There’s some positive news for Alaska Airlines and Hawaiian Airlines, when it comes to their merger. The airlines won’t face the same fate as JetBlue Airways and Spirit Airlines…
In this post:
Alaska’s takeover of Hawaiian clears major hurdle
In December 2023, plans were announced for Alaska Airlines to acquire Hawaiian Airlines, in a $1.9 billion deal. Hawaiian has been struggling in recent years due to a variety of factors, while Alaska is looking to grow, and viewed this as an attractive opportunity.
When the merger was announced, one immediate question was whether this deal would face any regulatory scrutiny. After all, the Department of Justice (DOJ) under the Biden Administration has taken a very aggressive approach with trying to block consolidation. The DOJ sued to block the merger between JetBlue and Spirit, and was successful, causing the merger to be called off.
For the past several months, there has been a review period during which the DOJ could challenge the merger. Well, that has officially expired as of yesterday (Monday, August 19, 2024), and since the DOJ didn’t request an extension for the review period, that means the merger won’t be challenged. Interestingly the DOJ didn’t even require the combined airline to agree to any specific conditions in order to get the deal to close.
This is a significant milestone in the merger between the two airlines. The proposed combination remains subject to other customary closing conditions, including approval from the Department of Transportation (DOT). Following that step, the airlines will work to close the transaction, and proceed with integrating the two companies.
Alaska reaffirms commitment to state of Hawaii
Obviously the major concern with Alaska Airlines’ takeover of Hawaiian Airlines is what the impact will be on Hawaii travel. This includes the impact on the inter-island market, the Hawaii to mainland market, and the Hawaii to other international destination market:
- Hawaiian has been struggling with inter-island flying, given how much competition it has faced from Southwest, and it’s obviously very important to the state for this service to be maintained
- Hawaiian has roughly had the same market share as United between Hawaii and the mainland, and when you combine Alaska and Hawaiian, the airlines will control around 40% of market; that’s not a monopoly, but there are concerns about what this means for competition
- Hawaiian offers the most service from Hawaii to other international destinations in the Pacific, and it’s important for the state that this service is maintained, and that it isn’t lost in the merger
So it’s not surprising that Alaska has reaffirmed its commitment to Hawaii. The airline has stated that it worked closely to reinforce and expand its commitments for the future of its presence in Hawaii, including plans to maintain the Hawaiian Airlines brand and local jobs, and continue providing strong service between, to, and from the islands.
Hawaii Governor Josh Green has released the following statement following this latest development:
“Over the past several months, my administration and I have worked with the leadership of Alaska Airlines to carefully review the potential impacts of a consolidation and we insisted that any changes expand travel options for our residents and preserve union jobs.”
“Alaska has reinforced commitments to our state and will maintain the Hawaiian Airlines brand, preserve and grow union jobs in our Hawai‘i, as well as continue to provide crucial passenger and air cargo service to, from, and within the islands.”
“The merger will vastly expand the number of destinations throughout North America for Hawai‘i residents that can be reached nonstop or one-stop from the islands, and HawaiianMiles members will retain the value of their miles while gaining access to more destinations around the world.”
“I am confident that by the joining of these two airlines, a stronger company will emerge and offer more travel options for Hawai‘i residents and local businesses — and will enhance competition across the U.S. airline industry.”
“I appreciate the DOJ’s strong consideration of Hawai‘i’s unique needs during its review of the proposed merger. I look forward to this merger proceeding and the overwhelming consumer, employee and community benefits that will result from it.”
Bottom line
In December 2023, Alaska announced plans to acquire Hawaiian. Over the past several months, the DOJ had the opportunity to challenge this merger, which could have caused a similar outcome to what we saw at JetBlue and Spirit.
Ultimately the DOJ has let the review period expire, meaning that the DOJ doesn’t intend to challenge this takeover. Now the merger can proceed, so we’re one step closer to the latest US airline industry merger. This will have implications for your miles, so this potentially creates some opportunities.
What do you make of the DOJ not challenging Alaska’s takeover of Hawaiian?
It will be interesting to see if they will operate it as two separate airlines or if it will all become Alaska. It may be beneficial for business purposes to keep the branding separate.
They have said they will keep the branding separate. But that doesn't mean they will be two firms under one owner. There is the possibility I suppose that the airline is effectively a single airline operator with two brand names but essentially everything else is the same.
Even if this goes through, it will be many years before Alaska starts operating longhaul international flights from SEA.
The TATL and TPAC JVs crush the competition and even if AS was to join the Europe OW JV, they'd likely be hurt more than helped by it. AA suffers from exactly this problem by overloading its Europe network w/ LHR, which brings down its fares significantly. They also have basically no presence on the East...
Even if this goes through, it will be many years before Alaska starts operating longhaul international flights from SEA.
The TATL and TPAC JVs crush the competition and even if AS was to join the Europe OW JV, they'd likely be hurt more than helped by it. AA suffers from exactly this problem by overloading its Europe network w/ LHR, which brings down its fares significantly. They also have basically no presence on the East Coast, while the overwhelming majority of the population sits in that EST to CST zone.
AS would be much smarter to eye the premium transcon market as a first step. They can build up a presence on the East Coast and leverage those to feed into HNL and SEA TPAC flights.
thank you for your logical and well-stated posts here and below.
As much as some people want to believe otherwise, there is little incentive for AS to want to be a part of a JV with AA and the DOJ is very likely to have a bigger issue with having AA/AS as the same anchors of JVs than they did with AA and B6. AA still has several very large hubs and the JVs it...
thank you for your logical and well-stated posts here and below.
As much as some people want to believe otherwise, there is little incentive for AS to want to be a part of a JV with AA and the DOJ is very likely to have a bigger issue with having AA/AS as the same anchors of JVs than they did with AA and B6. AA still has several very large hubs and the JVs it does participate in are large in those specific markets.
And LHR and HND are both very limited access markets; if AS wants to buy slots at LHR, they are available just as they are for B6. HND frequencies to the US have been given out so AS' opportunity to go to Japan is to NRT where US fares continue to fall because there is enough capacity from the US to HND that makes the geography of NRT unconducive for good local Tokyo fares.
Going through the Pacific rim, S. Korea is pretty well locked up w/ DL-KE.
SEA-TPE is very well served right now and one of the 3 carriers would love to have a deeper relationship with AS but not at the expense of their own flight being replaced by AS.
China is effectively closed to new flights.
HKG could work but other than UA, no US carriers currently fly there.
SIN could work but only as part of a larger Pacific network.
And the bigger challenge for AS growing across the Pacific - which is the most logic place for international expansion - is that Delta has 2 dozen new A330NEOs and A350s coming just in 2024 and 2025; they will be growing their Pacific network. They say that SEA-TPE is doing well which means more expansion is likely.
the biggest hope AS has for joining a JV is as part of the DOJ's approval of the Korean/Asiana merger which is expected later this year. KE/OZ together will provide a significantly larger ICN operation and more opportunities for DL which is chomping at the bit to add ICN flights. S. Korea is a very important ally to the US so it will be very hard for the US to say "no" but that doesn't mean there can't be a lot of horse trading.
As you note, beefing up its transcon service makes far more sense but SEA transcon markets are not that large to dictate dedicated widebody capacity. The whole reason why AS underperforms to the eastern US is because they weren't willing to have a dedicated domestic premium fleet as Virgin America had. They could accomplish much of what they need by having a premium configured MAX 9 or 10 or keeping the A321NEOs and making them more premium configured.
None of this will happen fast; AS' first job is to stem HA's losses which means lots of changes will be coming.
Dreams of AS becoming an international carrier weigh against their history of being well-run and not trying to bite off more than they can chew - and returning to their core markets when they face resistance which they certainly will.
There are 3 major west coast carriers that will be putting enormous competitive pressure on AS - DL, WN and UA - all for different reasons.
SEA market is probably big enough to sustain premium transcons and the route is certainly long enough to dictate one. The issue is rightsizing the fleet, Delta was trying to run widebodies and 757s for this, which failed. Delta's premium A321neos on the other hand should do a very good job of it vs trying to fill widebodies. B6 has it down w/ Mint configured A321s.
Delta should seriously think about it if it truly...
SEA market is probably big enough to sustain premium transcons and the route is certainly long enough to dictate one. The issue is rightsizing the fleet, Delta was trying to run widebodies and 757s for this, which failed. Delta's premium A321neos on the other hand should do a very good job of it vs trying to fill widebodies. B6 has it down w/ Mint configured A321s.
Delta should seriously think about it if it truly wants a TPAC hub in SEA, otherwise that Delta One lounge is going to be sitting very empty most of the time.
my point is precisely that premium narrowbodies are a better bet for SEA transcons than widebodies. I agree that SEA to JFK and BOS would be good candidates for DL's premium transcon 321NEOs; it is precisely that aircraft or the MAX 9 or 10 in a similar configuration which I suggested that AS might want to consider.
As for the D1 lounge, DL has 4 TPAC and 3 TATL destinations from SEA, IIRC - which...
my point is precisely that premium narrowbodies are a better bet for SEA transcons than widebodies. I agree that SEA to JFK and BOS would be good candidates for DL's premium transcon 321NEOs; it is precisely that aircraft or the MAX 9 or 10 in a similar configuration which I suggested that AS might want to consider.
As for the D1 lounge, DL has 4 TPAC and 3 TATL destinations from SEA, IIRC - which makes DL the largest international carrier or even alliance at SEA by a fairly wide margin.
specific to SEA-LHR, DL/VS and BA each have 2 flights and BA really doesn't have that much more capacity given that they have a large hub in the UK - so either DL does a pretty good job of feeding its own and VS' LHR flights or all of the other foreign carriers are competing very well for all of the traffic that also goes beyond LHR.
If anyone can make SEA work premium transcon it would be Delta with their BOS and JFK hubs that are doing extremely well now.
Delta certainly does the most international flying for a carrier, but Star Alliance is definitely on par, despite SEA's non hub status for them. LH group has FRA/MUC/ZRH now, with SWISS likely to launch full time service over. Also having BR/TK/ANA/OZ/SQ is pretty robust. OZ will move over to DL/KE though....
If anyone can make SEA work premium transcon it would be Delta with their BOS and JFK hubs that are doing extremely well now.
Delta certainly does the most international flying for a carrier, but Star Alliance is definitely on par, despite SEA's non hub status for them. LH group has FRA/MUC/ZRH now, with SWISS likely to launch full time service over. Also having BR/TK/ANA/OZ/SQ is pretty robust. OZ will move over to DL/KE though. (Now that I say this, it looks very crowded already, not sure what AS can do here profitably)
DL's SEA-LHR is definitely the weakest of the 3. Since SkyTeam at LHR is much more focused on point to point than BA is. DL seasonally reduces SEA-LHR capacity and moves over its slots and aircraft, this year to MCO.
alot of those Star carriers you list are not part of a joint venture.
It isn't a surprise that Star has the largest presence at SEA since they are the largest alliance but that doesn't mean there is any coordination other than marketing and some benefits.
given that UA pulled its BOS-LHR flight after a short time and AA has dropped some LHR flying w/o a direct BA replacement, it isn't a surprise that...
alot of those Star carriers you list are not part of a joint venture.
It isn't a surprise that Star has the largest presence at SEA since they are the largest alliance but that doesn't mean there is any coordination other than marketing and some benefits.
given that UA pulled its BOS-LHR flight after a short time and AA has dropped some LHR flying w/o a direct BA replacement, it isn't a surprise that LHR has more capacity than it needs right now.
But again, Delta manages to generates the highest profits of any US carrier and also does it across both the Atlantic and Pacific on either an absolute or per ASM basis. So, if SEA-LHR is weak for DL, then there are clearly a whole lot of much weaker markets for other carriers. AA doesn't operate its TATL and TPAC networks at breakeven w/o there being some money-losers among the routes it serves while UA makes just half of what DL does across the Atlantic and almost half of what UA does on a per ASM basis across the Pacific w/o there being a lot of dogs there.
UA made a big deal about holding onto widebody aircraft so it could jump on international expansion post covid and yet there are signs that the international market is flattening out just as has happened with the domestic market.
add in that SEA has a lot of international service on many carriers and it simply means that it will be much harder for AS to break into the longhaul international market than a lot of people think.
Given that keeping the A330s and 787s will be costly, it is very possible that one of AS' first decisions will be to start getting rid of the A330s as soon as labor integration issues are settled.
Given that HA flies for Amazon, getting rid of the A330s also means getting rid of the Amazon contract which many HA pilots like doing only because it keeps them employed but at lower rates than HA's own passenger flying.
looks like Alaska is hedging it’s bets in the event plans a, b, c, through to K continue to fail and a political and euphemistic economic seat belt softening and tightening ensues.
This merger gives AS the ability to grow its Seattle Hub with the right wide-body fleet (787 by no means is guaranteed over the A330 i might add) and increase Alaska’s ability to right size the Pacific frequencies and timings of its entire...
looks like Alaska is hedging it’s bets in the event plans a, b, c, through to K continue to fail and a political and euphemistic economic seat belt softening and tightening ensues.
This merger gives AS the ability to grow its Seattle Hub with the right wide-body fleet (787 by no means is guaranteed over the A330 i might add) and increase Alaska’s ability to right size the Pacific frequencies and timings of its entire Hawaii network to the islands with growth or easy contractions of Wide-Bodies should demand out strip supply or vice versus.
AS is going to crash and burn (figuratively) if they even think of launching SEA longhaul service with HA's A330s today.
Those are extremely leisurely configured and their business cabin will not be competitive in any shape or form with international carriers. It must be the 787s since I doubt they want to do an extensive A330 retrofit program.
you nailed it… 330s extremely leisurely configured. The Alaska brand doesn’t really need sleeper seats for a 3.5 to 5.5 hour flight. Maybe the Hawaiian Brand does need sleepers for its extremely lengthy flights. Those can be had on A330s too!
The potential good news in this maybe that AS will get rid of HA's awful IT system. The potential bad news is that all the HA Airbuses will be gone (ala VA) and we will be flying Max10s to Pago Pago.
DA is not wrong about Hawaiian's truly bad IT system. Long story short: I flew Hawaiian but had issues getting points credited to my home airline, which is a partner airline of Hawaiian. Was told by the agent assisting me that her Hawaiian counterpart had to resort to manual list checking(!) to confirm my details because "their computer system is primitive".
HA and AS have a lot of work in front of them:
- mixed narrow body fleet (B737 will prevail, can be used for inter island like WN)
- mixed wide body fleet (bet either B787 or A330 assigned to SEA for Euro service)
- back office procedures & personnel consolidated (finance, IT, legal, accounting, benefits & HR from HA will prevail)
- union contracts (shift to HA contracts, seniority will...
HA and AS have a lot of work in front of them:
- mixed narrow body fleet (B737 will prevail, can be used for inter island like WN)
- mixed wide body fleet (bet either B787 or A330 assigned to SEA for Euro service)
- back office procedures & personnel consolidated (finance, IT, legal, accounting, benefits & HR from HA will prevail)
- union contracts (shift to HA contracts, seniority will be the hot button issue)
- FF programs, code share, and alliances to be sorted out and credits mapped accordingly
- renegotiation of vendor contracts (HA vendors will probably get the nod)
- consolidation of MRO bases, inventory of spare and exchange of parts, etc
- best of all, who survives in the C-Suite, and various presidents & vice-presidents on down the line.
Based on my past experience, those on operating side of the fence survive, maybe a shuffle or two at the most.
Those further up the food chain are very, very concerned.
This really does me wonder if DOJ would have approved a spirit/frontier merger. It makes me think that the JetBlue/spirit combined airline would have just had too much market share at enough locations that DOJ couldn't even come up with a proper list of concessions to make it work. Perhaps DOJ is also pressured from some of that backlash but everyone needs to realize JetBlue was the problem in that proposed merger and, in their...
This really does me wonder if DOJ would have approved a spirit/frontier merger. It makes me think that the JetBlue/spirit combined airline would have just had too much market share at enough locations that DOJ couldn't even come up with a proper list of concessions to make it work. Perhaps DOJ is also pressured from some of that backlash but everyone needs to realize JetBlue was the problem in that proposed merger and, in their typical strategic fashion, thought they would whine about it enough to get their way
JetBlue/Spirit had the bad timing to be the first proposed merger to come across the desk of the DOJ's new anti-trust zealot/enforcer Jonathan Kanter. Kanter wanted to send a message that a new sheriff was in town and he needed a scalp. Route overlap and airport specific market share concentration way worse with AS/HA merger than B6/NK. Frontier-Spirit even worse route overlap. There's no other conclusion to draw other than B6 has been singled out...
JetBlue/Spirit had the bad timing to be the first proposed merger to come across the desk of the DOJ's new anti-trust zealot/enforcer Jonathan Kanter. Kanter wanted to send a message that a new sheriff was in town and he needed a scalp. Route overlap and airport specific market share concentration way worse with AS/HA merger than B6/NK. Frontier-Spirit even worse route overlap. There's no other conclusion to draw other than B6 has been singled out for some historically anomalous and unequal antitrust enforcement. The ruling was way out outside the actual law. There's absolutely no law that discriminates between a ULCC and LCC business model. There's also no law that designates certain airlines with the duty of being a loss-making price enforcer. Very fishy. The only winners were DL, UA and AA.
Who is going to choose the cabin temperature settings post-merger? AS is too cold, HA is always roasting!
HA needs a financial savior and AS believes being larger strategically makes sense so let's see if they can make it work.
Getting the merger approved is a far easier task than for AS to integrate HA and keep AS' margins up which have just now returned to best-in-class positions - on a basic transportation basis, AS, DL and UA all reported nearly identical margins for the 2nd quarter.
AS' margins fell significantly...
HA needs a financial savior and AS believes being larger strategically makes sense so let's see if they can make it work.
Getting the merger approved is a far easier task than for AS to integrate HA and keep AS' margins up which have just now returned to best-in-class positions - on a basic transportation basis, AS, DL and UA all reported nearly identical margins for the 2nd quarter.
AS' margins fell significantly in the years after the Virgin America acquisition.
HA operates a much more complex fleet for its size even compared to the big 3.
And DL, UA and WN all of which are far larger than AS and HA combined - have very good reasons to keep the pressure on over the next few years of integration even as AS tries to stem HA's losses.
AS has historically been a well-run company and integrating HA and then figuring out how to make the combined airline as profitable as AS has been in its prime will be a huge task.
Hawaiian’s margins were relatively strong pre-pandemic but have been hit by the strong dollar. If this weakens vs other currencies (which is already has somewhat vs the Yen and Aussie $), those international flights should become more profitable.
Also funny how you mention Delta with WN and United as being able to apply pressure. The latter 2 are in a class of their own with the combined Alaska + Hawaiian in serving Hawaii, and unless...
Hawaiian’s margins were relatively strong pre-pandemic but have been hit by the strong dollar. If this weakens vs other currencies (which is already has somewhat vs the Yen and Aussie $), those international flights should become more profitable.
Also funny how you mention Delta with WN and United as being able to apply pressure. The latter 2 are in a class of their own with the combined Alaska + Hawaiian in serving Hawaii, and unless Delta thinks it can boost capacity to compete at the already straining SEA not sure what they can do.
Alaska will probably look to right-size the fleet and now has international service and more wide bodies ordered that are incoming. It can now decide whether it wants to compete in SEA internationally or focus on Hawaii, the former being Delta’s lone advantage vs Alaska in SEA. Will be interesting to see the next 4-5 years play out.
first, the weak yen is impacting all US-Japan traffic and HA is relatively small in the market compared to other players. There is no expectation that the USD-JPY relationship will change anytime soon which means that HA's previous profits from Japan tourism are unlikely to return. At some point, Japanese tourists "reprogram" where they vacation and we are now going on five years of much lower Japan to Hawaii tourism.
second, DL is the second...
first, the weak yen is impacting all US-Japan traffic and HA is relatively small in the market compared to other players. There is no expectation that the USD-JPY relationship will change anytime soon which means that HA's previous profits from Japan tourism are unlikely to return. At some point, Japanese tourists "reprogram" where they vacation and we are now going on five years of much lower Japan to Hawaii tourism.
second, DL is the second largest carrier on the west coast by revenue behind UA. DL and UA have extensive international route systems from multiple western US hubs including DL from SEA.
AS and DL have comparable local SEA average fares in the western US but DL has a significant average fare advantage not just to Asia but also to the eastern US. DL is also the 2nd largest airline to Alaska and much of that strength comes from the eastern US.
UA is far more focused on Hawaii which is where WN will also do all it can to limit the success of AS/HA but DL has a larger overall overlap with AS.
And let's not forget that AS/HA will grow more than just from SEA. Part of the reason why Virgin America struggled is because of the pressure UA put on them at SFO.
You are right that AS has no choice but to rationalize HA's complex fleet and do it fairly soon. Ironically, DL is the only airline in the world that operates the 717 and A330 - which DL has maintained for HA, btw - so it is very possible that AS and DL could find it in both carriers' interests to work together on fleet rationalization.
this will indeed be a merger to watch but let's not underestimate the work that AS has to do and how many larger players have an interest in seeing AS/HA not go as smoothly as AS would like or needs
There is definitely work for Alaska to figure out, but your perspective on Japan tourism is likely wrong. Japan was closed to inbound tourism from 2020 to fall 2022 (3 of your 5 years) so travel everywhere was dead - then there were massive wildfires in Maui last year. Japan tourism to Hawaii has recovered to ~60% of pre-COVID levels with huge growth in Q1 2024 in air capacity and passenger volume (https://dbedt.hawaii.gov/blog/24-14/).
Outbound tourism...
There is definitely work for Alaska to figure out, but your perspective on Japan tourism is likely wrong. Japan was closed to inbound tourism from 2020 to fall 2022 (3 of your 5 years) so travel everywhere was dead - then there were massive wildfires in Maui last year. Japan tourism to Hawaii has recovered to ~60% of pre-COVID levels with huge growth in Q1 2024 in air capacity and passenger volume (https://dbedt.hawaii.gov/blog/24-14/).
Outbound tourism overall to anywhere from Japan in 2024 vs 2019 is down ~35% so the drop to Hawaii is only slightly more than other countries which can likely be attributed to the strong dollar. We have already gone from $1 to 162 JPY to $1 to 145 JPY (JPY is strengthening) and most expect this to continue. There are very strong indications and reasons to expect this demand will recover.
There is a lot to figure out - will Alaska try and gain entry to the TATL or TPAC JVs for OneWorld (unlikely in this admin but very possible if there's a Trump admin)? Will Alaska upgrade its transcontinental offering from Seattle? How much of the Hawaiian long-haul routes will Alaska keep? Will Alaska stop interlining local Hawaiian flights with United and Delta which would hurt the latter two significantly to Hawaii as they'd be unable to serve local markets? How much will Alaska try to grow internationally?
These questions neither you nor I have any indication on which we will have to wait and see. All we know is Alaska now has new opportunities and scale with no losses to its existing operation that it did not have before which should allow it to scale up further as a carrier.
doug,
covid affected alot including the hybrid work environment, much of which has not changed 3 years after covid.
There is no outlook for the JPY/USD relationship to change which makes it unlikely for their to be a change in Japanese tourism to the US.
and the biggest impact on Japan-Hawaii is the fact that the duplicate NRT/HND airport situation is causing overcapacity. NH is using their A380s on NRT to HNL and there...
doug,
covid affected alot including the hybrid work environment, much of which has not changed 3 years after covid.
There is no outlook for the JPY/USD relationship to change which makes it unlikely for their to be a change in Japanese tourism to the US.
and the biggest impact on Japan-Hawaii is the fact that the duplicate NRT/HND airport situation is causing overcapacity. NH is using their A380s on NRT to HNL and there would certainly not be near as much capacity between Tokyo and Hawaii if all of it came from just one Tokyo airport.
As for AA/AS, there is virtually no benefit in SEA to adding AS to AA's JVs and the DOJ will very likely try to block it just as it did with AA/B6 because of AA's overall nationwide size.
As for fleet, AS' costs will soar to legacy levels until they start getting rid of several fleet types. If it mattered for AS to get rid of the A320 fleet from Virgin America, getting rid of the 717s and 330s will be much more important unless AS is willing to accept more costs - on top of the HA A321s which still might be pulled from the fleet.
Do people really think it's going to be that easy for AS to enter the international market?
Europe is all but locked up in tight JVs, JetBlue has not been a disruptor at all in that market, despite its ideal positioning w/ two very good point to point TATL hubs. AS is going to find it even harder to enter the market, especially from a West Coast hub. On top of that, AS wouldn't even...
Do people really think it's going to be that easy for AS to enter the international market?
Europe is all but locked up in tight JVs, JetBlue has not been a disruptor at all in that market, despite its ideal positioning w/ two very good point to point TATL hubs. AS is going to find it even harder to enter the market, especially from a West Coast hub. On top of that, AS wouldn't even have the LHR slots to launch service.
Asia/Pacific similarly has JVs and AS wouldn't be having a HND slot for Japan, where else do they plan on flying? Not enough range for something like SIN/SE Asia, TPE/ICN/HND are all locked up at this point.
AS flying SEA premium transcon would be a much more logical step imho. And it'd push Delta to bring better planes over to SEA. AS has the worst transcon experience of full-service carriers rn, which is why its so weak on the East Coast.
AS has the most domestic feed and strength in SEA, but it is an open question how big that market is to Europe and Asia. They do have HND slots now from HNL (unlikely they will be able to move it) as well as service to ICN (also HNL).
Delta does well on LFs to Paris and Amsterdam (both its JV partner hubs), but there's a reason why the only other service they have to...
AS has the most domestic feed and strength in SEA, but it is an open question how big that market is to Europe and Asia. They do have HND slots now from HNL (unlikely they will be able to move it) as well as service to ICN (also HNL).
Delta does well on LFs to Paris and Amsterdam (both its JV partner hubs), but there's a reason why the only other service they have to Europe is London. Delta's London LFs are poor and they almost certainly are losing $$ on it (which is also likely why AA pulled out), but it's an important prestige route. SEA is poorly placed as a hub to Europe anyways so agree the opp. there doesn't seem great.
TPE is likely too competitive of a market to be desirable from SEA with 4 carriers now - the LFs are showing signs of weakness as per Enilria and that is with a 3rd carrier just entering and a 4th not even starting. The unserved market opportunity from Seattle is probably India but w/ Russian airspace that becomes tough. Perhaps Alaska can target a destination in China to compete w/ Delta in Shanghai (which performs well).
Transcons make sense, but no airline has really had long-term success with premium seating from SEA - it's strictly a SFO / LAX thing. So maybe SEA - JFK but unsure how much demand there is for SEA - BOS, SEA - DCA (they have slots for this), or SEA - MIA. Joining the competition in the NYC - LA or SF routes seems to be a bad strategy.
You're confusing your opinion with facts - as I said above, your opinion on Japan tourism to Hawaii likely neve recovering is PURELY opinion. Tourism to Hawaii has already increased substantially (as I shared w/ actual data) and the yen is ~10% stronger than its low earlier this year. Where it trends afterwards is a question - we have a presidential candidate publicly asking for a weaker dollar. This is in the post-COVID world that...
You're confusing your opinion with facts - as I said above, your opinion on Japan tourism to Hawaii likely neve recovering is PURELY opinion. Tourism to Hawaii has already increased substantially (as I shared w/ actual data) and the yen is ~10% stronger than its low earlier this year. Where it trends afterwards is a question - we have a presidential candidate publicly asking for a weaker dollar. This is in the post-COVID world that you claim.
If AS was added to AA's JVs there is definite potential for OneWorld to kick Delta out of SEA-LHR (which performs poorly - the April LF data from posters on Airliners.net show it at <70%) and reduce Delta's LF on SEA-HND. Independently Alaska will further gain an advantage vs Delta in travel to Hawaii w/ far more frequencies - if they stop interlining w/ Delta they will have connectivity Delta cannot match.
Plus, there still is HNL-HND - with another OneWorld frequency (w/ the JV this would further compound), Delta is at a clear disadvantage here for a route that anyways wasn't performing. They nearly gave up this slot a few years ago - that is very possible again in a few years which would take another valuable HND slot to bidding which would likely benefit AA or UA since it's hard to see where Delta could win a new route and benefit.
You believe the DOJ will try to block, but we had the DOJ overlook the NEA under another admin just a few years ago. It is definitely possible. Very likely is purely your conjecture that we do not know about. Again, lots to see that will be interesting to see unfold over the next 5-10 years, but Alaska has a clear opportunity to squeeze Delta further in SEA and become on-par with Delta and Southwest on the West Coast (behind United).
Doug,
Daddy's opinions are as good as everyone else's facts!
The new AS/HA will not be allowed to stop interlining in interisland travel as that would be uncompetitive.
You are crazy if you think that the DOJ or even the EU would allow 2 American carriers to enter JVs together like that, which are the pinnacle of what anti-trust goes against.
The TPAC JV w/ JAL seems slightly more possible, given that AA basically does no Asia flying.
Regardless, Delta way overestimated the potential of...
The new AS/HA will not be allowed to stop interlining in interisland travel as that would be uncompetitive.
You are crazy if you think that the DOJ or even the EU would allow 2 American carriers to enter JVs together like that, which are the pinnacle of what anti-trust goes against.
The TPAC JV w/ JAL seems slightly more possible, given that AA basically does no Asia flying.
Regardless, Delta way overestimated the potential of the SEA market as a TPAC hub, AS would be smart to not repeat those mistakes. Careful, controlled, and disciplined growth is what got AS to where it is today. They will be saddled with many issues they inherit from HA, entering the international market is going to take a lot of time for them.
AS / HA have no restrictions for interlining interisland travel - as Ben mentioned in a comment on another post, it is very likely this happens despite it appearing uncompetitive. If this were to be stopped, then the DOJ would have had to make that challenge now which did not happen.
The JV is a tougher sell, but given there is no AA presence in Seattle with the right administration it's possible to see a...
AS / HA have no restrictions for interlining interisland travel - as Ben mentioned in a comment on another post, it is very likely this happens despite it appearing uncompetitive. If this were to be stopped, then the DOJ would have had to make that challenge now which did not happen.
The JV is a tougher sell, but given there is no AA presence in Seattle with the right administration it's possible to see a conditional approval. We shall see = we've had a lot of odd M&A in Europe get approved.
Agree that SEA intl flying won’t happen for a while. If it does happen I wouldn’t be surprised to see existing HA cities expanded first (SEA to Tokyo, Seoul, Sydney) before anything TATL. Fleet simplification seems like a top priority- the 737 replacing 717 makes a lot of sense as these can be rotated throughout the network. Unsure where the A321 fits in long-term
JVs aren't just for the SEA market to be added; they are for the entire US market to those countries.
Adding AS/HA to JVs significantly increases the size of those JVs IF AS also serves those cities; there is no reason for any foreign carrier to add AS to a JV unless AS flies to the countries where those JV airlines operate. Why would a Japanese airline want a JV and share revenue with...
JVs aren't just for the SEA market to be added; they are for the entire US market to those countries.
Adding AS/HA to JVs significantly increases the size of those JVs IF AS also serves those cities; there is no reason for any foreign carrier to add AS to a JV unless AS flies to the countries where those JV airlines operate. Why would a Japanese airline want a JV and share revenue with an airline unless they can add something to the network other than feeding domestic flights?
and you still have to race that the highest value international airports from SEA are served by foreign airlines in those JVs and Delta and its JV partners.
It is more than a huge step for AS to profitably break into those markets let alone to a level that foreign airlines want to add AS to a JV.
AS' strengths are also their weaknesses. Being so strong on the West Coast has enabled them to sustain their domestic/short haul focused operations.
Unfortunately, it's also their undoing. SF/LA markets are already heavily saturated to the point where entering is not doable. LA is not a money-maker. SEA has potential, but it's already quickly getting saturated for its size. Between Delta's JV flights, the increasing Star presence, the existing JVs, and being on the West...
AS' strengths are also their weaknesses. Being so strong on the West Coast has enabled them to sustain their domestic/short haul focused operations.
Unfortunately, it's also their undoing. SF/LA markets are already heavily saturated to the point where entering is not doable. LA is not a money-maker. SEA has potential, but it's already quickly getting saturated for its size. Between Delta's JV flights, the increasing Star presence, the existing JVs, and being on the West Coast, there's very limited TATL potential for Alaska who has no East Coast presence at all.
TPAC is certainly a possibility, but SEA's geography means Air Canada is selling cheap one stop options via YVR to nearly everywhere include deep SE Asia and Australia markets. Meanwhile UA's crown jewel of SFO and the big 3 contested LAX block any TPAC expansion. Not to mention the JVs blocking new entrants. The only real way for AS to get a foothold would be to enter the AA/JAL JV since AA has very limited Asia service to begin with.
again, there is no reason for a foreign carrier in AA's JVs to add a US carrier that currently only flies domestic flights.
AS needs to add foreign flights and the list of obstacles by city should not be glossed over.
With all the fixation on growing SEA, there are other smaller west coast cities that would love to have more international service including PDX where AS is the largest carrier by a wide...
again, there is no reason for a foreign carrier in AA's JVs to add a US carrier that currently only flies domestic flights.
AS needs to add foreign flights and the list of obstacles by city should not be glossed over.
With all the fixation on growing SEA, there are other smaller west coast cities that would love to have more international service including PDX where AS is the largest carrier by a wide margin and with plenty of connecting flights.
Instead of fighting it out for SEA where DL and its JV partners have a large presence on top of a bunch of other carriers, AS' best bet may be to build other cities including PDX.
You can keep claiming it, but DL and its JV partners do not have a large presence outside of their SkyTeam hubs in SEA. For one, AviationDB LF stats for April 2024 for Delta's Europe and Asian routes:
- LHR: 67.5% (definitely losing $$)
- CDG: 86%
- AMS: 85.5%
- HND: 85%
- ICN: 85.5%
- PVG: 76% (probably break-even)
Alaska will not be able to beat Delta in...
You can keep claiming it, but DL and its JV partners do not have a large presence outside of their SkyTeam hubs in SEA. For one, AviationDB LF stats for April 2024 for Delta's Europe and Asian routes:
- LHR: 67.5% (definitely losing $$)
- CDG: 86%
- AMS: 85.5%
- HND: 85%
- ICN: 85.5%
- PVG: 76% (probably break-even)
Alaska will not be able to beat Delta in AMS, ICN, and CDG, but outside of that it's all fair game. For instance, British Airways in June was at a 96% LF vs Virgin Atlantic's 89% - typically they average ~10% higher LFs than Delta and VA on average (with higher fares). If Alaska can add service and join that JV, them + BA would almost certainly beat out Delta + VA.
Similarly, there is no OneWorld service to Haneda today from SEA - now, if Alaska can run off Delta for HNL - HND (likely) that's an opportunity in which w/ JAL it would have an advantage over Delta. Now make that a JV and it becomes a very lucrative potential opportunity.
Plus, we haven't even started talking about South Asia (Indigo partners w/ much of OneWorld and big demand to SEA) and the Philippines (Philippine Airlines partnering with most OneWorld Airlines like AA, Cathay, Malaysian, etc.). TPE is likely too competitive for anyone to make money until some drop out in the next year.
Plus, you are neglecting the South Pacific - Alaska already partners with Air Tahiti Nui to Papeete in Tahiti and will now serve New Zealand & Australia (+ the Cook Islands & American Samoa). They would be the first on those routes - if they can join the South Pacific JV with Qantas (and Fiji Airways), they'd again have the advantage over Delta.
Now there will be a lot of trial and error, but simply adding international flying creates opportunities for Alaska that it did not have. Delta has not been able to lucratively expand long-haul international out of Seattle outside of SkyTeam hubs and its protected slot to Tokyo. Alaska can keep it that way and leverage OneWorld.
you can't get through your head that AS is in oneworld as a DOMESTIC FEEDER airline.
There is no incentive for any oneworld joint venture carrier to add AS to their JV UNTIL AS flies to those hubs on their own metal. No airline is going to revenue share with a carrier that has not proven it can exist in the international market.
And, joint ventures are for the entire US market; AA is...
you can't get through your head that AS is in oneworld as a DOMESTIC FEEDER airline.
There is no incentive for any oneworld joint venture carrier to add AS to their JV UNTIL AS flies to those hubs on their own metal. No airline is going to revenue share with a carrier that has not proven it can exist in the international market.
And, joint ventures are for the entire US market; AA is still a large carrier in other parts of the US. The DOJ is not going to just staple AS onto JVs that are already very large.
And you could find low load factor routes for any airline. DL has a viable hub in SEA and if you don't think that DL will not only defend it but grow it while AS figures out how to even become an international carrier, you will be in for a rude surprise.
And WN and UA will do the exact same thing in the markets that matter.
You seem to forget that AS just spent years overcoming its Virgin America merger which was much more about United in SFO putting AS in its place that it was about DL -and yet DL has managed to grow SFO.
I get that you and everyone thinks there is some great goldmine for AS in the international market but their first priority is going to be to 1. eliminate HA's losses 2. integrate the two companies and then focus on logical - not over the top growth prospects - that make sense based on the gap between what the two companies are presently doing.
Let me remind you that AS just decided that it was going to focus on reducing the seasonal swing in its earnings and announced a bunch of 2-3 times/week routes (at best).
The notion that AS is going to develop a large scale international network anytime in the next 5 years is beyond fanciful.
AS has no intention of watching its finances tank w/ this merger as they did with Virgin America. Getting out over their skis is the fastest way to repeat what they want to keep in the rearview mirror.
I'm pretty sure Delta just bleeds money out of LHR from the West Coast. Their LAX-LHR LF was 58% only in the same month. But I do think you need to consider the whole system.
Certain routes are necessary to attract high paying and business travelers and build loyalty. Delta would probably lose a substantial amount of fliers if they didn't have LHR one of the most important airports in the world.
South Pacific is...
I'm pretty sure Delta just bleeds money out of LHR from the West Coast. Their LAX-LHR LF was 58% only in the same month. But I do think you need to consider the whole system.
Certain routes are necessary to attract high paying and business travelers and build loyalty. Delta would probably lose a substantial amount of fliers if they didn't have LHR one of the most important airports in the world.
South Pacific is questionable for SEA. QF is anyways already looking at it. And SEA is poorly positioning to fly to Australia. Not an efficient use of oil and aircraft.
None of this addresses the real root cause which is the saturation of the aviation market in SEA which is seemingly outpacing the growth of the city itself. Yes, SEA is an important and growing city to build up, but most of the routes and destinations already have sufficient coverage at this point. AS is going to find a very hard time to launch uniquely profitable routes.
I agree that AS may have a better time building out at other airports, PDX/SAN/etc.
regarding whether DL makes or loses money on SEA-LHR, DL managed to make twice as much flying the Atlantic in 2023 as United while American only broke even.
DL made 1.8X the amount per seat mile that UA made flying the Pacific; UA lost money as did HA. In fact, HA lost more money in 2023 flying the Pacific than they lost on their domestic system.
Every airline has money losing routes; DL...
regarding whether DL makes or loses money on SEA-LHR, DL managed to make twice as much flying the Atlantic in 2023 as United while American only broke even.
DL made 1.8X the amount per seat mile that UA made flying the Pacific; UA lost money as did HA. In fact, HA lost more money in 2023 flying the Pacific than they lost on their domestic system.
Every airline has money losing routes; DL does the best job of limiting the money-losing routes and maximizing its total profits - not just domestically but also internationally.
AS' first job is going to be to cut money-losing routes.
The notion that they are going to jump into other routes that are going to have to start from scratch is just naive.
You are absolutely correct that SEA has an excessive amount of international capacity right now.
AS has a full-time job integrating HA, amending labor agreements, and getting rid of costly and unnecessary duplicate aircraft types.
It is very possible that the A330s or even the 787s will be disposed of to allow a single widebody type. AA is a far larger airline and has only 2 widebody types.
If AS gets rid of one of the two widebody types. there may be a whole lot less "extra widebody" capacity to throw around in international markets that some are convinced will work.
correction:
DL made 1.8X the amount per seat mile that UA made flying the Pacific; AA lost money (flying the Pacific) as did HA.
It makes no sense that this was allowed but Jet Blue/Spirit denied. And to be clear I'm no stating either are a wise business decision. As far as future promises, that's a joke. Just look at previous mergers in which airlines made similar non specific promises. This is about reducing competition. And that can be good or bad depending upon one's perspective.
I'm no fan of the DOJ, but the likely reason why this was allowed is because HA would have gone bankrupt in short order otherwise. That wasn't a real concern for NK/B6.
These guarantees to the state regarding the continuation of service to international destinations are not really guarantees (even if framed as such). They're more like: "we promise to try". If the numbers don't end up working out for AS....bye bye route.
I'm merely pointing out what statements like these *actually* mean. How many mergers have you seen where the acquiring entity promises not to change something? Many, if not most. But yet it's really...
These guarantees to the state regarding the continuation of service to international destinations are not really guarantees (even if framed as such). They're more like: "we promise to try". If the numbers don't end up working out for AS....bye bye route.
I'm merely pointing out what statements like these *actually* mean. How many mergers have you seen where the acquiring entity promises not to change something? Many, if not most. But yet it's really common that the "Something" ends up being gone maybe a year or two later. In this case, my guess is that some Pacific routes will eventually be pared but most will remain as there's little competition on the routes.
Alaska closed Virgin America's JFK base, shrunk SFO, Virgin's main hub to a size smaller than it was pre-merger just for Alaska operations, and Alaska sold all of Virgin's airplanes. It was an extremely anti-competitive merger purely designed to kill one rival and prevent a potentially more dangerous rival in the form of a combined JetBlue-Virgin America. Alaska will chop and drop all parts of the HA operation that are difficult or loss making. Their...
Alaska closed Virgin America's JFK base, shrunk SFO, Virgin's main hub to a size smaller than it was pre-merger just for Alaska operations, and Alaska sold all of Virgin's airplanes. It was an extremely anti-competitive merger purely designed to kill one rival and prevent a potentially more dangerous rival in the form of a combined JetBlue-Virgin America. Alaska will chop and drop all parts of the HA operation that are difficult or loss making. Their recent history is proof.
imagine you build the past several years of your airline's growth strategy around assaulting the main hub of a locally-beloved airline, lose money hand over fist on it, learn that they're planning a revolutionary merger with another of your key regional competitors, and then finding out that the DOJ isn't even challenging it... WOMP WOMP
should you speculatively transfer to HA w/ Amex w/ 30% bonus now?
No. The only speculative points move is grab the HA Barclays card (or 2, or 3) while you can - if you have 5/24 slots sitting around.
Will Barclays allow one to get multiple cards of the same - Hawaiian personal for example (it's been a long time since I got the sub) - or even Hawaiian business?
I've had the personal like for 7-8 years and the business for maybe 18 mos.
Not surprised!! The Democrats don't want anything to stand in the way of Kamala winning in November. Therefore, approve the merger as a means to placate the business world (and raise their tax rate to 28% when she is in office)
If it would have been Biden, I have a feeling we would have had a different outcome (ie: knee jerk liberal, anti-business, etc) similar to the B6 & AA North East Alliance or...
Not surprised!! The Democrats don't want anything to stand in the way of Kamala winning in November. Therefore, approve the merger as a means to placate the business world (and raise their tax rate to 28% when she is in office)
If it would have been Biden, I have a feeling we would have had a different outcome (ie: knee jerk liberal, anti-business, etc) similar to the B6 & AA North East Alliance or B6 & NK merger.
Funny how the legal reasoning for mergers & acquisitions changes direction depending who is in the White House.
There are so many things wrong with this, but among others the president does not control the DOJ. Also, how exactly would choosing not to block a West-Coast airline merger help Harris with swing voters in Pennsylvania or Wisconsin?
Sloth Boy,
whether you agree with the thesis of what was written, the DOJ most certainly is a part of the executive branch of the federal government and the President appoints the heads of each cabinet.
In reality, with regard to business and aviation, the DOJ is far less political than a lot of people try to argue - there are established principles that trigger concern which include market concentration which Ben notes 40%...
Sloth Boy,
whether you agree with the thesis of what was written, the DOJ most certainly is a part of the executive branch of the federal government and the President appoints the heads of each cabinet.
In reality, with regard to business and aviation, the DOJ is far less political than a lot of people try to argue - there are established principles that trigger concern which include market concentration which Ben notes 40% can be a problem; but Hawaii is a highly competitive heavily leisure market.
The bigger theme is that there are airline mergers that don't trigger massive concern and there were good reason why the AA/B6 NEA was challenged and disallowed while other mergers like AS/HA had no conditions.
Sloth - the DOJ is an executive agency. Do you know what Article II is?
This is an extremely naive and ill informed comment. Lina Khan and Jonathan Kanter were the two most politically costly of Biden's Cabinet picks that drew the most heat from big business and big donors. Messing with M&A deals is messing with the gravy train of some fat cat Democrat donors. I can also promise you Biden lost the support of a lot of rank and file JetBlue and Spirit employees due to the DOJ's...
This is an extremely naive and ill informed comment. Lina Khan and Jonathan Kanter were the two most politically costly of Biden's Cabinet picks that drew the most heat from big business and big donors. Messing with M&A deals is messing with the gravy train of some fat cat Democrat donors. I can also promise you Biden lost the support of a lot of rank and file JetBlue and Spirit employees due to the DOJ's capricous antitrust zealotry. It's a tough pill to swallow when the DOJ arbitrarily picks your employer for bankruptcy and ruin while conferring blessings on others.
I mostly agree. Jonathan Kanter collected his scalp and made his name with his ugly and confounding victory over B6/NK. He's now auditioning to save his job with the more corporate and M&A friendly Harris. She's got Eric Holder and Tony West advising her on policy and cabinet picks and Kanter surely knows which way the winds are blowing.
Finally some good news!
I appreciate that AS will "maintain their commitment to Hawaii," but if HA is struggling now, then maintaining the status quo won't be sustainable - something has to give.
The merger gives Hawaiian strength in their key West Coast markets.
Load factors and fares will jump overnight. Helps that Alaska is near guaranteed to trim capacity here.
It will be interesting to see how the merger will impact the respective frequent flyer programs. Hawaiian Airlines is a transfer partner of American Express and Alaskan Airlines is a transfer partner of Bilt. Will Hawaiian Airlines miles be converted to Alaskan Airlines miles, and vice versa?
I would bet that the Amex partnership will be lost in the combined FF program. Alaska put together a unique partnership with Bilt, and BoA will want to maintain the competitiveness of their card offerings. Pretty much all of the major domestic airlines have the model of protecting their miles by only partnering with one bank (Bilt is the program outlier).
The more interesting question is: what will happen to the Barclays partnership with Hawaiian?...
I would bet that the Amex partnership will be lost in the combined FF program. Alaska put together a unique partnership with Bilt, and BoA will want to maintain the competitiveness of their card offerings. Pretty much all of the major domestic airlines have the model of protecting their miles by only partnering with one bank (Bilt is the program outlier).
The more interesting question is: what will happen to the Barclays partnership with Hawaiian? Will Alaska keep that partnership, like AA does with Citi and Barclays?