Alaska Airlines is buying Hawaiian Airlines. Is it a Christmas miracle or a bah humbug?

In a surprise move that quite literally no one saw coming, Alaska Airlines has announced that it plans to acquire Hawaiian Airlines. The airlines expect the merger to take between 12-18 months, depending on how the Biden Administration feels about the consolidation. The government hasn’t been a big fan of either the JetBlue/Spirit merger or American’s attempted alliance with JetBlue. Along with the announcement, the airlines launched a shared website that describes the merger.

Alaska says that both airlines will operate as “distinct brands” which use a “single operating platform and industry-leading loyalty program.” After merging, the combined route network will serve 138 destinations with 365 aircraft. International service will expand significantly, incorporating destinations that Hawaiian serves in the Asia-Pacific region, like Japan, South Korea, New Zealand and Australia.

After hearing the announcement, and picking my jaw up off the floor, I have to say that I’m excited by the news.

What we know about the Alaska/Hawaiian merger

Alaska and Hawaiian have both sent letters announcing the merger to their customers and had a call with investors as well. Here’s what we know so far:

• Alaska is paying Hawaiian shareholders $18/share, a healthy premium above the company’s last closing price of $4.86.
• Alaska and Hawaiian will operate as separate brands in terms of aircraft livery and airport signage.
• Hawaiian’s loyalty program, HawaiianMiles, will be integrated into Alaska Mileage Plan. Members of both programs will receive elite benefits on each other’s flight and on oneworld Alliance airlines. The combined program will have a co-brand credit card.
• Alaska doesn’t have any immediate plans to alter Hawaiian’s fleet, meaning it will have widebody 787’s for the first time, as well as Airbus 330s and 321s. However, the airline will be “evaluating the unit economics of each (aircraft) type and the potential costs of fleet exit.”
• Honolulu will become the merged airline’s second biggest hub.
• The airline will have a 51% market share in Hawaii and a 58% share in Seattle.

Positive impacts of the Alaska/Hawaiian merger

This is an interesting move by Alaska that no one had on their 2024-25 bingo card. For years, it’s been rumored that, eventually, JetBlue and Alaska would merge to consolidate JetBlue’s strength on the East Coast and Alaska’s in the west. Instead, Alaska is choosing to go the literal opposite direction and make a foray into the Asia-Pacific (perhaps to compete with Delta’s Asia route network?). I see industry folks scratching their head about whether or not this is a worthwhile use of resources for the company. That said, for both Mileage Plan and Hawaiian Miles members, I think it’s pretty exciting and has the potential to be very rewarding. Here’s why:

• Alaska/Hawaiian’s list of international destinations is terrific. Over the last few years, Alaska has been making a strong foray into international flights to Mexico, Central America and the Caribbean. Now it adds flights to Australia, New Zealand, Raratonga, Tahiti, American Samoa, South Korea and four different airports in Japan. In my opinion, one of Alaska’s biggest weaknesses over the years has been the inability to provide transoceanic service for its own customers. This merger will change that…and I have to think that Alaska has plans to add more as well.
• Better mileage-earning opportunities. Because Alaska still awards redeemable and elite-qualifying miles based on flight distance, having access to Hawaiian’s long-haul network will create some excellent earning opportunities. For example, an Alaska mid-tier MVP Gold member would earn ~7,740 elite qualifying miles and 15,480 redeemable miles when flying from Seattle to Sydney via Honolulu in economy.

• Hawaiian elites will now become oneworld elites. Hawaiian isn’t a member of an airline alliance, instead having individual partnerships with several international programs and JetBlue. Now, Hawaiian elite members will have greatly-increased redemption options along with oneworld status, which can include things like global lounge access, priority boarding and increased luggage allowance.
• More nonstops to Hawaii. Currently, flying to Hawaii using Alaska miles from anywhere but the West Coast requires a stop in Washington, Oregon or California. The merger will add nonstops from Phoenix, Las Vegas, Austin, Boston and New York City (JFK). I wouldn’t be surprised to see additional mainland route additions down the line.
• Lie-flat first class. Alaska has an old-school domestic first class with wide recliner seats and hasn’t followed other domestic carriers that are now offering lie-flat seats on transcontinental and overseas routes. Hawaiian, on the other hand, already offers lie-flat seats on its A330s and will soon start service with Boeing 787s that have a lovely-looking business class with 1-2-1 reverse herringbone seats. Both products are a huge improvement over Alaska’s current first class.
• We should be able to book Hawaiian US-Hawaii flights with AA miles. Currently, you can book Hawaiian flights using American Airlines AAdvantage miles…but only on international flights. Hawaiian keeps the US-Hawaii flights for its members. My assumption is that, with Hawaiian being folded into the new, oneworld-member airline, all of its flights will be fair game for AA miles.

Questions we still have

Given the relatively sparse details of the announcement, there’s still a fair amount that we don’t know about the merged airline and, more to the point, the combined loyalty program. I have a few right off the bat, some of which could have a significant impact on how much fun we’ll have with the finished product.

• Will elite benefits change? Alaska has generous elite benefits in terms of complimentary upgrades to first class, same-day confirmed changes, premium economy upgrades at booking and “guest upgrades” that can be used in advance for yourself and/or companions. Will those benefits apply to Hawaiian long haul flights?
• Will the Alaska Companion Pass apply to the whole route network? I have four grandfathered Alaska credit cards that give me access to complimentary companion passes each year (new cardholders have to spend $6K/year to get it). It can be an incredibly powerful instrument that allows up to three (and sometimes more) stopovers on multi-city itineraries. It currently applies to Alaska’s entire route network. Will it apply to Hawaiian’s as well? If so, that’s a huge win.
• Will Alaska add transoceanic nonstop flights from the West Coast? Having access to all of these new international destinations is great, But Hawaii is a bit out of the way when going from Seattle to Japan. Part of the strategy of this acquisition and the addition of widebody planes to the fleet means that Alaska will eventually start flying to Asia direct from the West Coast…right?
• Will Hawaiian’s mileage upgrade be a casualty of the merger? Overall, Hawaiian’s redemption chart isn’t great. However, one terrific feature is the ability to book confirmed upgrades for 25-50,000 miles on an economy ticket between Hawaii and North America (even the East Coast), often with excellent availability. My assumption is that this will go away.
• Will HawaiianMiles transfer to Mileage Plan at a 1-1 ratio? This is a big one, both for HawaiianMiles members and points and miles folks. Hawaiian’s miles are much less valuable than Mileage Plan. We value Alaska’s own miles at 1.3 cents each, while Hawaiian’s are a dismal .75 cents apiece. If HawaiianMiles transfer at a 1-1 ratio, it would suddenly make Hawaiian’s credit card, a transfer from Amex Membership Rewards, or another transfer bonus from Bilt very interesting pre-merger. Hawaiian is pledging to “preserve the value” of member’s existing miles, but I could see a lower ratio than 1-1 fitting into that promise. If it is 1-1? Hot. Dog.
• Will Alaska/Hawaiian remain an Amex/Bilt transfer partner? Currently, HawaiianMiles is a transfer partner of Membership Rewards and Bilt Rewards. Alaska doesn’t partner with a transferable currency. My assumption is that Bank of America, who issues Alaska’s credit card, would fight tooth and nail to keep that from happening. Would Alaska use Hawaiian’s existing relationship with Amex or Bilt to jimmy-rig its way in? My guess is no, but it would sure be fun.

Final Thoughts

In the end, there’s still much that we have yet to learn about the merger between Alaska and Hawaiian, including whether or not the US government will actually allow it to happen. There will be a Hawaiian Airlines shareholder vote in Q1 of 2024 that will almost surely pass, then it will be a waiting game to see if the regulators agree as well.

If the merger goes through, I think this is generally good news for members of both programs, and has the potential to make Alaska miles even more appealing. Who says nothing exciting happens on Sundays?

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