Alaska / Hawaiian merger gets DOJ green light – what’s next?

At the end of last year, Alaska Airlines announced that it planned to acquire Hawaiian Airlines, a move that had some of us dreaming about how a Pacific-Oceania route map and some fresh, widebody 787s might spruce up what ’til now has been a very domestic Alaska route map. The airlines expected the merger to take between 12-18 months, depending on the feds, who weren’t big fans of either the JetBlue/Spirit merger or American’s attempted alliance with JetBlue.

Last week, the Department of Justice (DOJ) requested an extension to its review of the deal…not once, but twice. This led many folks to speculate that the deal was about to go through, but that the DOJ was asking for additional concessions from Alaska. Evidently, whatever reservations still remained were answered, as the DOJ allowed its review to expire this morning without making any objection to the merger.

The Department of Transportation (DOT) still has to sign-off, but this was the biggest anticipated hurdle and it seems like the merger is set to proceed with no conditions attached.

Many of us “points and milers” thought that this merger would sail through relatively easily. In fact, Greg and I both featured it prominently in our 2024 predictions:

There’s really no risk of market dominance here and the two airlines when combined will still be small compared to the big four. The Biden administration has bigger fish to fry this year and Alaska/Hawaiian won’t be in the pan.

While last week’s requested review extensions seemed to indicate that there might be some behind-the-scenes turmoil, it looks like both Greg and I may finally be able to score a point for this year’s predictions (however, we’re still getting trounced by Stephen Pepper).

What’s next for Alaska Mileage Plan

Even if/when the acquisition completes, there’s still a fair amount that we don’t know about how the merged “standalone” airlines will operate and, more to the point, what the combined loyalty program will look like. These are some questions that I asked when the purchase was first announced:

• 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 to Alaska at a 1-1 ratio, it would suddenly make Hawaiian’s credit card or a transfer from Amex Membership Rewards very interesting pre-merger. Hawaiian is pledging to “preserve the value” of member’s existing miles, and it’s hard to believe that a transfer ratio below 1-1 to feel that way. If it is indeed 1-1? Hot. Dog.

Will Alaska/Hawaiian remain an Amex/Bilt transfer partner?

Currently, HawaiianMiles is a transfer partner of Membership Rewards and, up ’till today, Bilt Rewards.

Bilt has already removed Hawaiian from its list of transfer partners in a move that the VP of Travel Richard Kerr described as “planned.” Evidently, Hawaiian hasn’t been listed as a Bilt transfer partner since June, but no once noticed until the merger news (which says something about how desirable HawaiianMiles are).

However, as of this moment, Hawaiian still partners with Amex. Will that remain the case long-term? Both Bilt, who is a 1-1 transfer partner of Alaska and Bank of America, who issues Alaska’s credit card, would fight tooth and nail to keep that from happening. My guess is that Hawaiian’s days with Amex are short-lived and the time to strike on Hawaiian-to-Alaska transfer speculation (via Amex transfers and/or Hawaiian credit cards) is now.

Final Thoughts

Now that Alaska’s acquisition of Hawaiian has been allowed to proceed by the DOJ, it’s very likely that it will get DOT approval as well…meaning that the merger should proceed.

Personally, I think this is an exciting development and opens up some very compelling arbitrage opportunities with HawaiianMiles in the months ahead.

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