Alaska Airlines and Hawaiian Airlines made a big announcement over the weekend—they entered into an agreement under which Alaska will purchase Hawaiian for $1.9 billion.
Under the proposed merger, the two distinct airline brands would be maintained (unlike when Alaska acquired Virgin America and dissolved the Virgin America name). And the airlines tout that the integration would result in an expanded network for passengers, including more service for Hawai‘i residents by tripling the number of destinations throughout North America that can be reached from the islands through direct and connecting flights. It would also result in more service between the West Coast and the Asia Pacific region by establishing Honolulu as a key hub for making international connections.
On the loyalty front, the deal would connect Alaska’s and Hawaiian’s frequent flier programs, including giving members of both programs access to more airport lounges throughout the world and the ability to earn and use miles through the oneworld Alliance—Alaska is a oneworld Alliance partner airline; Hawaiian is not. The oneworld Alliance includes American Airlines, British Airways, Cathay Pacific, Japan Airlines, Qantas, and Qatar Airways, among a few others.
However, the deal is still subject to regulatory approval, and it remains to be seen if the federal government will sign off.
Earlier this year, JetBlue Airways ended its three-year pact with American Airlines following a federal ruling that declared the union was anticompetitive. JetBlue said that it would instead focus on its bid to purchase Spirit Airlines, but the Justice Department has filed a civil antitrust lawsuit to block the Spirit acquisition claiming that “the merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers, with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly,” according to a statement from Attorney General Merrick Garland.
But while Spirit airfares are considerably lower than those offered by competitors such as JetBlue, when it comes to Alaska and Hawaiian, their airfares are similar. For instance, the average one-way economy fare in September between the continental United States and Hawai‘i was $321, according to data provided by Cirium, an aviation analytics company. Cirium reports that Alaska and Hawaiian’s average one-way economy fares for the same route were $294 and $292, respectively. So, while their fares were slightly below the industry average, they were almost identical to each other.
The deal would, however, inevitably reduce the amount of competition on flights to the islands. Hawaiian currently flies the highest percentage of seats—24 percent—of any U.S. airline between the continental United States and the Hawaiian Islands. If it combined its airlift with that of Alaska, which currently flies 15 percent of seats between the continental United States and Hawai‘i, the airlines would operate 40 percent of the seats on those routes.
But according to the airlines’ executives, passengers and employees will only stand to gain from the merger.
“This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for West Coast and Hawai‘i travelers,” stated Alaska Airlines CEO Ben Minicucci.
“With the additional scale and resources that this transaction with Alaska Airlines brings, we will be able to accelerate investments in our guest experience and technology,” Peter Ingram, Hawaiian Airlines president and CEO, said in a statement.
The 94-year-old Hawaiian Airlines is one of Hawai‘i’s largest employers, and under the proposed merger, the airlines are promising to not just maintain but grow the number of union-represented jobs in Hawai‘i, including preserving Hawaiian’s pilot, flight attendant, and maintenance bases in Honolulu. Additionally, the airlines said they are committed to “promoting regenerative tourism in the Hawaiian Islands and investing in Hawaiian language and culture, continuing and building upon Hawaiian Airlines’ existing programs.”
The two carriers will also remain focused on their environmental commitments, which includes Alaska’s plan to be net zero by 2040 and continuing to invest in sustainable aviation fuel.
In terms of their fleets, following its acquisition of Virgin America, Alaska operates an all-Boeing fleet with an average age of almost 16 years (not including 41 Embraer E175 planes operated by Horizon Air for Alaska), according to Cirium data. Hawaiian operates both Airbus and Boeing aircraft with an average age of around 10 years and has 12 Boeing 787-9 planes on order. Together, the brands would operate a total fleet of 365 narrow- and wide-body planes, serving 138 destinations.
Subject to the necessary approvals and closing conditions, the deal is expected to be finalized within the next 12 to 18 months. The combined organization would be based in Seattle and would be led by Alaska CEO Minicucci.
