Why American Airlines Was Cutting Ties With Alaska – And How They Changed Their Mind

American Airlines gutted their partnership with Alaska Airlines and the most recent stage of the breakup was just announced in the fall so I was genuinely surprised by the about-face announced in mid-February of a newly-energized partnership including oneworld alliance membership for Alaska.

On Wednesday American’s CEO Doug Parker held one of the airline’s monthly ‘Crew News’ employee question and answer sessions, a recording of which was shared with View From The Wing. During his introduction Parker talked about the strategic shift that this represents.

Notably Alaska Airlines executives have always told me that the breakup between the two airlines, first eliminating earning miles on most of each others’ flights and then eventually even planning to drop award redemption, was driven by the American Airlines side.

Parker shared that they viewed the breakup as the result of Alaska’s acquisition of Virgin America – which meant more of a route overlap – and therefore seeing Alaska as a competitor rather than a partner.

A couple of weeks ago we announced an expansion of what had been our dwindling relationship with Alaska. American and Alaska had a codesharing relationship for a long time. It was getting smaller and smaller because as Alaska had acquired Virgin America their network started to compete with ours a lot more rather than be complementary. And it’s not really generally a good thing for an airline to allow our customers to you know earn miles on us, and then choose to fly or to earn miles on American, burn them on us but earn them by flying Alaska say flying Chicago – LA.

Interestingly Parker as head of US Airways saw value in being part of Star Alliance with United Airlines. United in many ways had a larger route network overlap – in the New York market and the DC market especially – than American and Alaska did. Virgin America’s greatest strength was in San Francisco, where American is weak (despite offering flights to hubs). And Alaska remains strongest in the Pacific Northwest.

Parker continued that it was time to fish or cut bait on the partnership,

So we’d been pairing that back. It got to the point it paired back enough that both of us thought we need to work on something more creative or it’s gonna end up not having a relationship at all which neither of us liked unfortunately.

A closer relationship is clearly going to benefit American. It means access to Alaska’s corporate customers on the West Coast who can buy a package including American flights into myriad domestic and international markets. And it means American grows in Seattle to take advantage of the partnership, which is good for customers.

We got some creative people together on both sides and came up with a bigger relationship that we all feel good about. It requires DOT approval but we hope to get that here in the coming months. And that allows us to do flying that would have never made sense for us. We announced our intent to fly Seattle – London and Seattle – India so those are flights that would make no sense without the Alaska relationship feeding those flights but do make sense when they do so we’re excited about that.

While I agree that the move is positive for American Airlines and its customers, my bet is still that Alaska Airlines Mileage Plan members will see program devaluation as a result.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Like dating my ex-wife. Having said that should AA get new CEO capable of running the once proud and great airline things might become different until then it sucks domestically and internationally.

  2. I can explain the about-face in one word – DELTA. Dumbass Doug Parker finally figured out that it is better to fight Delta as a team than go it alone.

  3. Parker:

    “So we’d been pairing that back. It got to the point it paired back enough that both of us thought we need to work on something more creative or it’s gonna end up not having a relationship at all which neither of us liked unfortunately..”

    +We got some creative people together on both sides and came up with a bigger relationship that we all feel good about. ”

    So they just figured out their campaign to dis Alaska and the bs about route overlap was a big mistake. An expanded relationship between Alaska and American should be good for passengers. I just hope Mileage Plan doesn’t pick up any bad habits from AAdvantage.

  4. American showing up at the door of Alaska reminds me of the scene in the wedding singer when his Ex, Linda, ends up in Robbie’s room wearing his Van Halen T-shirt. She only did it because she was jealous (Delta Latam) not because she loved Robbie (Alaska). I just hope AA doesn’t jinx Alaska the way Linda tried to jinx Van Halen. I guess it’s a good sign that Alaska is going to join One World but I wonder what will happen to all the good partner awards they have that are non-One World.

    Either way, I like how Delta managed to drag AA into the “battle for Seattle”.

  5. Big mistake Alaska Airlines! I only fly American as a last resort! The country club in our neighborhood is using American’s bookkeeping system–what a nightmare! Don’t trust American Airlines!

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