Alaska Airlines and Hawaiian Airlines Merger: Impact and Implications

An Alaska 737 MAX in Seattle (Jamsheed Motafram).

So yesterday I was just relaxing in my home when I found out on X that Alaska Airlines would acquire Hawaiian Airlines for $1.9 billion as reported by Bloomberg. The aviation community was shocked by this news as I was because it came from nowhere. But here we are and I'm here to discuss my overall reaction to the ramifcations of this merger starting with the elephant in the room.

Proudly All Boeing?

A former Virgin America A321neo that was recently retired by Alaska to commit to Boeing. But now with this merger, Alaska flip flops on the "Proudly All Boeing" mantra (Jamsheed Motafram).

With this recent news, the first thing that came to mind for avgeeks everywhere is "didn't Alaska want to commit to an all Boeing fleet?" Well after this news broke out, that doesn't seem to be the case. For reference here's a breakdown of the fleet per planespotters.net:

As of today, Hawaiian has 18 A321neos. But that's not the only problem Alaska has to deal with. The merger would also make them inherit 25 A330 aircraft making them the first widebody jets to enter their fleet.

A Hawaiian Airlines A330 taking off from Seattle (Skift).

In addition to the Airbuses, Hawaiian has 19 Boeing 717 aircraft and recently placed an order for 12 Boeing 787s. This will add a lot more fleet complexity to Alaska Airlines thus increasing maintenance costs. This would go against their commitment to efficiency. While it's too early to see how Alaska will approach this, the next question is what will happen to the Hawaiian brand?

Future of the Hawaiian Airlines Brand and Merger Impact on Alaska Airlines and Hawaiian Consumers

An Alaska flight from Boston making a go around in Seattle (Jamsheed Motafram).

So what will the future of the Hawaiian Airlines brand be? Well thankfully for now the brands of Alaska and Hawaiian will be separate but will be a part of the Alaska Air Group. But even that is uncertain because Alaska said the same thing when they acquired Virgin America in 2016 so time will tell if Hawaiian shares the same fate. However the loyalty program for Hawaiian will merge into Alaska's mileage program and will become a part of Oneworld.

Proposed route map post merger (Alaska Airlines).

When combined, this merger would allow Alaska to have more access to countries in the Pacific region and utilize Honolulu as a major hub for access to said countries. This gives mileage members more bang for their buck when it comes to destinations served. While all of this sounds good, this merger has some hurdles to overcome.

Reduced Competition and Higher Fares

Various Alaska Airlines aircraft at SeaTac (Jamsheed Motafram).

With this announcement, a big concern with Wall Street is will it get approved in 12-18 months? Between the Biden administraition suing JetBlue for their propsed $3.8 acquisiton of Spirit as well as blocking the former's plans for an alliance with American, there is skepticism regarding the recent news. The reason being so is historically whenever there is consolidation in the airline industry, airfares have a propensity to increase. And especially in an era dominated by inflation, it's a big concern for regulators and consumers. However travel industry analyst Henry Harteveldt states that, "given the lack of overlap, there won't be as much angst in Washington against the merger." It made me think about similarities with another major merger in the 21st century when Canadian Pacific Railway merged with Kansas City Southern to form Canadian Pacific Kansas City (CPKC).

A Canadian Pacific locomotive in Seattle. The parallels between CPKC and the Alaska Hawaiian merger are strong considering both mergers involve the smaller players in their respective industries (Jamsheed Motafram).

Similar to Alaska and Hawaiian, CPKC didn't have a lot of overlap with their respective rail networks and allowed the company to connect to newer markets. CPKC CEO Keith Creel stated that, "the merger is allowing more competition from other railroads for faster cross border intermodal service taking more trucks off the road." Similarly, Alaska-Hawaii would help give consumers more options on how they can travel whether one wants to fly to Hawaii or go to Australia while transiting through Honolulu. And it will cause a domino effect and force other airlines to increase traffic into the Hawaiian Islands. But that's not the only hurdle this merger will have to deal with.

Jobs and Pay

More Alaska jets in Seattle (Jamsheed Motafram).

The next big question is how will the labor force be impacted by this? Alaska claims that the merger will help increase the already existing union-represented workforce in Hawaii. But historically with these major mergers, there are layoffs that happen as the two partners merge. It has happened before when Northwest and Delta merged in 2009 as well as United-Continental in 2010 and US Airways-American in 2013. Not to mention that Alaska hasn't agreed to a new collective barganing deal with their flight attendant union since 2014. With Alaska flight attendants earning between $24,000 and $27,000 a year, which isn't enough to cover rent in the cities that Alaska has bases in, this is something that has to be figured out before the merger is approved.

Conclusion

N920AK at SeaTac (Jamsheed Motafram).

While there are still a lot of unknowns, this Alaska Hawaiian merger has the potential to make Alaska a stronger global airline to compete with the big 3 (United, Delta, American). It will be interesting to see what happens with Alaska in the next couple of years. But what do you guys think? Do you like this merger? Be sure to let me know in the comments below and keep looking to the sky!