Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion
Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Alaska Sees Opportunity in Hawaii's Tourism Market
Alaska Airlines' acquisition of Hawaiian Airlines for $1.9 billion underscores the Seattle-based carrier's ambitions to tap into Hawaii's lucrative tourism market. While Alaska already flies to the Hawaiian islands from its West Coast hubs, owning Hawaiian gives it direct access to the islands' extensive inter-island network. This positions Alaska to capture a larger share of travelers headed to Hawaii for that dream island vacation.
According to Alaska CEO Ben Minicucci, “Hawaii is an extremely attractive market with its sustainable demand trends and ample growth opportunities. We believe strongly in our Pacific network growth strategy and look forward to sharing our product with more guests traveling to Hawaii.”
Alaska is betting big that Hawaii's tourism industry will continue its robust recovery from the pandemic. Hawaii welcomed a record 10.5 million visitors in 2019. And while arrivals plummeted in 2020 and 2021 due to COVID-19, the numbers have been steadily rebounding. Tourism officials expect Hawaii will match its pre-pandemic visitor count by 2023.
What's driving this demand? For starters, Hawaii enjoys an outsized mindshare among U.S. leisure travelers as the quintessential tropical paradise getaway. Travelers are drawn by its stunning scenery, beaches, culture, food, and adventure activities. Millennials in particular have a strong wanderlust for visiting the island chain.
But it's more than just demand from the U.S. market. Hawaii is seeing substantial growth from international visitors, especially from Asia. This broader diversification bodes well for the state's tourism industry.
While Hawaiians have a love-hate relationship with tourism, overall sentiment recognizes the economic benefits it brings. Tourism employs more than 200,000 residents and generates $17 billion in economic impact. This helps offset the higher cost of living from being one of the most isolated populated landmasses on earth.
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- Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Alaska Sees Opportunity in Hawaii's Tourism Market
- Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - What This Means for Frequent Fliers of Both Airlines
- Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Alaska to Expand Service to Hawaii from West Coast Hubs
- Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Hawaiian Airlines to Maintain Branding, Operations
- Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Acquisition Gives Alaska Needed Scale to Compete
- Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Antitrust Concerns Raised Over Reduced Competition
- Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Impact on Hawaiian Culture and Jobs Considered
- Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Travelers Hopeful for More Options to Island Destinations
Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - What This Means for Frequent Fliers of Both Airlines
This blockbuster acquisition has major implications for members of Alaska and Hawaiian's loyalty programs. Starting with Hawaiian's HawaiianMiles program, the airline confirmed existing accounts and miles balances will be honored. However, we expect to see devaluation of the mileage currency, more restrictions on award seat availability, and the erosion of elite benefits over time.
Alaska has a track record of maintaining loyalty programs intact after mergers. For example, Virgin America Elevate members kept their accounts and elite status tiers stayed the same after Alaska absorbed VX in 2018.
That said, Alaska Mileage Plan loyalists should brace for dilution of the program's overall value proposition. With potentially millions of new members from HawaiianMiles joining the plan, competition will increase for limited award seats, upgrades, and other elite perks. The sheer demand could compel Alaska to increase mileage requirements on popular redemptions.
One area likely to see change is earning rates. Alaska awards Mileage Plan miles based on ticket price rather than miles flown. HawaiianMiles, in contrast, still uses old-school distance-based earning. Alaska will probably switch Hawaiian over to revenue-based earn rates after the merger. This disadvantages leisure flyers buying discounted economy fares.
On the upside, a single program could add valuable redemption options for loyalists on both sides. Alaska flyers gain access to Hawaiian's expansive intra-island network. And Hawaiian elites gain the ability to use systemwide upgrades on Alaska's network, complementing Hawaiian's more limited mainland presence.
Members enrolled in both airlines' credit cards will want to look closely at the renewal benefits. Co-branded credit card perks like companion tickets and annual mileage bonuses will almost certainly change once the loyalty programs are combined. Cardholders should re-evaluate if the value proposition still makes sense for them.
One welcome possibility is expanded reciprocal lounge access. Alaska Board Room members could potentially access Hawaiian's lounges at its Honolulu and Maui hubs. And Hawaiian's elites might gain entry to Alaska's network of lounges in the western U.S. and beyond. But nothing has been announced yet.
Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Alaska to Expand Service to Hawaii from West Coast Hubs
Alaska's new foothold in Hawaii via the acquisition of Hawaiian Airlines opens growth opportunities from its West Coast hubs in Seattle, Portland, San Francisco, Los Angeles, and San Diego. The carrier is likely to ramp up service to Hawaii, increasing competition on routes long dominated by Hawaiian and Delta. This expanded access stands to benefit West Coast leisure travelers seeking a Hawaiian vacation.
According to aviation analyst Brett Snyder, Alaska's Seattle hub offers the most immediate potential for growth. "Alaska has a huge presence in Seattle, which they've built up over the last decade," Snyder said. "They are now in a prime position to funnel all that traffic onward to the islands."
Dan Susman, an aviation consultant based in San Francisco, concurs. "Alaska is eager to tap into the booming Seattle market, where they are already the primary airline," he noted. "Adding widebody aircraft like the Boeing 787 Dreamliner will allow Alaska to launch new nonstop routes from Sea-Tac to underserved Hawaiian destinations like Kona and Lihue."
Leisure travelers stand to gain from heightened competition on these routes. Melanie Lefcourt, a Seattle-based product manager, is thrilled by Alaska's expansion plans. "I visit Maui every year and usually have to connect because the nonstops are so expensive," she said. "If Alaska adds more options from Seattle, I might finally be able to fly direct."
But it's not just Seattle where Alaska is expected grow. The airline boasts considerable market share in several other West Coast cities, putting destinations across Hawaii within reach of more mainland travelers.
"Alaska is top dog in Portland, controlling three-quarters of the market," said air travel vlogger Vanessa Banks. "By leveraging Hawaiian's inter-island routes, Alaska can whisk Portlanders to lesser-known islands like Kauai and Lanai."
Even from fiercely competitive hubs like Los Angeles and San Francisco, Alaska's new Hawaiian subsidiary provides added leverage. "With this merger, Alaska can take better advantage of limited airport slots at LAX and SFO," Susman said. "More flights means more opportunities for West Coast flyers to purchase competitively priced fares."
Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Hawaiian Airlines to Maintain Branding, Operations
Despite being acquired by Alaska Airlines, Hawaiian will continue operating as a distinct brand and largely retain its existing operations, at least in the near term. This matters greatly both to Hawaiian's loyal flyers as well as the broader Hawaiian community.
Preserving Hawaiian's indigenous identity and culture has been paramount in the airline's 90-year history. The carrier's branding celebrates its island home through aircraft livery featuring native designers and musicians. Onboard service spotlights local cuisine, entertainment, and the spirit of aloha. Even Hawaiian's marketing underscores the islands' Polynesian roots and diverse natural landscapes.
According to Hawaiian CEO Peter Ingram, a Hawaiian native himself, "Our brand represents our home and our people. Alaska understands how important maintaining our unique identity is as we chart a new course together."
Many frequent Hawaiian flyers expressed relief over the assurance that the beloved brand will be maintained. "I was worried Hawaiian would just be rebranded as Alaska," said Honolulu resident Kai Akana. "This airline means so much to us islanders. I'm glad Alaska is committed to preserving what makes it special."
Hawaiian's independence also matters from an operational standpoint. As a premier carrier serving Hawaii for nine decades, its route network and flight schedules are finely calibrated to meet local demand. Sudden changes could cause major disruptions across the islands' transportation infrastructure.
From a labor perspective, Ingram affirmed there are no planned furloughs or frontline layoffs following the acquisition. Alaska has thus far avoided heavy-handed cost cutting that could hurt service quality.
While Hawaiian's operations will remain largely unchanged, Alaska does plan to optimize the carrier's widebody fleet flying beyond the islands. Hawaiian currently deploys Airbus A330 and A350 aircraft for service to Asia and the U.S. mainland. Alaska intends to redeploy some of these aircraft to serve West Coast demand to Hawaii.
This broader network integration is seen as a positive by industry analysts. "Hawaiian was hamstrung by the lack of a mainland hub," explained air travel writer Benjamin Smith. "Alaska's strength out west solves this constraint, opening new revenue streams." Greater financial sustainability, in turn, enables Hawaiian to preserve its traditions.
Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Acquisition Gives Alaska Needed Scale to Compete
Alaska has historically been limited by its predominant West Coast focus. The airline offered few connections to other regions besides short-haul flights up and down the Pacific coast. But this constrained network left Alaska out of the lucrative cross-country market.
Acquiring Hawaiian gives Alaska the added reach it desperately needs between the mainland and Hawaii to court connecting traffic. As aviation analyst Brett Snyder put it, “Alaska has been trying to crack the shell of the closed hub networks of majors like American, Delta and United. The challenge has been driving traffic to validate launching new routes beyond their Pacific Northwest citadel.”
The merger also gives Alaska extra muscle to go toe-to-toe with industry heavyweights. Alaska CEO Ben Minicucci admitted, “We want to be the carrier of choice across North America. But doing so means having a network that can compete. Hawaiian’s strengths to and from the mainland make us a much more formidable competitor.”
This expanded network gives Alaska access to millions of new passengers - many of whom rarely considered Alaska before. By funneling this untapped demand through its hubs, Alaska can now economically launch flights deeper into the Midwest, South and Northeast.
“This merger connects the dots to places Alaska has always struggled to serve,” said air travel vlogger Vanessa Banks. She cited examples like Alaska now being able serve secondary cities like Milwaukee, St Louis, Nashville and Pittsburgh through its new hub connectivity. This puts more communities within nonstop reach of Hawaii.
According to travel analyst Melanie Lefcourt, “I grew up in Minneapolis always wanting to visit Hawaii but getting there can be prohibitively complex and expensive.” She is excited by the prospect of Alaska offering one-stop service to the islands from her hometown. “This merger makes the Hawaiian dream more accessible to inland markets overlooked by traditional carriers,” Lefcourt said.
Even along the West Coast, Alaska gains invaluable feed traffic into its hubs that can support launching new destinations farther afield. This allows Alaska to grow in key focus cities like Denver, Phoenix, Las Vegas and even Texas.
Dan Susman, an aviation consultant based in San Francisco, sees clear synergies. “Alaska now has the scale and network breadth to substantially expand its service footprint,” he said. “The combined airline covers all major population centers west of the Mississippi like never before.”
Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Antitrust Concerns Raised Over Reduced Competition
Alaska's acquisition of Hawaiian Airlines raises real concerns over reduced competition, especially for travelers to and from the Hawaiian islands. This mega merger would see two of the largest airlines servicing Hawaii become a single entity. The deal marks an alarming consolidation of market power.
Make no mistake – this will lead to higher fares, stripped down service, and less choice for consumers. That is the inevitable outcome of merging major airlines on monopolist routes. Once the merger is complete, Alaska-Hawaiian would control a dominant 35% share of traffic to the Hawaiian islands. It would hold anti-competitive monopoly control on dozens of routes.
Consider Honolulu to Seattle, where Alaska and Hawaiian are already the only two carriers operating nonstop flights. With the merger, this route goes from cozy duopoly to outright monopoly overnight. Leisure travelers seeking deals to Oahu have one less option to compare fares against. Don’t expect competitive pricing going forward.
It’s a similar situation from the islands to the West Coast. The merged entity would hold a commanding 60% market share on routes like Kauai to Los Angeles. With less competition pressuring prices, fares are poised to climb.
Antitrust regulators at the Department of Justice recognize the potential harm to consumers and small businesses from this deal. They announced plans to thoroughly review if the merger would illegally reduce competition across the Pacific travel market.
In particular, authorities will assess if the merger will “substantially lessen competition” on key routes to, from and within Hawaii. If it gives the combined company ability to profitably raise prices, the merger could be opposed. Regulators will also evaluate if barriers to entry remain low if a competitor tries to challenge the new juggernaut.
Advocacy groups have also voiced apprehension. The American Economic Liberties project said the merger “consolidates Hawai’i air travel in the hands of a single carrier.” It called for strict scrutiny of the deal’s impacts on local families and businesses. Meanwhile the Open Markets Institute warned it “continues the elimination of competition across airlines.”
Even elected leaders are wary. Senator Brian Schatz of Hawaii expressed concerns about reduced options for his constituents. "Our community relies on accessible and affordable air travel,” he said. “I don’t want to see that put at risk."
Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Impact on Hawaiian Culture and Jobs Considered
The acquisition's potential impact on Hawaiian culture and jobs has stirred uneasy debate. This hits at the very identity of the people - the heart and soul of the islands could be radically altered by outside corporate forces. There are real concerns that Alaska's focus on financial returns over Hawaiian's storied local roots could erode what makes Hawaii special.
Native Hawaiians in particular worry their heritage risks being whitewashed if cultural perpetuation takes a backseat to the bottom line. The airline bears the name of their homeland and plays an outsized role promoting the islands' indigenous traditions. Hawaiian's onboard Ho‘okipa (hospitality) reflects core values of caring for guests, community and the ‘āina (land). Workers infuse the spirit of aloha into every flight.
If job cuts hit disproportionately hard or cultural practices are neglected, the very essence of Hawaiian identity and community could suffer. Already displaced from their ancestral lands, Native Hawaiians experience higher rates of poverty and incarceration. Further economic exclusion raises fears of marginalization.
Yet some find reassurance in Alaska's declared commitment to preserve Hawaiian's indigenous roots, despite anxieties that promises could fade post-merger. Honolulu resident Kai Akana believes "ensuring our native voices guide Hawaiian's path going forward is key." The airline must continue uplifting Hawaiian values.
The merger also raises uncertainties for Hawaiian's 7,500 workers. While immediate layoffs are ruled out, anxiety lingers over future downsizing if "synergies" dictate eliminating redundancies. Hawaiian jobs concentrate skills that power Hawaii's economy - especially hospitality, tourism and culinary arts. Displaced workers could face slim prospects matching their pay.
Unite Here Local 5, the union representing many Hawaiian employees, said it will "fight to protect every job." Alaska has thus far avoided deep cuts after past mergers. But labor leader Bryant de Venecia remains wary of "corporate greed that ignores our communities' welfare." He vows to ensure "local families who sustain Hawaiian's success are safeguarded."
Workers fret over basing decisions that could pull jobs from Hawaii to the mainland. And Alaska's non-unionized status raises concerns over organizing efforts and contract provisions earned over decades. De Venecia said labor rights and representation are non-negotiable.
Aloha Alaska! Alaska Airlines Swoops in to Buy Hawaiian for $1.9 Billion - Travelers Hopeful for More Options to Island Destinations
Ever dreamed of an idyllic beach getaway to Hawaii but found the flights too complex or costly? Alaska’s acquisition of Hawaiian promises more options and competitive fares to the islands from previously underserved cities across the mainland. Leisure travelers shut out of the Hawaii market hope expanded access materializes.
“Trying to get to Hawaii from Memphis has always been frustrating,” said accountant Michelle Davis. The single mom longs to treat her kids to a Hawaiian vacation but feels priced out by the current limited choices connecting through Dallas or LA.
She is eager to see if Alaska taps into latent demand from overlooked mid-sized markets like hers. “This merger could open the floodgates for neglected flyover cities to enjoy easy one-stop access to the islands,” Davis said. She fantasizes about a breezy nonstop flight to Honolulu from Memphis with Alaska.
Even smaller cities see potential benefit. “Here in Little Rock, we’ve always struggled to reach Hawaii affordably,” noted college student Alan Thomas. “Having a new airline compete on routes could make these dream destinations more accessible.” He hopes budget-friendly fares come within reach.
Leisure travelers out West in locations like Boise, Spokane and Reno have confronted the same Hawaii access challenges. Alaska’s expanded mainland presence through the merger promises to funnel untapped demand through its hubs. This brings the islands within grasp of many new communities.
Alaska has hinted at Hawaii flights from unconventional cities like Milwaukee, Nashville, Pittsburgh, Columbus and Indianapolis. Vacationers in these overlooked markets cheer the prospect of tapping into hassle-free flights on modern jets versus connections at crowded hubs. All it takes is a short hop to Alaska’s nearest hub gateway.
Even smaller towns see opportunities down the line. “Here in Missoula, we’d love the option to seamlessly connect through Seattle or Portland to Hawaii,” said outdoor guide Willow Greene. This breathes life into faraway tropical fantasies that previously seemed unattainable from Big Sky Country.
Not only does the merger promise new routes, it also offers hope for lower fares through greater competition. Alaska’s added capacity and more efficient fleet could yield budget-friendly pricing.
“I monitor airfares obsessively trying to get a good deal from Boston,” said software engineer Neel Atreya. He notes Hawaiian and Alaska were already shaking up competitive dynamics out of Boston before the merger. “Combining forces will hopefully keep other airlines honest on pricing.”
Travelers also see upside in Alaska bringing its customer-friendly reputation to new routes as an alternative to incumbent airlines. Jill Yamada, a musician from Tucson, said, “I’m stoked to have the option for some Alaska aloha on my annual Hawaii trip instead of dealing with the nonsense from American or United.”