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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Nice article Tim.
Looking at the combined route map, is Anchorage a reasonable place considering geography and weather to provide connecting service from the East and Midwest to Asia?
According to Northern Pacific (or whatever they are called this week) – yes. According to Northern Pacific’s track record and common sense – absolutely not. That would require yet another fleet type addition, more than likely Airbus, to Alaska’s “Proudly All Boeing*” fleet.
*And some E175s
Will be interesting to see if this all gets approved next year – if it does I guess we’ll all have a rush on Hawaiian card applications to speculatively build up extra Alaska point balances.
If Bilt stays a transfer partner that short term makes Alaska much more accessible but long term will probably lead to a substantial devaluation in point values.
I’ll get to try out a business class award booking on the Hawaiian 787 next May, that could be an exciting option for trans-pacific flights for the combined airline as more deliveries of that aircraft come in.
Is it good time to apply hawaiian airline credit card as they might go away?
As for transferable currency Bilt maybe, AmEx no. It’s not just Bank of America that would object to AmEx offering it, Delta would too.
Maybe if the transfer rate of Hawaiian miles to Alaska were 3/2 and AmEx offered to transfer to Alaska at 1500 MR points to 1000 Alaska miles everyone would be accept it (except the miles and points community).
Nice article Tim. I didn’t know you could write so well. I’m jealous.
Here’s one I’m curious about. I’ve been enjoying AA’s reciprocal status on Alaska flights thanks to my Platinum Pro status translating into pseudo-Alaska MVP 75K. Currently, I get upgraded to 1st class 60-70% of the time on Alaska flights.
1) I hope/wonder if they will keep this reciprocal relationship alive and add Hawaiian airlines into it.
2) if so, I wonder how this will work with that wide body fleet and those much sexier potential free upgrades.
1) Yes, I think they will and that Hawaiian flights would be added to it.
2) That’s a good question. Alaska’s current elite benefits apply equally to domestic and international flights, but they also don’t have widebody planes or flights to Australia, New Zealand etc. I’ll be interested to what changes, if any, it makes to elite benefits and how they’re applied on Hawaiian flights.
I also have two unrestricted companion passes annually (without 6K spending requirement) but I am really afraid with this merge, the companion pass will match Delta’s companion certificates to be only usable on the route of the 48 contiguous states unless you are residents of Hawaii or Alaska. I am almost confident they will not just allow us to use $99 + tax companion pass to be used on RT to Australia/Japan/Korea lol But please surprise me, Alaska Airline!
That’s my fear as well. That they add an exclusion for either Hawaiian-branded flights or flights within North America. I’d have a hard time imagining that they would confine it to the lower-48 (they are “Alaska” Airlines, after all:)).
I’m most excited for the possibility of using the Alaska Airlines companion fare for flights to the AU/NZ and South Pacific
Preach it!
Since when has a U.S. airline merger worked for the consumer? Spoiler alert …. Never!
‘Who says nothing exciting happens on Sundays?’ – LoL!!
Good write-up! Good entertainment news and looking forward when the dust settles.
And then next year American buys Alaska/Hawaiian.
no way in hell that would ever pass the FTC here in the US. Delta, American, and United are are too big to buy any other large airlines directly. They may enter into a “strategic partnership”, but there’s no way that American could ever buy them outright without dealing with years of FTC red tape and probably being sued by Delta and United.
I’m not surprised. Hawaiian has tons of route overlaps with Alaska that can/will reduce competition and raise prices. I doubt the antitrust folks will look at this buyout favorably.
Tons? The investor presentation says there is less than 3% route overlap and the map in the post meets that eye test. I assume most of that is Hawaii to the west coast. Looking at a good sample of those routes on flightconnections, I see Alaska and Hawaiian compete exclusively on only a small handful of routes. I do agree that the regulators will certainly look at that closely, but I don’t see overlap as a particularly strong argument against the merger.
If the new entity is going to use two trade names (brands), just wondering about whether the quality of the Hawaiian lounges will remain the same or come up to Alaska’s level. Admirala Club reciprocal privileges?
My (complete) guess is that they invest in sprucing up the current Plumeria Lounge in HNL and not the inter-island Premier Lounges.
Exciting news
Any idea when we should anticipate the Hawaiian-Jetblue partnership to end? I’m sitting on some Jetblue points that I’ve been waiting to use for the right Hawaiian redemption, so just trying to figure out how soon I need to act. Also, would partner reservations booked before the partnership ends normally be honored?
Honored: yes.
My guess is that there will be some significant time. The merger still isn’t guaranteed to happen and, even if the feds approve it, the rosiest projections are 12-18 months. You have some time. Absolutely, all reservations made before the merger will be honored.