Alaska and Hawaiian Merger Approved
Alaska and Hawaiian have already cleared many hurdles towards closing their merger, including approval from the Department of Justice. Now, the Department of Transportation has given its blessing to the merger, albeit with conditions. As announced yesterday, Alaska and Hawaiian have agreed to a number of conditions relating to the new combined loyalty program focused on preserving value for customers. Let's take a look at what the airlines have agreed to as part of getting the Alaska and Hawaiian merger approved by the DOT, which was the last major hurdle to closing the deal.
DOT's Conditions to Approving the Merger
The main focus of the DOT's conditions is on preserving the value of Hawaiian miles under the combined loyalty program following the merger. Even though it is expected that Alaska Mileage Plan will be the surviving loyalty program, we don't have any information about what the new program will look like.
This is also the first time the DOT has required airlines to agree to binding provisions relating to their loyalty program as a condition to approving the merger. Notably, the protections will remain in effect for six years.
No Expiration for Miles Under the Current Programs
Miles earned under the current HawaiianMiles and Alaska Mileage Plan programs must not expire once converted into the new combined loyalty program. Alaska and Hawaiian miles already don't expire, so this wasn't much of a risk.
Transfer Miles at 1:1 Ratio
This is the big one most folks have been wondering about. Alaska and Hawaiian agreed to allow HawaiianMiles members to transfer their miles into the new loyalty program at a 1:1 ratio. Since we do not have any details about the combined program, I remain hesitant to speculatively transfer Amex Membership Rewards to Hawaiian to take advantage of this. But I still view this as good news for HawaiianMiles members, who can expect to get potential value out of their miles under the new program.
Maintain Value of Miles
According to the DOT, the “combined airline must not take any actions that would devalue HawaiianMiles miles.” Further, the DOT states that “the combined airline must maintain a minimum dollar value for all miles in the new loyalty program, measured by the guest-facing value of miles redeemed for carrier-operated flights.” What the DOT means by maintaining “a minimum dollar value for all miles” is quite the head-scratcher, so I am particularly interested in seeing this one play out.
No New Change Fees
The DOT press release also mentioned that the “combined airline must not impose change or cancellation fees on rewards redemption tickets for travel on carrier-operated flights.” Alaska Mileage Plan does not charge change or cancellation fees for award flights, regardless of operating carrier. Yet the DOT is only requiring the new loyalty program to not impose change or cancellation fees on carrier-operated flights, meaning flights operated by the new combined airline.
I would like to think Alaska won't view this as an opportunity to impose change or cancellation fees on partner awards, since that would be a departure from industry norm post-pandemic. But the language in the press release sure seems to leave an open door…
Alaska and Hawaiian Merger Approved: ToP Thoughts
DOT approval was the last major hurdle remaining for the Alaska and Hawaiian merger to close. The DOT got the airlines to agree to a number of binding protections regarding the combined loyalty program following the merger. The biggest condition is that Hawaiian miles will transfer at a 1:1 ratio to the new program. While this is certainly good news, it remains to be seen what the new program will look like, since we don't have any details about that as of now.
