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By Yiru Zhang Valuations analyst, Cirium Ascend Consultancy

The recent termination of the JetBlue and Spirit Airlines merger has brought more attention to the merger of Alaska and Hawaiian Airlines. There are some similarities but also many differences in the two cases. The unsuccessful case might not be a bad sign for Alaska and Hawaiian.

Route

Alaska Airlines ranks as the fifth largest passenger airline in the US. It serves more than 100 destinations across North America, with three hubs including San Francisco International Airport (SFO), Portland International Airport (PDX), and Seattle Tacoma International Airport (SEA).

Meanwhile, Hawaiian Airlines operates a wide network centered around Hawaii to major cities in Asia Oceania, and North America. Key routes are Honolulu to Tokyo, Maui to Seattle, and Honolulu to Los Angeles.

Once the merger is completed, Alaska’s strong presence on the west coast combined with Hawaiian’s Hawaii-centered routes can bring more flexibility for travelers to connect among destinations covered, for example, Tokyo – Hawaii – San Francisco.

Fleet

Optimization of the fleet structure is one thing that Alaska and Hawaiian must consider. Alaska’s fleet consists of two Boeing Single-Aisle types, 737 NG and 737 Max, with 80 more 737 Max orders through 2027 (which may be delayed due to the recent investigation). Hawaiian operates a fleet with Boeing 717 for domestic short-haul flights, and Airbus A321 and A330 for long-haul transpacific routes.

In 2023 Hawaiian announced its plan to replace the 717 fleet by early 2024, but due to the increasing demand, there are still 18 717 currently in service. The previously mentioned potential replacements include A220 and E195 E2, while as the merger goes on, it was widely believed that the final pick would be 737 Max. However, given the recent turmoil at Boeing, this is becoming uncertain again.

Hawaiian Airlines holds firm orders for 18 787-9 aircraft as of today. After the first delivery of the 787-9 earlier this year, Hawaiian Airlines now has three different aircraft types for long-haul missions. Hence, they need to decide which one to keep, to optimise cost on maintenance, training, etc.

JetBlue-Spirit

The JetBlue and Spirit merger was blocked by the Justice Department due to a violation of antitrust law. Spirit Airlines has benefitted its travelers by operating as an ultra-low-cost carrier. According to the US Bureau of Transportation (US DOT), in 2023 Spirit Airlines had 5.1% domestic market share. This means that if the merger happened, higher fares would apply to a large group of travelers which could potentially disrupt the market.

From that perspective, their situation doesn’t seem to apply to the Alaska–Hawaiian case. According to the same statistics by USDOT, Alaska and Hawaiian rank fifth and tenth, respectively, with market shares of 6.4% and 1.7%. The combined 8.1% will still stay at fifth and far from United, which holds 16% shares.

Another difference is that the business models of Alaska Airlines and Hawaiian Airlines, or at least in terms of service, are not as different as they are between JetBlue and Spirit. There doesn’t seem to be a lot of opposition from either shareholders or passengers.

At this point, it seems like there won’t be as many barriers for Alaska and Hawaiian compared to the earlier blocked merger. However, they still need to be careful about regulatory requirements, financial implications, and other issues for the merger to go through.

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