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)
But that’s not all. Alaska also partners with:
- Korean Air
- 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…
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.