Will Alaska Airlines Launch Long Haul Flights From Seattle?

We recently saw Alaska Airlines complete its acquisition of Hawaiian Airlines. While Hawaiian is now part of Alaska Air Group, the job of proving the value in this merger is just starting.

The company is now working toward getting both airlines on a single operating certificate, meaning that on the back-end, the two airlines will become one. However, the company has committed to maintaining the two separate brands in the long run, or at least that’s the claim as of now.

The biggest issue with this merger is simple — Alaska has pretty consistently been profitable, while Hawaiian has been losing money for years. Obviously Alaska acquired Hawaiian because it wants to grow (profitably), though both airlines are very connected to their home markets.

So, what can Alaska Air Group do to turn around Hawaiian’s performance? Could the plan include some of Hawaiian’s wide body aircraft being transfered to Alaska, and being flown out of Seattle?

Alaska Air Group seeks International Development Director

Following the closing of the merger, Alaska Air Group is now hiring an International Development Director. The airline is light on details when it comes to what exactly this entails. The person who gets this role is described as “the sole subject matter expert and thought leader in driving Alaska Air Group’s (AAG) global growth with a focus on delivering successful commercial outcomes.”

We all know why Alaska is seeking someone for this role. Alaska historically hasn’t operated any wide body aircraft. Meanwhile Hawaiian has a large wide body fleet — the airline flies 24 Airbus A330-200s, and is now taking delivery of Boeing 787-9s.

Hawaiian uses its wide body jets both for flights to the US mainland, and also for flights to Asia, the South Pacific, and beyond. Presumably Alaska Air Group executives are now stepping back, looking at the big picture, and figuring out how they can best allocate their resources to maximize profitability.

Why Hawaiian Airlines has struggled financially

It’s important to first consider why Hawaiian has been losing money:

• The US mainland to Hawaii market is super competitive, and Hawaiian doesn’t have some major advantage there over other carriers, like United, so it’s not the highest margin flying on earth
• Hawaiian has faced a ton of competition on inter-island flights, due to expansion from Southwest
• Asia and South Pacific demand is weaker than in the past; in particular, Hawaii is so popular with Japanese tourists, but the weak Japanese Yen has caused a reduction in inbound travelers
• Hawaiian has frankly done an awful job monetizing its loyalty program and developing partnerships, especially given what a desirable destination Hawaii is; as far as I’m concerned, Hawaiian should never have an empty seat on a flight

Some of these issues will work themselves out. For example:

• Alaska management will do a much better job monetizing Hawaiian’s loyalty program, and capitalizing on how much people enjoy traveling to Hawaii
• On the inter-island front, Southwest is starting to pull back a bit, as the airline hasn’t been making money in the market, and is trying to boost its financial performance
• When you combine Alaska and Hawaiian, they have a really strong presence between the US mainland and Hawaii

But that still leaves the issue of Hawaiian’s rather large wide body fleet…

Will Alaska Airlines start flying wide body aircraft?

Alaska Air Group hasn’t announced plans for wide body jets to be transfered from Hawaiian to Alaska. However, I think it goes without saying that this is at least under consideration.

The merit to this is obvious. Alaska has a loyal customer base in Seattle, a massive hub with lots of connectivity, and it’s also a lucrative business market. Logically, you’d think the airline could easily fill planes to places like London, Sydney, Tokyo, etc. Or at a minimum, you’d think these flights would perform better than many of Hawaiian’s current wide body flights out of Honolulu.

Alaska flying wide body jets out of Seattle comes with its own challenges, though. For one, Alaska has historically been an airline all about close global airline partnerships, and it’s going to be hard for Alaska to expand into long haul markets without stepping onto its partners’ toes.

Long haul flying is largely dominated by joint ventures, and that’s also where most of the money is made in long haul flying. Alaska partners with American, British Airways, Japan Airlines, and Qantas, and those airlines all belong to long haul joint ventures. Surely they wouldn’t be happy if Alaska starting competing directly with them, and there could be consequences.

Then there’s the general issue of product quality. Hawaiian’s 787s are pretty great, and have business class suites with doors. Meanwhile Hawaiian’s A330s are definitely more leisure oriented, as they’re in a 2-2-2 configuration, and wouldn’t be competitive in business markets. Yes, Alaska could reconfigure these, but there’s only so much you’re going to want to invest in classic A330s.

I guess a completely different approach could be that Alaska Air Group could try to build up Hawaiian’s Pacific hub in Honolulu. For example, if you’re flying from Seattle to Sydney, then Honolulu is basically right on the way. Wouldn’t it make sense to route people through there, and then you could capture a lot more travelers?

I find this merger incredibly exciting in part because I have no clue how this is going to play out. I don’t even have a guess I’m confident about. I feel like with past airline mergers in the United States, there hasn’t been much mystery to how things would play out. However, this is a merger that’s unlike any other US merger we’ve seen, in terms of the airlines both being so closely tied to their home markets, plans to maintain separate brands, etc.

If I had to guess, my gut tells me that we’re going to maybe see 787s transfered to Alaska and flown out of Seattle in prime business markets, while the A330s might stay in Hawaii, with a bit more effort put into building an integrated network.

Since there’s just a small 787 fleet, Alaska could probably do that without annoying partners too much, while still adding some profitable flying. I could be totally wrong, but that’s my best guess.

Bottom line

Alaska Airlines has now completed its acquisition of Hawaiian Airlines, though the work is just getting started. The company intends to maintain two separate airline brands, which is unconventional, but kind of intriguing.

What I’m most curious about is to see what happens to Hawaiian’s wide body fleet, consisting of A330s and 787s. Hawaiian has struggled with flying these jets profitably, so can they be put to better use out of Seattle with Alaska? And if so, can Alaska accomplish that without causing too many issues with its partners? Or is the airline group better off optimizing long haul flying out of Honolulu?

How do you see the Alaska Air Group wide body aircraft situation playing out?