New Sheriff In Town: Two CEOs In, One Out With $13M, At Hawaiian

In a surprising shift that has left many in the aviation industry wondering about the future dynamics between the two biggest players in the Hawaii travel market – Alaska Airlines and Hawaiian Airlines – Alaska now finds itself in the unique position of having two CEOs.

Why did that happen, and what does it mean for both airlines, especially given the arrival of long-time Alaska Airlines executive and pilot Joe Sprague as the new CEO of Hawaiian Airlines? Sprague, a seasoned executive with decades of experience at Alaska, including heading Horizon Air, is set to lead Hawaiian Airlines as its new CEO during a pivotal time going forward. He replaces outgoing CEO Peter Ingram, who received a very generous compensation.

Sprague is no stranger to Hawaiian, however. Since the first announcement of the planned acquisition, Sprague has been headquartered in Hawaii and was in charge of integrating the two carriers before becoming CEO. His expertise in guiding Alaska through its rise to prominence in the Pacific market and other destinations made him a logical choice to lead Hawaiian Airlines during its transitional period.

In an exclusive interview with us, more details of which are forthcoming, Sprague emphasized that Hawaiian Airlines would, by necessity, partially operate independently for at least 12 to 18 months while it remains under its own operating certificate. This buffer period is critical.

Understanding airline operating certificates: Why they matter.

An airline operating certificate is essentially the regulatory approval that aviation authorities require to provide air transportation. In the United States, the aviation authority is the Federal Aviation Administration. Each airline must maintain its own certificate, which outlines key operational, safety, and maintenance protocols.

This certificate is no trivial matter. It defines the airline’s specific permissions, routes, and safety guidelines that comply with FAA regulations. When one airline acquires another, as in the case of Alaska and Hawaiian, they can’t simply combine their operations overnight. Each airline must continue to comply with its respective operating certificate until regulatory authorities approve a new unified certificate.

This leads to a key point: Hawaiian Airlines, now part of Alaska Airlines Holdings, will continue to operate independently with its own certificate for the next 12 to 18 months. During this time, Hawaiian will maintain its distinct routes, branding, and elements of its operational structure. Alaska, for now, will remain focused on its own West Coast-dominant network.

While the merger has been approved, airline operating certificates have not.

Once the FAA and other regulatory bodies approve Hawaiian’s actual absorption under Alaska’s operating certificate, the two airlines will fully integrate as a single certificate operator. Until that happens, Joe Sprague’s role as CEO of Hawaiian Airlines will remain in place as the company navigates the complexities of maintaining two separate operations and preparing for eventual full integration.

Why two Alaska CEOs?

Both Ben Minicucci, CEO of Alaska Airlines, and Joe Sprague, CEO of Hawaiian Airlines, will each remain in charge of managing somewhat independent operations with vastly different networks, fleets, and target markets. Sprague’s role is critical during this transitional period, overseeing Hawaiian’s daily operations and employee relations and maintaining the brand’s strong presence, particularly in Hawaii, the US mainland, and the Asia-Pacific market.

Installing two CEOs is part of a strategic approach to ensuring smooth, uninterrupted service at Hawaiian. At the same time, Alaska Airlines begins to implement its larger vision for the combined airline, which is large and comprehensive. We went behind the scenes with Joe Sprague yesterday, and we’ll be revealing much more about what’s planned in the days ahead.

Sprague and Minicucci will continue working together closely during this period, sharing insights, resources, and strategies to align the two airlines’ operational cultures before the final integration. We asked Joe Sprague what would happen after the single operating certificate was approved. He said he isn’t worried about that for now and might be happy to go back intoto airline retirement in the future. But for now, he is working extended hours to coordinate the management of Hawaiian Airlines and its integration with the new owner, Alaska Airlines.

The integration process: What to expect.

The integration of Alaska Airlines and Hawaiian Airlines into a single entity is a multifaceted and complex endeavor that extends well beyond the mere combination of routes and fleets. Here’s an overview of key areas to monitor as this merger progresses. Our conversation with Joe provided insights into these aspects, and we’ll share detailed updates on each as they develop.

Fleet Compatibility.

Hawaiian Airlines’ mainland fleet predominantly consists of Airbus widebody and narrow-body aircraft, a stark contrast to Alaska’s exclusive Boeing 737 lineup. This discrepancy poses significant challenges for fleet integration, including aligning training, maintenance, and operational procedures. Addressing these issues will be crucial as they move toward a unified operation and certificate post-merger.

Labor Relations.

The merger will involve intricate negotiations with labor unions representing pilots, flight attendants, and ground crews. Alaska Airlines has committed to retaining all unionized roles post-merger. However, the situation appears more precarious for non-union employees in Hawaii, with significant changes already underway, evidenced by the departure of key figures such as former CEO Peter Ingram. The future for other non-union employees remains uncertain.

Route Optimization.

Alaska Airlines has a strong presence on the West Coast and Pacific Northwest, whereas Hawaiian Airlines specializes in long-haul flights to Asia and the Pacific. Integrating these routes under a single brand poses a strategic challenge, with the goal of optimizing network efficiency without compromising service quality or market reach.

Customer loyalty programs with changes already in effect.

Both airlines boast robust loyalty programs: Alaska’s Mileage Plan and Hawaiian’s HawaiianMiles. The upcoming merger of these programs, sometime in 2025, will aim to streamline benefits, offering a unified rewards system that leverages the strengths of both networks to enhance value for passengers.

For now, customers can transfer miles from Alaska Airlines to Hawaiian Miles and vice versa. That is being permitted on a 1:1 basis, which already means that HawaiianMiles members can access Alaska Air flights and the extensive range of Oneworld members and other Alaska Airlines partners. We were told there will be more news in the next few days in this regard.

What’s next for Hawaiian Airlines?

For the immediate future, Hawaiian Airlines customers can expect “business as usual.” Under the guidance of Joe Sprague and his leadership team, the airline will maintain its unique branding and continue delivering the high level of service its passengers expect.

By merging the strengths of both airlines, customers will benefit from expanded route options, streamlined operations, and unified loyalty programs, among other improvements. This integration aims to optimize resources and enhance the overall travel experience.

As this dynamic landscape evolves, Beat of Hawaii aims to keep you apprised of all the latest developments. Stay tuned for in-depth updates as we navigate these exciting changes together.

We welcome your input and questions.