Two months after getting his feet under the desk as head of Hawaiian Airlines Joe Sprague has two big goals after the $US1.9 billion ($3.2b) takeover by Alaska Airlines.
The first one is easier – make sure passengers notice very little change when they step aboard a Hawaiian Airlines flight and although there’ll be tweaks he’s not about to change its personality.
While there’s no playbook on keeping two airline brands distinct in an airline merger (they invariably get folded into each other), the second big goal is even more formidable.
It involves a massive restructuring behind the scenes at both airlines – how they will be run, laying off non-frontline staff, route development, tech standardisation and critically, integrating the loyalty programmes as it moves towards the goal of getting a single operator’s certificate.
Sprague – a 17-year veteran of Alaska Air, says all the big back office changes are aimed at enhancing customer experience, but it is the merging of two similar mileage-based loyalty schemes and Hawaiian Airlines’ future membership (in 2026) of the Oneworld alliance that could be game changers.
Hawaiian this month resumed a seasonal service between Honolulu and Auckland, flying three times a week until the end of April.
The airline faces a challenge trying to lure Kiwis, conscious of their weak currency, to the islands. But the merger creates a big opportunity to fill planes in the other direction by boosting visitor numbers from the US, especially from Alaska’s stronghold in the Pacific Northwest .
This week the airlines launched a campaign in which fares start at US$390 ($659) one-way from Seattle or Portland via Honolulu for travel to Auckland through to April 30.
Alaska, in its 93rd year of flying, is just the fifth biggest carrier in the US but flies more up and down the West Coast than its bigger rivals and has an air miles and credit card programme that penetrates deeply into its customer base.
That means it has the opportunity to feed more US travellers on to the combined airlines’ network to Australia and New Zealand, where Hawaiian has been flying for more than a decade, bringing welcome competition and punching above its weight against Air New Zealand on the Auckland-Honolulu route.
Asked whether there’s any prospect of the season being extended or extra frequency added, Sprague said: ‘’Stay tuned. I suspect in a few months we’ll have a better sense for things. There’s some real genuine excitement about that because it creates an opportunity to really boost the service to Auckland and Sydney by bringing in a whole other set of customers.’’
Following the election in the US travellers would be assessing how the economy and investment portfolios are performing but he was confident that there’s going to be high demand for holidays in Oceania out of the Pacific Northwest, which has a population of about 13 million.
‘’As we start to see the networks come together, we start to see the fruit of some of the promotional efforts that we are kicking off in the Pacific Northwest of the United States to encourage more travel from that region.’’
The takeover by Alaska was a lifeline for Hawaiian, which had struggled to recover from the pandemic and faced waves of competition, especially from the US mainland.
Alaska’s revenue at $US10.4b last year was more than three times that of Hawaiian’s and its headcount of around 24,000 was almost four times as big.
However, the culture of each airline made them a natural fit.
‘’Although Alaska is quite a bit bigger than Hawaiian and it’s grown a lot in the past 20 years we always have maintained a little bit of a sense of the underdog just like Hawaiian Airlines. We’ve been up against these much bigger competitors for most of our history [and] built that into the culture,’’ says Sprague who worked for Alaska Airlines for 17 years during a three-decade career in aviation.
‘’Both airlines are scrappy, [and] resourceful, we know we have to keep our costs down and we know we have to take really good care of our customers - which is partly what makes the combination so much of a natural move.’’
Both airlines are similar in their product offer.
“We’ve always offered a first-class cabin, premium-class cabin as well as a really good food and beverage product. Alaska is not a low-cost carrier in the sense of Spirit [now in bankruptcy protection] or even a Southwest, we have seat assignments and airport lounges.’’
Hawaiian has avoided the main airline alliances previously.
Alaska joined Oneworld three years ago and when Hawaiian joins its passengers will be able to use their miles on member airlines including Qantas, Qatar Airways, Cathay Pacific and American Airlines.
‘’The benefit is that members will be able to use their miles not just on Hawaii and Alaska ... but for Hawaiian miles members will now be able to use those miles to travel anywhere in the world.’’
Sprague will lead Pacific operations for Alaska and will remain chief executive until the Federal Aviation Administration issues a single operating certificate. Ben Minicucci is the head of Alaska Airlines.
Stitching the two airlines together was challenging.
‘’It’s mixing metaphors but there’s a lot of moving parts and it’s a lot of cooks in the kitchen. You hate impacting people in any sort of negative way and a combination like this, it does mean change.’’
At Hawaiian, up to 1400 management and office-based jobs are under review.
‘’The vast majority are receiving either an interim offer that will take them out to one of the integration milestones that most cases are a year or more away or they’re receiving a long-term permanent offer with the new combined airline.’’
About 6000 front-line unionised staff have been told their jobs are safe.
‘’I think in the long run and maybe even the medium or short run, it’s going to be a very positive for so many people, so many communities, so many employees and customers, but there are a few people that will be negatively impacted in the short term and that’s difficult for sure.’’
Sprague’s predecessor at Hawaiian, Peter Ingram, was paid about $US13 million in a severance package. Sprague wouldn’t comment on the payout - ‘’I don’t really have any thoughts on that.’’
Based in Seattle since the 1950s, Alaska operates a 238-strong fleet of Boeing 737s (ranging from freighters to new model MAX-9 planes) and its regional operation Horizon Air and partner SkyWest fly 86 Embraer 175 planes.
In contrast to the simplicity of Alaska Air, Hawaiian has a more varied fleet with 24 Airbus A330s (which operate the NZ route) two Boeing 787 Dreamliners (with 10 more on order), 18 Airbus A321neos and 19 717-200s.
‘’We’ll be operating an airline with multiple fleet types, but we’re okay with that. The flip side is the aircraft that Hawaiian has in its fleet are all very mission specific.’’
The 717s flew neighbour island flights, the A321s were flying to the US mainland, the Dreamliners for now were doing Los Angeles and Phoenix flights and A330s were on Oceanic routes to Australia and New Zealand.
‘’The Alaska team is super excited about it because the Hawaiian team not only has the airplanes, they have tremendous expertise in operating those airplanes, not just to the west coast, but internationally.’’
Boeing manufacturing problems had delayed aircraft deliveries but Sprague said when more Dreamliners entered the fleet they would be used on longer routes.
They have been fitted with more premium-heavy cabins to meet growing demand for business class and extra comfort seating, a trend that was mirrored in all parts of the travel sector, he said.
Grant Bradley has worked at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
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