Hawaiian Airlines’ Fleet And Brand Fusion

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Alaska Airlines announced plans to acquire Hawaiian Airlines for $1.9 billion, which marks a significant milestone in the airline industry. This acquisition, pending regulatory approvals and Hawaiian Airlines investor consent, is set to combine two iconic brands. The combined Alaska Airlines and Hawaiian Airlines operation would build the fifth-largest airline in the U.S. Because of its scale, the deal will likely face scrutiny from the Department of Justice.

But that may not be the biggest challenge ahead for the two beloved aviation icons. Both airlines have over 90 years of brand history but have different approaches to managing their brands. A merger requires Alaska to integrate Hawaiian’s diverse fleet and upscale onboard experience.

Alaska Airlines said it will maintain the unique Hawaiian Airlines brand. The airline previously erased all traces of the Virgin America brand and rationalized the fleet, eliminating the Airbus A320 family aircraft in favor of a return to an all-Boeing
BA
737 operation. Now, Alaska Airlines plans to acquire an airline with mixed short- and long-haul operations deeply rooted in the Hawaiian identity while centralizing headquarters in Seattle.

“This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for West Coast and Hawai’i travelers,” said Ben Minicucci, Alaska Airlines CEO. “We are fully committed to investing in the communities of Hawai’i and maintaining robust Neighbor Island service that Hawaiian Airlines travelers have come to expect. We look forward to deepening this stewardship as our airlines come together while providing unmatched value to customers, employees, communities and owners.”

Hawaiian Airlines Fleet Integration

Hawaiian Airlines operates a mix of narrowbody A321neos, B717s, and long-haul wide-body A330s and B787-9 aircraft. Keeping the fleet mix presents fresh challenges to Alaska Airlines in operations and maintenance, more so than Virgin America’s fleet because it includes wide-body planes.

Alaska Airlines opted to transition away from Airbus, phasing out the A320 aircraft it acquired through Virgin America.Last year, Alaska Airlines ordered 52 additional Boeing 737 MAX aircraft, scheduled for delivery between 2024 and 2027. This order increased the airline’s confirmed 737 MAX fleet from 94 to 146.

In the investor presentation, Alaska Airlines suggests that B737s could replace Hawaiian Airlines’ existing B717 fleet. Hawaiian currently owns 14 of these aircraft and leases an additional five. They are at mid-life of service. At least for now, it seems Alaska Airlines would keep the 4.5-year-old Hawaiian Airlines A321neo fleet flying. Hawaiian owns 14 Airbus A321s and leases eight.

For long-haul service, Alaska Airlines may advance a transition away from the Airbus A330 to more Boeing Dreamliner aircraft. Twelve of the Hawaiian Airlines A330s on lease are up for renewal soon. Alaska Airlines notes the end of these leases offers “flexibility in wide-body capacity.” Hawaiian already planned to add to its Dreamliner capacity with an existing order for 12 Boeing 787-9s.

The Challenge of Brand Harmony

While both brands are well-established, Hawaiian Airlines has fostered a strong destination brand over its 94-year history, intrinsically linked with Hawaiian culture. Appealing to leisure travelers, Hawaiian favors an upscale passenger experience with unique premium offerings.

For example, Hawaiian Airlines crafted a cabin for its Boeing 787-9 aircraft rich in cultural references, from the choice of textiles to seating and amenities. On its long-haul fleet, Hawaiian Airlines features 34 Leihōkū (garland of stars) Suites that compete well with the profitable premium cabins of larger flagship airlines.

Alaska Airlines maintains a comfortable but cost-optimized and conservative cabin design.

In the investor presentation, Alaska Airlines acknowledges a disparity in premium services. The merger would add two million premium seats to the newly combined carrier, with only 24% contributed by Alaska Airlines’ aircraft. That share is up for debate. What Alaska Airlines defines as premium is an economy-plus offering, not an actual premium cabin. Its premium offering consists of four additional inches of legroom.

The airline chose not to adopt the separate first-class experience once provided by Virgin America. For that merger, the decision made sense. Premium seating requires significant up-front investment to design and equip, ongoing investment to maintain service standards, and more regular investment every five to ten years to keep up with competitors. Suites are expensive, with many moving parts and electronics that can break. Premium cabin seating does not offer the same efficiencies of scale in production as economy seating.

Both airline CEOs made statements addressing this question of brand continuity.

“We have a longstanding and deep respect for Hawaiian Airlines, for their role as a top employer in Hawai’i, and for how their brand and people carry the warm culture of aloha around the globe,” said Minicucci.

“With the additional scale and resources that this transaction with Alaska Airlines brings, we will be able to accelerate investments in our guest experience and technology, while maintaining the Hawaiian Airlines brand,” said Peter Ingram, Hawaiian Airlines President and CEO.

A more conservative cabin works for the routes Alaska serves and provides a price advantage. However, it would dilute brand value if Alaska Airlines moved away from Hawaiian Airlines’ distinctive, localized and more expensive cabin design tradition. The airline’s upscale services are a distinct competitive advantage on long-haul routes.

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