Alaska Airlines will from a strategic alliance with American Airlines to compete with Delta in Seattle and also join the Oneworld alliance. Let’s be careful before we start celebrating this news.
There’s a lot to be happy about in today’s announcement.
- Alaska will join Oneworld as a full member, opening up several additional earning and redemption opportunities
- The partnership between American and Alaska will not dissolve on March 1st, as planned
- Instead, American and Alaska will form an even closer partnership and American Airlines will build up its presence in Seattle
- American and Alaska flyers will enjoy reciprocal benefits across both airlines
What Will Happen To Alaska Mileage Plan?
The takeaway question is will this tie-up help consumers? Will creating a stronger force to battle Delta give consumers more choice? Will reciprocal earnings on American and Alaska make loyalty more valuable?
That may be the case; I certainly will not foreclose the possibility.
And yet my first thought when I read the press release was that Alaska’s quirky but valuable Mileage Plan program would be a casualty of this new partnership.
Alaska already partners with six Oneworld carriers:
- American Airlines
- British Airways
- Cathay Pacific
- Fiji Airways (oneworld connect)
- JAL
- Qantas
But that’s not all. Alaska also partners with:
- Emirates
- Hainan
- Icelandair
- Korean Air
- Latam
- Singapore Airlines
Imagine if the price of its alliance with American Airlines and Oneworld are these valuable partnerships outside the alliance?
Imagine if American Airlines pressures Alaska to adapt a revenue-based earning model? Or devalue its redemption model?
In either case, consumers don’t just lose, but lose big.
One reason American and Alaska were slated to split up on March 1st (before today’s news) was because American complained that its members were redeeming far less miles on Alaska than Alaska members were redeeming on American Airlines.
That disparity will only widen and many AA flyers may find an arbitrage opportunity in crediting American flights to Alaska. Do you really expect that window to remain open for long?
Alaska will certainly review its entire Mileage Plan program on both the earning and redemption side. Even if some of the non-Oneworld partners remain for awhile, I expect prices will go up and stopovers on one-way awards will become a thing of the past.
That’s nothing to celebrate…
CONCLUSION
Perhaps this tie-up was unavoidable. With Alaska losing corporate contracts to Delta, which offered overlapping domestic service plus extensive international connectivity, it was natural that Alaska would seek a new partner.
But I’m a bit surprised by the euphoria over today’s announcement. There will be some good, but there will likely some bad…especially when it comes to loyalty.
I believe American Airlines is laying the groundwork for a merger with Alaska Airlines, which I will discuss in depth tomorrow.
Seattle is a crappy city. Rains so much. What idiots decided to love Seattle.
So, you didn’t see the announcement of SEA-BLR and SEA-LHR on AA metal?
I saw it. Will be a separate post.
I’m worried about the partnership with Singapore Airlines, Emirates, Korean airlines.
Aer Lingus isn’t Oneworld
AerLingus will likely re-join Oneworld in next 18 months.
I think the most likely outcome is some combination of the following:
1) Reduced RDM earnings for AA flights credited to AS. Something like 50-75% of the miles you would otherwise earn if crediting to AA.
2) Some kind of monkeying around with the price of AS awards for AA flights and vice versa to equalize the number of redemptions. Or more likely, discourage them entirely.
3) A discontinuation of the LATAM partnership, and a prohibition on stopovers for AS awards booked on AA metal.
While regrettable, I certainly wouldn’t rule out Discount Dougie attempting to strong-arm AS into adopting a revenue-based model and ditching all of its other partners, but I don’t see that as a significant risk, at least initially.
As for an AA merger with AS, I’m interested in seeing your thoughts tomorrow, but that’s not very likely. Why? There’s no way AA could pull it off with their currently depressed market valuation.
“I believe American Airlines is laying the groundwork for a merger with Alaska Airlines”
They are already the #1 airline by passengers in the U.S., why would the DoJ approve such a merger? If anything, Alaska should merge with jetBlue, which would complement their domestic network–Alaska west coast, jetBlue east coast).
That’s part of the analysis – will it be a Trump DOJ a year from now?
@ Matthew — Probably will be a Trump DOJ a year from now. Our latest great hope of saving us from Trump, Michael Bloomberg, said redlining caused the financial crisis. Great. It was poor people’s fault that bankers were gambling until they hit broke. We are screwed.
Even if Michael Bloomberg says we should hang white Republicans in the square i will vote for him. Even if he actually shoots a few of them on live television.
It’s time Democrats stopped being level headed. Just give the leader a free pass as long as he is throwing republicans under the bus.
Don’t you read the bloody news? Republicans are already doing it.
LOL.
Hopefully we will still have Trump presidency as well as a GOP controlled House and Senate because we don’t need another buffoon Democrat president & Congress to sell the USA down the river to the globalists. Things have never been better and will drastically improve with the GOP running the entire government!
The potential for a merger between AA and Alaska is an appalling idea for consumers. AA will treat what’s left of Alaska with the same disregard as they treated the remains of TWA. That didn’t go well for St. Louis. Not to mention that you blow up an airline who cares about it’s customers and is focused on quality and you (sort of) replace it with an airline that aspires to be Spirit. Only more greedy.
Gone will be the days of earning almost 600% of award miles and 250% on elite qualifying miles on cheap BA First sales as a MVP 75k. I suspect not only will AA pressure AS but so will other airlines like BA for which AS has some incredible earning structures. Ride it out while it lasts and get your JAL and Cathay F awards ticketed within the next 12 to 18 months.
A merger with AA would effectively kill off any value AS holds, it would be terrible for everyone and would only benefit a few at AS
There will be no merger. That’s ridiculous. If they were going to merge then why would AS go through the huge expense and lengthy process of joining OW independently, getting approvals for codesharing with AA, etc.?
Oh but Trump will approve any merger huh? Nice Dem propaganda. Who approved AA/USair btw?
The big news is the impending death of the AS award chart, and MileagePlan as a whole. You buried the lead to talk about nonsense.
To me, slightly bad in the future. Rules of AS Mileage Plan will probably start aligning with AA and all their enhancements. Award stopovers ending (terrible enhancement). Latam, Icelandair, Singapore eventually ending (bad enhancement).
I don’t understand the pessimism. Seriously.
First, the *point* of a loyalty program is to build loyalty. The problem I have with AS is that their international network is weak. In fact, their East Coast footprint is pretty weak. And I can’t search for their allies on Google Flights. Integration with oneworld means I can fly with them more. I love their service (maybe a bit too much?), and they are the only other option here in Bay Area (Delta is barely here, and, let’s be frank, why would you fly Delta if you can fly Alaska?). So, this is excellent. I can be loyal to them.
Second, AS devaluation is, well, inevitable. Let’s leave it at that. They already receive hostility from their various partners, in the form of lower award spaces or more restriction in services (e.g. EK won’t give ground service or KE only round trip). It’s inevitable that something will have to give.
Third, devaluation isn’t necessarily bad. Take AA vs FlyingBlue (AF + KL). AA supposedly has a chart. Supposedly. FlyingBlue doesn’t. You said yourself that FlyingBlue is rather well-done. Your loyalty is recognized, and you get OK OK value out of their miles. Imagine of AS goes down this road rather than Skymiles, with decent sales and good recognition of loyalty flyers. That would be awesome.
I think my opinion rests on the fact that there must be a balance. When a thing is too good, it won’t last. AS loyalty program is there right now, along with Virgin Atlantic. So, I start with an expectation of reversion to the mean. As such, AS will eventually have to adjust their program to align with (although hopefully a bit better than) average market value. My hope is that AS would prepare for such landing. And by joining oneworld, they are making very good landing pad. If nothing else, well, we get status with more airlines 🙂
Hi,
I’m not too familiar with US antitrust law, but would this agreement raise competitive concerns and regulatory scrutiny?
It may. A more extensive AA-AS codeshare was shot down before by regulators and this new link-up is subject to regulatory approval.
Agreed with this article, I’m MVP Gold and fly Alaska almost exclusively because I can get upgraded. If all the AA elites take over i’m out and will just fly whoever.
I don’t fly enough or spend enough to get high level on other airlines. Nor do I need the bigger network since I basically fly where Alaska goes.
I presume Alaska will lose most of it’s current elites, but they’ll get more pax from the AA elites which is a bigger pool, so the airline probably wins overall; but they’ll lose their old loyal AS elites is my guess. I’ll probably just go for gold this year for 2021 and then stop after when all the AA elites get upgrades before me or they move to away from distance mileage.
I looked at Alaska for SFO-SEA. What are the benefits of the current AL/QF relationship ? Absolutely ZERO, as QF PLT/ OW Emerald. Not even a checked bag. Pathetic.
The AS and AA partnership wouldn’t belong in your list of current Oneworld partners if not for this news. Mileage redemptions were toast, so not even close to being same value as JL or CX.