Hawaii Airlines and Alaska Airlines executives couldn’t promise that the proposed merger between their two companies will reduce airfares, but said the customers should experience only minimal disruptions.
During a Hawaii Island Chamber of Commerce Event Monday, Hawaiian Airlines President and CEO Peter Ingram and Alaska Airlines Regional President — Hawaii/Pacific Joe Sprague discussed the potential impacts and benefits of their proposed merger.
Announced in December, the merger would see Alaska purchasing Hawaiian for $1.9 billion, although regulatory hurdles still need to be cleared before the deal can go through.
During the event, Sprague said the transaction “makes sense” for both airlines, noting that the two businesses are similar in that they connect smaller communities that are inaccessible by roads — many communities in Alaska are so remote as to not have roads built between them.
Ingram said that Alaska’s size — the distant fifth-largest U.S. airline — will complement Hawaiian’s “scrappy” nature, noting that the Big Four airlines of American, Delta, United and Southwest, are only growing larger with an eye toward “taking over the world.” Most of those Big Four, he said, are also targeting a higher-income customer, opening a niche for another business to succeed.
However, when asked about whether the merger will allow them to reduce plane ticket costs — or, less ideally, require a price increase — the two said they could make no promises.
“We’re still competing airlines until the deal closes,” Sprague said. “But, our approach is to listen to our customers and our employees.”
Nor could either executive commit to another popular request: direct flights from Hilo to the mainland. But Ingram said that could be possible under the new regime.
Ingram said that, based on the current rate of inbound air traffic to Hilo, it isn’t economically feasible for Hawaiian to do direct mainland flights from Hilo in its current state. But if the merger goes through, he said it will be “more likely than it is for Hawaiian alone.”
Sprague said public feedback will be a factor in making such decisions, announcing that Alaska will establish later this month an “Alaska Airlines Hawaii Community Advisory Board,” which will allow community members to deliver feedback about the airline’s activities via regular meetings. He said a similar board has existed in the State of Alaska for more than 40 years, and that the 16 inaugural members of the Hawaii board have already been selected.
But even though they couldn’t guarantee customer’s biggest requests, Ingram and Sprague emphasized that other perks of the airlines should remain untouched. Loyal Hawaiian customers will not lose their accumulated HawaiianMiles once the merger takes place — and, in fact, Sprague said those miles will become more valuable once the merged airline can make more direct flights to mainland destinations from Hawaii.
Sprague said Alaska’s loyalty program will be combined with Hawaiian’s, although the specifics of how that will work have not been determined yet. Ingram added that other airline benefits, such as Hawaiian Airlines’ credit cards or the company’s retiree benefits shouldn’t be impacted for the foreseeable future.
In any case, the deal is still a long way off. Ingram said the merger still requires an approval vote by Hawaiian Airlines shareholders, which should take place in mid-February, and then a review by the U.S. Department of Justice to whether the transaction is anti-competitive, a judgment that could take 12-18 months.
While Ingram said he believes the DOJ should rule in favor of the deal, he added that Hawaiian will still be in a good place should the merger fall apart.
“We’re not the ones who asked for this,” Ingram said. “We had a good future plan in place before Alaska approached us, and if the deal doesn’t work out, that plan is still good.”
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
