While flying Hawaiian Airlines yesterday to the Honolulu press conference, we saw first hand how the news was impacting employees. One flight attendant told us she heard the news on the plane. Another flight attendant said she only wanted to fly with Hawaiian because her parents worked for the airline for thirty years. It’s clearly not easy to show up for work and see that the company you have devoted your career to is planning to be sold to another airline.
Hawaiian Airlines is more than an airline to Hawaii.
It’s the largest private employer in the state and is also emblematic of strong local pride.
For those of us who live here, having an airline based in Honolulu with international, mainland, and interisland routes was always about a sense of pride, local ability, and much more. Hawaiian flew with an Aloha spirit that none of the others could duplicate since Aloha’s demise while proudly displaying the flag of the State of Hawaii, as its own flag carrier.
When we find ourselves in Sydney or at JFK, for example, and we see the Pualani on the Hawaiian tail, it evokes a feeling of comfort and home. If the sale goes through, all operations will soon become based instead in Seattle.
Is it even possible to maintain separate branding between Alaska and Hawaiian?
We’ve seen this work before in similar circumstances. Several months ago, we flew SWISS to Geneva and enjoyed service from flight attendants who are Swiss nationals, food choices that reflected their own country, and a plane proudly displaying the flag of Switzerland. In actuality, SWISS is whoely owned by a German airline, Lufthansa, but kept its branding. If you dig deeper, however, Lufthansa provides the maintenance, technology, call service centers, and most of the remaining infrastructure that keeps SWISS flying.
At this point, Alaska also plans to let Hawaiian keep its unique identity. That didn’t happen, however, when Alaska took over Virgin America. But perhaps in this case it will truly be different and seen as a good marketing move to have the Hawaiian name and service kept. And also given that Hawaiian is a far stronger brand than Virgin America. But how that will ultimately unfold is anyone’s guess.
Safety comes first during distracted times.
Jeff spoke with Joe Sprague, who is now in charge of Alaska Airlines’ integration with Hawaiian Airlines. He reports directly to Ben Minicucci and has had a long and diverse career with Alaska. Joe mentioned, among other things, something that we’ve heard from no one else. That is about keeping safety first during distractions caused by the acquisition and how it impacts the airlines’ employees. This came as great advice from a seasoned airline executive.
Emotions ran high at the Honolulu press conference.
Hawaiian CEO Peter Ingram told Jeff that he sadly hadn’t had time to be with the employees yet to help them work through the emotions they were starting to experience. Keep in mind that most employees only found out about the acquisition at 9 am on Sunday morning.
It was hard to hide the emotions we saw between these two companies that we have known well for so long. Ben, CEO of Alaska, was respectful, restrained, but ebullient about the upcoming merger, the largest event ever for Alaska Airlines. Peter Ingram, who we’ve known and watched far longer than Ben, was a pro. He put on a strong face and did a superb job of explaining the acquisition from the Hawaiian side of things. Nonetheless, his face (lead image) couldn’t hide what we perceived as profound sadness too. In addition to everything else, Peter will be losing his job as CEO, when the merger is concluded. Ben said, “there can only be one CEO.” Jeff told Peter he has the hardest job at Hawaiian, to which Peter responded, “I have the best job.”
Would Hawaiian have survived without Alaska Airlines?
That’s hard to say, and we’ll leave that mostly to others including your comments. We know that Hawaiian’s business, like other airlines, suffered deeply during and since Covid. They have been a myriad of problems, too, that have included significant issues with their technology, including the online reservation system. Hawaiian has also been hurt by significant flight cancellations and delays, based on issues associated with Honolulu airport repairs, pilot and staff shortages, and other factors, many entirely outside of their control.
Hawaiian Airlines’ international business has never recovered from Covid, and it will be years before it does fully. They also faced purchasing a new fleet of interisland planes to replace the largely used-up Boeing 717 planes that are now about two decades old and have extremely high usage cycles due to the short and frequent hops interisland.
Southwest Hawaii flights came on strong as well and continue to provide significant ongoing competition to Hawaiian across both west coast and interisland routes.
As would be appropriate, Peter Ingram said yesterday that the merger was not a result of necessity and that they were approached entirely by Alaska Airlines early in 2023. On the other hand, the issues Hawaiian has and is facing are without doubt daunting for the relatively small regional carrier, which lacks the resources of larger airlines.
Hawaiian Airlines’ on-time performance slipped from 1st place to 5th place for all of 2022.
Peter Ingram told Jeff, however, that recently, Hawaiian has returned to number one in on-time airline performance for three of the last four months.
Can Hawaiian Airlines fix its litany of issues prior to the merger?
Jeff asked the CEOs about this specifically. He inquired about a range of items. Those outstanding include the reservation system coming to completion, the Boeing 787 Dreamliner deliveries, a new fleet to replace the very aged Boeing 717 interisland fleet, and the new airline-wide WiFi.
Peter Ingram addressed these as follows. The Dreamliner deliveries will start as expected, with one plane in early 2024. The Starlink WiFi will be rolled out in 2024 as planned. A decision on a Boeing 717 interisland fleet replacement will await being acquired by Alaska Airlines. The reservation system may or may not be concluded in its entirety prior to the 12-18 month period of regulatory approval and merger. In discussing it further with Avi Mannis, Senior Vice President at Hawaiian, he said that they are reviewing those aspects of the reservation system that can be completed during the time before the anticipated merger conclusion.
We look forward to your thoughts about the Hawaiian Airlines acquisition by Alaska Airlines.
Hawaiian Airlines is our favorite airline, and we fly it annually, sometimes more than once a year from SFO to the islands. We really hope for the best in the merger for employees, customers like we are and everyone for the long term. Please, all that are involved, do what is best for the company in the long term. Thank you.
And British Airways, Aer Lingus, Iberia are all owned by IAG. KLM is owned by Air France. There’s a lot of brand equity in Hawaiian Airlines. Alaska is, I’m sure, savvy to that and will keep the brand. Given HA’s recent woes related to infrastructure, and Alaska’s strengths there, one might postulate that Alaska’s acquisition is JIT. Better it’s now while the HA brand is still strong than by a corporate raider (think TWA) who would dismember it.
Well said David. Hawaiian’s recent issues are all going to be behind them by combining AK’s strengths with what has made Hawaiian such a great airline. Covid, runway 8L closure, NEO teething problems, Japans slow recovery from Covid and call center/website issues left them with 900 million debt. All that gets put in the rear view mirror and the AK/HA version of Hawaiian returns to the airline it was pre Covid…back then, the stock hit $60!
So I have BOTH Hawaiian Miles and Alaskan Miles, now what?
In addition, can we now use Alaska Lounges at LAX? Further, Terminal location Changes?
There are some people trying to float the idea that this merger may have a problem with the DOJ with anti trust issues, that’s a weak perspective. They quote Spirit/JetBlue…apples and oranges. No correlation as it doesn’t reduce competition, it enhances it…that said if AK/HA serves MKK and LNY (as has been reported) it’s a slam dunk, the merger cannot be turned down as doing so would reduce essential air service to two communities in dire need of better service. More and more this AK/HA merger is showing new signs of brilliance for both airlines.
Hi John.
Your perspective is always interesting. We asked a Southwest pilot about his take on the acquisition today and he too said it’s a good move. His only regret was that it wasn’t Southwest who had gotten Hawaiian.
Aloha.
Now that would have have had DOJ/anti trust issues (eliminating inter island competition)! Not to mention labor problems. Frontier employees fought off a SWA attempt at merging because the Frontier employees wanted no part of SWA’s history of the arrogance SWA demonstrated when they merged with AirTran. They were the polar opposite of how AK is handling this. SWA likely would have been “Yee Haw, we won!” and simply absorbed what they wanted into SWA and discarded the rest and Hawaii would be left with an inter island operation run from Texas, if approved. The labor problems would have been insurmountable. One more example of how uniquely brilliant AK approached this deal.
I’m quite fond of Hawaiian Airlines. When I fly to Hawaii (usually Oakland-Lihue), I don’t even bother to shop around. I belong to their mileage plan, and I finally got a Hawaiian Airlines credit card. I love the culture of the staff, on both the mainland side and island side, and the culture aboard the planes. They seem to do their best to make flying fun again (yes, it used to be fun). However, I also belong to Alaska’s mileage plan and have flown them recently when I needed to go to Mexico. I have no complaints about Alaska Airlines, but their culture is not as distinctly flavored as HA’s.
The interest payments on $900m in debt made it tough and unlikely for Hawaiian to be profitable. COVID and the Asian market lockdown coupled with the lockdown protocol by the state of Hawaii crushed Hawaiian airlines (And many businesses in the state). Just to cover the interest payments on the debt had to be enormous.
For me, Hawaiian was the airline we took to Hawaii most often. For many who took pride in an airline that preceded Hawaii joining the union this loss likely hurts. And, wishful thinking or not, HAL will likely disappear entirely in several years. Alaska might, as well.
For me, the bigger losses were specific aircraft. First, it broke my heart when the 747 and soon, the 757 were gone. Many airlines have fallen (merged) in my lifetime, but I just hope Alaska keeps the non-stop from Ontario. If not, I will fly as many widebodies as possible from, probably San Diego.
Rod: We always take the Airbus from SAN to HNL to OGG. That is really a comfortable ride. I would be very sad if they discontinued that.
Following the problems of HA here on BOH it seemed that HA was floundering in a sea of post COVID misfortunes and needed help. It seems this merger will make both airlines stronger and able to forge ahead in the Pacific rim markets which is the future. Now if the state of Hawaii gets it act together at HNL we’ll be set into this century for future travelers. Stay tuned
We go to Kauai frequently and over the last 20 years we have traveled to the Islands around 40 times. We have always loved the on board experience with Hawaiian. The people are wonderful. However, we have had problems with flight changes and our experiences with the reservation system since the upgrade began have been horrendous. Once you get people on the phone they do all they can to show the Aloha spirit but its hard to do when you spend multiple hours while they try to complete a transaction. We have been avoiding booking with Hawaiian when we can since then. Maybe after the merger we will go back and see if the system is better and the Aloha has been retained.
I don’t believe Ingram! Hawaiian has been losing millions ever since they emerged from COVID and since then, all they have been doing was spending more money. They gave their pilots a huge pay raise and bought two more 787s.
All needed to keep pilots (and thus keep flying its airplanes- the market dictates that, it is hard to get pilots to come to such an expensive state and compete against other airlines for pay, especially relative to the cost of living, Hawaiian pilots are still paid less than other legacy airlines, Alaska 737 pilots are paid a little more than HA 321 pilots) and keep the company competitive, those were long term decisions for the health of the company (including the 787 which Boeing gave them a deal to sway them from the A350) as was the expansion and diversification into Cargo with the Amazon deal as cargo flying is more stable than passenger and that was a big lesson from COVID.
JC, you’ve made some spot on posts here..I’ll add to to this one. Going forward AK/HA will be able to offer as a career choice for perspective pilots TransPac and likely Europe Widebody (787) flying, Inter island and Intra Alaska flying, Domestic 737 and an Amazon Widebody freight operation that has the potential to grow to to 60 A330 freighters and a quick upgrade to Captain. AK/HA will likely be the best option for career opportunities for prospective pilots compared to DAL/AA/UAL ….they have hired extensively and can no longer offer a quick upgrade. There are a lot of hidden gems in this deal.
Absolutely Right! Spend, spend, spend and hope for the best. Lose money and spend more money never works!
Let’s face it, Hawaiian is a regional airline trying to compete like a national one. They have been in over their head for a long time. This is just what is needed for them to continue and Thrive!
They do regional type work, namely interisland, supporting underserved areas that rely on the passenger and cargo movement, however they are not just regional, nor are they trying to compete to be a national airline, they are international. Alaska is similar in the regional flying supporting underserved areas of Alaska that rely on cargo and passenger movement. Beyond that Alaska has not done widebody or significant international flying outside of the Americas. Hawaiian does everything Alaska Airlines does and then some, this is Alaska buying instant growth into areas in which it has never flown before, relying on Hawaiian’s existing experience in widebody long haul international flying.
Back in late 2017 Hawaiian Air’s turnaround CEO Mark Dunkerly left the company just when the scepter of the Southwest Hawaii market entry was hanging over the company. The stock price started reversing. I couldn’t help but think how Peter Ingram was left alone with a ship in a very stormy environment. Just like in Hollywood movies, and in Silicon Valley startups, you always need a team to manage such critical situations, don’t you? So, yes, Hawaiian very much could survive. There is no question. Peter said so himself. But it would probably require Mark Dunkerly’s return. Not impossible. Look at what just happened at Open AI? If that happens, I might just volunteer time to look at the IT issues and see if not something could be done:-)
100%…add to the Southwest entry the COVID shutdown in Asia and the state of Hawaii and that almost did Hawaiian airlines in, they are just now starting to come out of that hole. I think it is ironic that the 2 companies Southwest was trying to put out of business are merging, and they are a big part of the reason that is happening.
I think it’s called Karma Jay……
I’m a loyal Alaska Airlines flyer and I welcome the merger with Hawaiian Air! I see benefits for both companies. Many Alaskans view Hawaii as their beach escape!! Me, included!!
Well, we fly Alaska and Hawaiian airlines the most often, and have never flown any other airline besides Hawaiian to or from Hawaii. And I loath Southwest. Alaska’s online booking system is great, and would be a huge upgrade to Hawaiians. I hope to believe that for Alaska some of the value of this deal is the branding associated with Hawaiian Airlines and that is a huge incentive to maintaining distinct operations. If what was announced actually comes to fruition it might be great. However, I’m not holding my breath and part of me hopes the government kills the deal. But, if Hawaiian is struggling that bad, do they survive without this? If not, those of us who love Hawaiian are all screwed anyways.
My concern is what will happen to the airline points to both Alaska an Hawaiian Airlines
They will be merged into one world and you’ll have an increased number of options to spend them. Personally as an American Airlines Executive Platinum, I’m stoked that I’ll be able to fly Hawaiian and earn AA miles and also have status recognition. Of these airlines, I’ve found Alaska to have the nicest/warmest flight attendants, followed by Hawaiian, and lastly American. I’m hoping some of the Alaska Corporate Culture will rub off on the Hawaiian Airlines Employees, with Alaska continuing to embraces our Aloha Spirit. I’m not sure of the internal differences between Alaska and Hawaiian, but I’ve noticed the differences as a passenger. I think with the correct culture, that our natural Aloha Spirit will have an opportunity to shine.
Well, this is a significant ‘bummer’. I’d like to know the specifics on the merger agreement, particularly what Hawaiian’s status is going to be after merging. This reminds me of the ‘disappearance’ of PSA, California’s airline, many years ago when U.S. Air took them over. It was a fun airline to fly, the ‘stews’ were friendly and accommodating, and of course the seats were better. After the merger, it’s like PSA never existed. Wonder what’s going to happen to the “Hawaiian Airlines” brand name. And, for those of us with the HA/Barclays credit card, all those ‘points?’ Stand by!
Everyone should stop hyper-ventilating over the proposed merger between Hawaiian Airlines and Alaska Airlines. With Lina Khan in charge of the FTC, this anti-competitive merger, with absolutely no upside advantages for the traveling public, has as much chance of surviving as a snow ball in hell.
I believe it will save Hawaiian Airlines as they are a small airline fighting monumental challenges that even a large airline would have a tough time surviving. Making Hawaiian stronger and giving it staying power is a plus in my book. Look what happened to Aloha. It’s the way of the world, grow or die.
BOH,
I forgot in my last post. But wasn’t the deal with Amazon designed to save the airline? Or is that not such a great deal. Or is that Alaska’s real motivation?
Mahalo
Hi Rod.
Yes, Amazon was designed to improve and diversify the income stream. Probably not save the airline.
Aloha.
I think a bigger issue than the 717 replacement is this: will Hawaiian switch to all 737s from the mainland? If they do, bye-bye HA.
And, for us, if they dump the non-stop from Ontario, we’ll be looking for other airlines from LAX (please no) or San Diego.
Don’t the acquired airlines disappear, over time, in airline mergers? Could Alaska rename the airline to include Alaska and Hawaiian in a new name???
Like Alaiian, Alaskaiian, Hawaiiska, 4950?
If you look on page 18 of the Alaska Air Group Investor Presentation, they directly say that the 717 “…could eventually be replaced by the 737”
Rob and Jeff, your title says it all, “A World of Emotion” surrounds this for the people that know and love Hawaii and it’s Flagship Airline. The perfect storm of Covid, predatory fare wars, Runway closures, slow recovery of Japan market, NEO teething problems and technology issues racked up racked up 900 million of debt. While I’m sure HA could have survived, Alaska brings everything HA needs to thrive going forward. The brand and it’s legacy will survive and the potential for the future is far greater for all than if HA stayed independent or worse….merged with a AA or DAL and suffered complete lose of it’s identity…Alaska appears to be doing this right.