Hawaiian Airlines A321neo takes off with Alaska Airlines tails parked at their gates, in the background

Alaska Airlines closes $1.9 billion acquisition of Hawaiian Airlines

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Oneworld alliance member Alaska Airlines on 18 September formally closed a $1.9 billion deal to acquire former rival Hawaiian Airlines. The news comes less than one day after federal regulators approved the merger with concessions attached.

Alaska will operate the two public-facing brands for the foreseeable future. “Guests can book and travel with confidence knowing their trips will occur as planned with the corresponding airline,” it assures. Alaska is, however, working to secure a single operating certificate, which would allow the two airlines to operate as a single carrier with an integrated passenger service system.

The new combined airline, under Alaska Air Group, will be the fifth largest in the US by revenue. It also expands the group’s international network by leaps and bounds, having added Hawaiian’s extensive connections to Asia.

To win over the US Department of Transportation, Alaska accepted several key compromises for six years. It agreed to maintain service levels between Hawaii and the continental US on any route where they either have a monopoly or a single competitor (think Seattle to Kahului, shared with Delta, or Portland PDX to Honolulu, run by Alaska and Hawaiian).

The new carrier must also maintain similar levels of service in the critical inter-island Hawaii market, including interline agreements.

A significant requirement targets consumer protections for the combined airline. Hawaiian’s existing HawaiianMiles program must stay intact until Alaska builds its replacement. When the time comes, mileage transfers must be honored at a 1:1 rate, and miles in either program are guaranteed to never expire. Finally, mileage redemptions can’t have ‘change or cancellation’ fees attached. Alaska currently levies neither. The airline is already alerting Mileage Plan members that a “single combined loyalty program” is coming later in 2025.

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Alaska will also be required to align Hawaiian’s customer service plan with its own existing service commitments, both for standard passengers and those traveling for active duty military service.

Most of Hawaiian’s leadership team will remain intact for now, says Alaska. But Hawaiian CEO Peter Ingram is out, replaced by Alaska Airlines regional president of Hawai’i/Pacific Joe Sprague, whose bio has already been updated online.

The tie-up likely comes as a relief to Hawaiian, which had been struggling mightily in recent years. A confluence of factors, including Covid, a post-pandemic demand slump in the Japanese market, the Maui wildfires and subsequent demand slump, and inter-island fare wars with new entrant Southwest Airlines had led to significant losses and a looming bankruptcy. As part of the deal, Alaska will assume Hawaiian’s $900 billion in debt.

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Featured image credited to Jeremy Dwyer-Lindgren