaged and there is the cost and inconvenience of checked luggage. I have carried apples and tomatoes back home (across the USA to LAX) in carryon luggage and apples in checked luggage. Are they carrying personally grown produce as gifts? Are they carrying high priced and high quality produce as gifts? If the circumstances are right, being able to carry produce could offset the higher price of a ticket. Thank you for any answer.
For many reasons HA has a 40 percent higher load factor on their smaller 717’s and commands about a 30% higher yield on the tickets they sell. At current prices they are no longer bleeding cash inter island like SWA is inter island. They won the inter island battle but at a big cost.
As long as Alaska keeps the Hawaiian brand intact they will always have the same advantage, just without the debt burden that Hawaiian is currently burdened with.
jim,
fruits and vegetables are a byproduct but HA sealed its position as the dominant – and for a long time the only – intrastate Hawaii carrier.
WN is using MAX 8s which they never intended to use for intraisland use. They expected to have MAX 7s which would lower their LF some
HA interlines with multiple other airlines while WN interlines with none. HA has a larger Hawaii to mainland network as well.
You can cling to the notion that fruits and vegetable rules give HA an edge but that is simply a byproduct.
The DOT will move to protect competition in the intrastate market by ensuring that AS/HA can’t selectively pull the rug out of the big 3 and others that currently have codeshares by requiring some sort of transition period – might be as long as 10 years.
AS and HA both have extensive codeshare relationships with foreign carriers; the DOT will simply require them to maintain the same depth of relationship with domestic carriers.
and neither UA or any other carrier is going to build dedicated interisland terminals. It would take decades to get approved and built if it ever happened and the DOT is determined not to allow ANY structural advantage that one carrier has to be abused as part of the merger process.
@Tim Dunn
I agree with you to extent. My take is that the DOT may hold AS/HA to some or all of those agreements only as far as they will protect the consumer. The DOTs job is not to protect the other carriers unless that causes harm to the consumers or somehow creates an unfair advantage. As Gary and other commentators pointed out it looks like United only made the case that it will hurt their bottom line, not their passengers or passengers at large. Foreign carriers and codeshares are different because they cannot easily add their own service in certain markets. United and the other big carriers can add service and not necessarily NEED to codeshare. With Hawaiian currently not in an alliance it was easier for them to make deals to help themselves with whomever they could. Now that they will potentially join an alliance and bigger network can they (Alaska) argue that it creates a stronger competitor which arguably is better for the consumer shutting down United’s claims? It will be interesting to see what the DOT ultimately decides. You said that the DOT “WILL MOVE” to protect competition. I am going to hold you to that when the DOT finally makes a decision. You can say I told you so if you are proven correct but don’t come back later and say well, I never said the DOT will do so and so if it turns out differently lol.
@Tim Dunn
@JNS
It’s a common practice here for people to want to take fruits and vegetables with them when traveling between islands for their family and friends. Additionally, Hawaiian Airlines (HA) seems to have an advantage due to its strong presence in the state. Hawaii’s state laws have historically made it difficult for mainland companies to establish themselves here. At my airport, all airlines use HA-owned computers at the gates, and HA controls all the gates. This is why Southwest Airlines (SW) doesn’t have a dedicated inter-island spot. I don’t understand why the Department of Transportation (DOT) hasn’t addressed this issue.
WN may have started off doing well initially. Due to the inspection station at mainland terminals. People are not allowed to take their fruits and vegetables. After four years of operating, people got tired of SW because they lost so much money on the bags of lychees or mangoes that were confiscated.
I fail to see how Kirby’s stance is not consumer friendly. Ending codeshares would reduce choice and competitive shipping for anyone wishing to go to the smaller islands where service is HA dominant. The counter that other airlines should open up regional ops only places HA further at risk of bankruptcy.
jim and tato,
you two need to get together and come up w/ a common opinion.
I am sure that having a dedicated interisland terminal helps but it isn’t even close to the sole reason.
HA dominates the intrastate HA market because it has been at it much longer, because WN came into the market w/ the pretty well-stated goal of hurting if not taking out HA, and because HA has more frequency which matters more than size.
Neither HA Or WN are doing well financially. WN is facing Elliott that is criticizing their low loads to and within Hawaii even though Hawaii is a pretty small part of WN’s network. HA has had to seek a merger and AS will cut whatever is not making money – which includes as much on its domestic network as it does on its international network.
HA sustains the frequencies by using the 717s. AS can get rid of them and use the 737 like WN does or deal w/ much higher operating costs by keeping the 330s, 717s and 321s from HA in its fleet; it just got rid of the last Virgin America 321s months ago and right before the MAX 9 grounding.
The Hawaii market is going to change. Economics at both HA and WN dictate it.
The DOT will almost certainly – you can quote me as anything less than a guarantee – require some sort of protection on codesharing by other US carriers. The marketing related stuff that UA is complaining about won’t matter. The DOT is interested in ensuring that HA’s unique position in the islands is not used as a weapon by AS against its competition.
There aren’t many other reasons why the DOT hasn’t finalized the merger other than codesharing. transferring HA’s international routes to AS should be a no brainer.
Southwest is doing perfectly fine with intrastate flights. I am talking about inter-island flights; they are failing at those. We do not need more intrastate flights. I work at the Kona airport, and the terminals need to be rebuilt to handle more inter-island flights. I highly oppose this because it will create a backlog with passengers getting to their flights on time due to inspections.
Sorry correction, I meant..rebuilt to handle more intrastate flights.
It’s possible to do, if they move all WN and HA inter-island flights to one side of the airport. Then move all mainland flights together. Except HA dominates all inter-island gates. This will create fairness in competition.