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Hawaiian Airlines - Strategic Analysis and Outlook Report (2026)
AviationOutlook
December 03, 2025 • Estimated Reading Time: 38 minutes
The year 2024 marked a transformative moment for Hawaiian Airlines, one of the most iconic carriers serving the Pacific region.
On September 18, 2024, Alaska Air Group completed its acquisition of Hawaiian Airlines for $1.9 billion, creating a combined airline group that now ranks as the fifth-largest carrier in the United States. This merger represents far more than a financial transaction; it signals a fundamental restructuring of how air service to and within Hawaii will operate in the years ahead.
Understanding the trajectory of Hawaiian Airlines within the Alaska Air Group framework requires examining operational integration, fleet modernization, competitive positioning, and the broader economic forces shaping Pacific aviation markets.
Let’s get started.
Table of Contents
Image source: hawaiianairlines.com
The Merger Context and Strategic Rationale
The acquisition of Hawaiian Airlines by Alaska Air Group stemmed from a confluence of financial pressures and strategic opportunities. Hawaiian Airlines had struggled with profitability in the years leading up to the merger, facing intense competition from Southwest Airlines on interisland routes and challenges in maintaining its transpacific network.
Southwest’s aggressive pricing strategy on Hawaii routes placed significant pressure on Hawaiian’s core business, contributing to the carrier’s financial difficulties.
Alaska Airlines saw the acquisition as an opportunity to expand its geographic footprint and revenue diversification.
The merger brings together two carriers with complementary networks: Alaska’s strength on the West Coast and in transcontinental U.S. markets combines with Hawaiian’s unmatched presence in transpacific routes and interisland service. Alaska Air Group projects that this combination will generate at least $500 million in run-rate synergies by 2027, up from an initial estimate of $235 million.
The integration officially progressed through several milestones throughout 2025. On October 29, 2025, Alaska and Hawaiian obtained a single operating certificate from the Federal Aviation Administration, allowing both carriers to operate under unified regulatory authority. This technical achievement paves the way for deeper operational integration, including common maintenance procedures, unified crew training, and streamlined aircraft utilization.
MERGER TIMELINE
================
December 3, 2023: Acquisition announced
April 2024: Hawaiian shareholders approve merger
September 18, 2024: Acquisition completed
October 1, 2025: HawaiianMiles transitions to Atmos Rewards
October 29, 2025: Single operating certificate obtained
Spring 2026: Hawaiian joins oneworld alliance
2027: Full integration target date
Financial Performance and Integration Progress
The financial performance of Hawaiian Airlines during the integration period presents a nuanced picture. In the second quarter of 2025, Hawaiian returned to profitability, a significant milestone that exceeded expectations. According to Alaska Air Group’s Q2 2025 earnings report, Hawaiian’s performance contributed positively to the combined entity’s premium revenue growth. Cargo operations, particularly the Amazon Air contract, generated $136 million in the second quarter alone, representing a 34% increase from the same period in 2024.
However, the third quarter of 2025 presented new challenges. Pre-tax expenses to operate Hawaiian exceeded revenue by $42 million during the three months ended September 30, 2025, contributing to reduced overall income for Alaska Air Group. This operational loss stemmed from several factors: elevated integration costs, the impact of the July IT outage that affected Alaska’s operations, and challenging weather patterns that increased recovery expenses.
Despite these near-term challenges, Alaska Air Group remains optimistic about the long-term financial trajectory. The company reported third quarter 2025 revenue of $3.8 billion, representing a 1.4% year-over-year increase in revenue per available seat mile (RASM). Corporate travel showed particular strength, growing 8% year-over-year compared to low single-digit declines in previous quarters.
Financial Metric | Q2 2025 | Q3 2025 | Year-Over-Year Change |
|---|---|---|---|
Hawaiian Operating Result | Profitable | -$42M loss | Variable |
Cargo Revenue | $136M | $170M (est.) | +27-34% |
Premium Revenue Growth | +5% | +5% | Steady growth |
Corporate Travel Growth | +8% | +8% | Strong recovery |
Combined Group Revenue | $3.6B | $3.8B | +1.4% RASM |
Fleet Composition and Modernization Strategy
Hawaiian Airlines’ fleet represents both its operational capability and its most pressing long-term challenge. As of December 2025, the carrier operates three distinct aircraft types, each serving specific strategic purposes within the network.
Boeing 717-200: Interisland Workhorse Facing Uncertain Future
The backbone of Hawaiian’s interisland operation consists of 19 Boeing 717-200 aircraft, with an average age exceeding 22 years. These aircraft are uniquely suited for Hawaii’s interisland routes, offering the right capacity (approximately 128 seats) and range for frequent, short-haul flights between the islands. The 717’s efficiency on these routes stems from its ability to handle rapid turnarounds and its engines’ tolerance for the demanding duty cycle of repeated takeoffs and landings with minimal cooldown time.
However, the aging 717 fleet presents several challenges. Boeing ceased production of the 717 in 2006, meaning replacement parts become increasingly scarce. The Federal Aviation Administration has flagged concerns about the fleet’s age and maintenance requirements.
Despite these issues, Alaska Air Group has not announced a formal replacement plan, likely because no obvious successor exists. Potential replacements under consideration include the Airbus A220, Boeing 737 MAX (likely too large for most interisland routes), and the Embraer E195-E2. Industry observers expect a decision within five to seven years, but the unique operational requirements of Hawaii’s interisland network make this a complex choice.
Airbus A330: The Long-Haul Fleet Backbone
Hawaiian operates a fleet of Airbus A330-200 aircraft for its transpacific routes, connecting Hawaii to destinations across the western United States, Asia-Pacific region, and Oceania. These widebody aircraft typically seat around 278 passengers in a two-class configuration, offering both economy and first-class seating with Hawaiian’s distinctive island-inspired cabin design.
The A330 fleet serves as Hawaiian’s primary long-haul asset during the integration period. In August 2025, Hawaiian adjusted its transpacific network, suspending service to Incheon, South Korea (5x weekly), Fukuoka, Japan (3x weekly), and Boston (4x weekly).
These aircraft were redeployed to strengthen capacity on higher-performing routes including Honolulu to Sydney, Papeʻetē (Tahiti), Los Angeles, and Seattle. Hawaiian also resumed service between Honolulu and Auckland, New Zealand in November 2025, reconnecting these markets for the first time in several years.
Airbus A330-300P2F: Dedicated Cargo Operations
One of Hawaiian Airlines’ most successful recent strategic moves has been its partnership with Amazon Air.
The carrier operates 10 Airbus A330-300 freighters converted from passenger configuration, making Hawaiian the first major U.S. passenger airline to operate dedicated freighter aircraft. This fleet operates under Hawaiian’s FAA air carrier certificate but flies exclusively for Amazon, transporting cargo between Amazon distribution centers across North America.
The Amazon partnership has proven financially beneficial, contributing substantial revenue during periods when passenger demand fluctuated.
In October 2025, Amazon added a third freighter flight to Honolulu, enabling next-day delivery service for Hawaiian consumers while also allowing the carrier to transport fresh Hawaiian pineapples back to mainland distribution centers. This cargo operation provides Hawaiian with a stable revenue stream less vulnerable to the volatility affecting passenger operations.
Boeing 787 Dreamliner: The Transitional Fleet
Hawaiian took delivery of four Boeing 787-9 Dreamliner aircraft in 2024, representing the carrier’s first new widebody type in years. However, the merger fundamentally altered the strategic role of these aircraft. Alaska Air Group announced that all four 787-9s currently in Hawaiian livery will be transferred to Alaska Airlines by spring 2026 and repainted in Alaska’s livery. Alaska will use these aircraft to launch new long-haul routes, including nonstop service between Seattle and Rome beginning in May 2026.
Additionally, Hawaiian had outstanding orders for additional Boeing 787 aircraft. In September 2025, the carrier converted orders for five 787-9s to five 787-10s, choosing the larger variant to increase capacity on high-demand routes. These larger Dreamliners will also ultimately fly in Alaska’s colors rather than Hawaiian’s, as the integration proceeds toward a unified fleet structure.
HAWAIIAN AIRLINES FLEET SUMMARY (December 2025)
================================================
Aircraft Type Quantity Primary Use Future Status
Boeing 717-200 19 Interisland Aging, replacement needed 2027-2032
Airbus A330-200 24 Long-haul passenger Continuing operation
Airbus A330-300P2F 10 Amazon cargo Expanding operations
Boeing 787-9 4 Long-haul passenger Transfer to Alaska livery 2026
Boeing 787-10 5 (orders) Long-haul passenger Delivery in Alaska livery
Network Strategy and Route Optimization
Hawaiian Airlines’ route network has undergone significant rationalization since the merger announcement. The carrier’s strategy focuses on concentrating capacity on routes with the strongest demand while eliminating or reducing underperforming services.
Transpacific Route Restructuring
The suspension of routes to Incheon, Fukuoka, and Boston in late 2025 reflects a data-driven approach to network planning. These routes struggled with load factors and yield metrics that fell below profitability thresholds. Freed capacity was redeployed to routes showing stronger performance:
Strengthened Routes:
Honolulu to Sydney, Australia (increased frequency)
Honolulu to Papeʻetē, Tahiti (capacity addition)
Honolulu to Los Angeles (widebody deployment on select flights)
Honolulu to Seattle (20% capacity increase using A330 widebodies)
The Seattle route expansion holds particular strategic significance. As Alaska’s primary hub, Seattle serves as the gateway for connecting Hawaiian’s transpacific network with Alaska’s extensive domestic and international routes. By deploying widebody aircraft on the Honolulu-Seattle route, Hawaiian increases premium seat availability for business travelers while Alaska gains feed traffic for its broader network.
Interisland Operations and Competitive Dynamics
Hawaiian’s interisland network faces intense competitive pressure from Southwest Airlines, which entered the Hawaii interisland market several years ago with aggressive pricing. Southwest operates its Boeing 737 fleet on interisland routes, offering lower fares but facing challenges with load factors due to the aircraft’s larger size compared to Hawaiian’s 717s.
Recent developments suggest Southwest may be reducing its Hawaii interisland presence beginning in 2025. Such a pullback would reduce competitive pressure on Hawaiian and potentially allow the carrier to improve yields on these historically thin-margin routes. However, any reduction in competition raises concerns about Hawaii reverting to a near-monopoly situation on interisland travel, which could affect pricing for residents.
Hawaiian’s interisland operation connects five major airports:
Honolulu (Oʻahu)
Kahului (Maui)
Līhuʻe (Kauaʻi)
Kona (Hawaiʻi Island west coast)
Hilo (Hawaiʻi Island east coast)
The carrier operates dozens of daily flights across these routes, serving both residents and tourists. Load factors on interisland routes have shown resilience, with strong performance particularly on leisure-heavy routes during peak travel seasons.
Mainland U.S. Gateway Strategy
Hawaiian maintains service to approximately 15 mainland U.S. cities, focusing primarily on West Coast gateways with strong Hawaii-bound traffic. Key mainland routes include:
Major West Coast Gateways:
Los Angeles (LAX)
San Francisco (SFO)
San Diego (SAN)
Seattle (SEA)
Portland (PDX)
Oakland (OAK)
San Jose (SJC)
Sacramento (SMF)
Other Mainland Destinations:
Las Vegas (LAS)
Phoenix (PHX)
The relationship with Alaska Airlines provides opportunities for improved connectivity at shared hub airports, particularly Seattle, San Francisco, and Los Angeles. Passengers can now more easily connect between Alaska’s extensive West Coast network and Hawaiian’s Hawaii service, with coordinated schedules and joint frequent flyer benefits.
The Alaska Accelerate Strategy and Synergy Realization
Alaska Air Group unveiled its comprehensive integration plan, branded “Alaska Accelerate,” in December 2024. This three-year strategic roadmap outlines how the combined airline group plans to generate $1 billion in incremental profitby 2027, driven by both revenue synergies and cost efficiencies.
Revenue Synergies
The revenue side of the synergy equation focuses on several key initiatives:
Network Connectivity: By combining Alaska’s 130+ destinations with Hawaiian’s transpacific routes, the merged carrier offers passengers access to more than 1,000 destinations globally through Alaska’s oneworld alliance membership and Hawaiian’s partnerships. Hawaiian is scheduled to join the oneworld alliance in spring 2026, further expanding connectivity options.
Premium Product Offerings: Both carriers have invested in premium cabin products. Hawaiian’s first-class cabin on transpacific routes and Alaska’s premium class on mainland routes create opportunities for upselling and attracting business travelers. Premium revenue increased 5% year-over-year in both Q2 and Q3 2025, demonstrating the strength of this segment.
Loyalty Program Integration: On October 1, 2025, HawaiianMiles members transitioned to Atmos Rewards, Alaska’s loyalty program. The unified program, named No. 1 by U.S. News & World Report for 2025-2026, provides members with expanded earning and redemption opportunities across a much larger network. Credit card partnerships, particularly with Bank of America, create additional revenue streams through card acquisition bonuses and ongoing spending volume.
Cargo Operations Expansion: The Amazon Air partnership continues to expand, with 10 A330 freighters generating consistent revenue. Alaska Air Group plans to further develop cargo operations by leveraging belly cargo capacity on passenger flights and potentially expanding dedicated freighter operations as Amazon’s needs grow.
Cost Synergies
Cost reduction opportunities stem from operational consolidation:
Shared Facilities: Airport facilities at common stations are being consolidated, reducing rent and operating expenses. In June 2025, Hawaiian Air Cargo operations in Portland relocated to Alaska Air Cargo’s facility, creating immediate cost savings and operational efficiencies.
Purchasing Power: Combined procurement of fuel, aircraft parts, catering supplies, and other materials provides volume discounts and negotiating leverage with suppliers.
Technology Platforms: The merger to a unified passenger service system was completed in October 2025, eliminating duplicate technology costs and enabling more efficient operations. A single operating certificate reduces regulatory compliance costs and streamlines crew training.
Maintenance Consolidation: Aircraft maintenance operations are being integrated where possible, sharing tooling, parts inventory, and technical expertise. Hawaiian’s experience maintaining the unique 717 fleet continues independently, but A330 and 787 maintenance benefits from Alaska’s widebody expertise.
ALASKA ACCELERATE SYNERGY TARGETS (2027)
=========================================
Category Target Annual Benefit
Network & Revenue Synergies $500-600M
Cost Reduction $300-400M
Technology Integration $50-100M
Facility Consolidation $50-100M
TOTAL INCREMENTAL PROFIT $1,000M
Operational Performance and Customer Service Metrics
Operational reliability serves as a critical competitive differentiator in the airline industry. Throughout 2025, both Alaska and Hawaiian maintained strong operational performance metrics, which bode well for the integrated carrier’s reputation.
During the Thanksgiving 2025 travel period, Alaska and Hawaiian led the U.S. industry in reliability. Key performance metrics included:
A14 on-time performance: 82.3%
Flight completion rate: 99.1%
DOT on-time arrivals: 80.5%
Hawaiian Airlines consistently ranks among the top U.S. carriers for on-time performance. In July 2025, the carrier achieved a 93.62% on-time arrival rate on its operations, though this represented a slight 1.75 percentage point decrease from the previous year. Only 62 flights were cancelled during the entire month, demonstrating exceptional reliability.
These operational achievements reflect the professionalism of both carriers’ 35,000 combined employees and the effectiveness of their hub operations. Strong operational performance translates directly to customer satisfaction, reduced compensation costs for irregular operations, and improved crew productivity.
Performance Metric | Hawaiian Q3 2025 | Industry Average | Hawaiian Rank |
|---|---|---|---|
On-time Arrivals | 82-93% | 78% | 2nd |
Completion Rate | 99.1% | 98.5% | 1st-2nd |
Customer Complaints | Low | Medium | Top 5 |
Baggage Handling | Strong | Average | Top 10 |
Labor Relations and Workforce Integration
The merger of two airlines inevitably creates workforce uncertainty and requires complex negotiations to integrate labor groups. Hawaiian Airlines employed approximately 7,200 workers prior to the merger, while Alaska employed roughly 28,000, bringing total workforce to about 35,000 employees.
Union Negotiations and Contracts
Multiple unions represent different employee groups at both carriers, requiring separate integration processes:
Flight Attendants: The Association of Flight Attendants (AFA) represents cabin crew at both carriers. In April 2025, Hawaiian flight attendants ratified a contract extension securing raises, profit-sharing, and scheduling improvements through February 2028. Under this agreement, average annual pay for Hawaiian crew members rose to nearly $49,000, with the top 10% earning more than $71,000. As integration proceeds, Hawaiian flight attendants will transition to become Alaska flight attendants while retaining their full seniority.
Pilots: Both carriers’ pilots are represented by the Air Line Pilots Association (ALPA). On October 29, 2025, ALPA leadership from both airlines issued a joint statement regarding the single operating certificate milestone, emphasizing the importance of fair integration that respects seniority rights and maintains safety standards.
Mechanics and Ground Workers: The International Association of Machinists and Aerospace Workers (IAM) represents mechanics and ground service workers. The IAM has been vocal about protecting Hawaii-based jobs, with the Honolulu Star-Advertiser editorial board backing the union’s record of preserving well-paid aviation employment in Hawaii.
Workforce Reductions and Restructuring
Not all Hawaiian employees transitioned seamlessly into the merged organization. In July 2025, Alaska Air Group notified 252 Hawaii-based employees that they were losing their positions. These layoffs affected primarily non-union employees in administrative, management, and support functions where operations were being consolidated. The WARN (Worker Adjustment and Retraining Notification) notice filed with Hawaii’s labor department indicated that most affected workers were based in Honolulu, with smaller numbers at other Hawaiian locations.
Labor groups have expressed concerns about the pace of integration. In November 2025, employee representatives from multiple workgroups pushed back against Alaska’s timeline, arguing that the rushed schedule could compromise safety and service quality. These tensions reflect the inherent challenges of merging two airlines with distinct operational cultures and procedures.
Workforce Culture and Identity
Beyond contracts and seniority integration, the merger raises questions about preserving Hawaiian Airlines’ distinctive culture. Hawaiian’s workforce takes pride in the carrier’s role as Hawaii’s flagship airline and its commitment to Hawaiian hospitality (“aloha spirit”). Many employees fear that integration into a larger mainland-based airline group could dilute this cultural identity.
Alaska has acknowledged these concerns, stating that Hawaiian will continue to operate as a distinct brand with Hawaiian-based employees maintaining the carrier’s traditional service approach. However, operational integration necessarily involves standardization of procedures, which may gradually shift the unique aspects of Hawaiian’s service culture.
Hawaii Tourism Trends and Market Demand
Hawaiian Airlines’ future performance depends fundamentally on Hawaii tourism demand, which accounts for the vast majority of passenger traffic on transpacific routes.
Tourism Outlook for 2026 and Beyond
The outlook for Hawaii tourism presents cautious optimism for recovery beginning in late 2026. DBEDT forecasts that visitor arrivals will reach 9.7 million in 2025, with the market surpassing 10 million annual visitors by 2028. Visitor expenditures are projected to grow from $21.2 billion in 2025 to higher levels as both arrival volumes and per-visitor spending increase.
Several factors support this recovery scenario:
Market Fundamentals: Hawaii remains a top-tier destination for U.S. travelers, particularly from the West Coast. The islands’ unique combination of beaches, culture, outdoor activities, and year-round pleasant weather provides enduring appeal that transcends short-term economic fluctuations.
Improving Economy: If U.S. economic growth continues and consumer confidence improves, discretionary travel spending should recover. Hawaii typically benefits from economic expansion, particularly among higher-income households that form its core visitor demographic.
International Market Growth: While the U.S. mainland provides the majority of Hawaii’s visitors, international markets (particularly Japan, Canada, and Australia) offer growth potential. As these economies recover and travel restrictions ease, international visitor volumes should increase.
Unique Access: Hawaii’s geographic isolation means air travel is the only practical access method for most visitors. This creates a structural advantage for airlines serving the market compared to destinations accessible by car or train.
Year | Projected Visitor Arrivals | Visitor Spending | Key Factors |
|---|---|---|---|
2024 | 9.6M | $20.8B | Post-pandemic normalization |
2025 | 9.7M | $21.2B | Modest growth, economic headwinds |
2026 | 9.5-10.0M | $21.8B | Recovery begins late in year |
2027 | 10.2M | $23.0B | Sustained recovery |
2028 | 10.5M+ | $24.5B+ | Exceeds 10M milestone |
Competitive Positioning and Market Share
Hawaiian Airlines operates in a competitive environment with multiple carriers vying for Hawaii traffic. Understanding the competitive dynamics provides context for assessing Hawaiian’s strategic position.
Major Competitors
Alaska Airlines: Prior to the merger, Alaska competed directly with Hawaiian on several West Coast to Hawaii routes. The merger eliminates this competition and creates a combined carrier with dominant market share on routes connecting the Pacific Northwest to Hawaii.
Southwest Airlines: Southwest entered the Hawaii market in 2019 and quickly became a significant competitor on both mainland-Hawaii routes and interisland service. However, Southwest has struggled with profitability on Hawaii routes. The carrier has announced reductions in Hawaii service beginning in 2025, particularly on interisland routes where load factors remained below breakeven levels. Southwest continues to serve Hawaii from several mainland cities but with reduced frequency.
United Airlines: United operates a substantial Hawaii network from its San Francisco, Los Angeles, and Denver hubs. The carrier targets premium business travelers and offers connections to its global network. United competes directly with Hawaiian on transpacific routes but does not operate interisland service.
American Airlines: American serves Hawaii from its West Coast gateways and Phoenix hub. Like United, American focuses on business travelers and connecting traffic rather than the leisure market that forms Hawaiian’s core customer base.
Delta Air Lines: Delta operates Hawaii service from several mainland cities and has historically competed aggressively on routes from Los Angeles. Delta’s premium product offerings and SkyMiles loyalty program provide strong competition for business and premium leisure travelers.
Hawaiian’s competitive advantages in the Hawaii market include:
Brand Recognition: Hawaiian Airlines is synonymous with Hawaii travel for many travelers. The carrier’s 95-year history and authentic Hawaiian service culture create brand loyalty that competitors cannot easily replicate.
Network Dominance: Hawaiian’s comprehensive interisland network and extensive transpacific routes give it unmatched connectivity for travelers visiting multiple Hawaiian islands. Competitors must rely on connections through Hawaiian or accept limited interisland options.
Slot Access: Hawaiian holds valuable takeoff and landing slots at capacity-controlled airports, particularly at Honolulu’s Daniel K. Inouye International Airport during peak hours. These slots represent a significant competitive moat.
Operational Expertise: Hawaiian’s decades of experience operating in Hawaii’s unique environment (salt air, volcanic emissions, variable weather patterns) provides operational advantages in aircraft maintenance and route planning.
Alaska Alliance Benefits: The merger with Alaska provides Hawaiian access to a much larger frequent flyer base, broader marketing reach, and financial resources to weather downturns. Alaska’s oneworld alliance membership (with Hawaiian joining in spring 2026) enhances competitiveness against United’s Star Alliance and Delta’s SkyTeam.
APPROXIMATE MARKET SHARE: MAINLAND U.S. TO HAWAII (2025)
=========================================================
Carrier Estimated Share Trend
Alaska/Hawaiian (combined) 35-40% Growing
United Airlines 20-25% Stable
Southwest Airlines 15-18% Declining
Delta Air Lines 12-15% Stable
American Airlines 8-10% Declining slightly
Other Carriers 5-8% Stable
Technology Integration and Digital Capabilities
Modern airline competition increasingly occurs in the digital realm, where seamless booking, mobile experiences, and personalized service create competitive advantages.
Passenger Service Systems Integration
One of the most complex aspects of airline mergers involves integrating passenger service systems (PSS), which handle reservations, ticketing, check-in, boarding, and frequent flyer accounts. Alaska and Hawaiian completed their PSS integration cutover in October 2025, migrating Hawaiian’s operations to Alaska’s Sabre-based platform.
This integration enables several capabilities:
Unified Booking: Passengers can now book Alaska and Hawaiian flights through a single interface, simplifying the process of creating itineraries that involve both carriers.
Coordinated Schedules: Flight schedules can be optimized to facilitate connections between Alaska’s mainland network and Hawaiian’s Hawaii operations, reducing connection times and improving the customer experience.
Integrated Loyalty Program: The transition from HawaiianMiles to Atmos Rewards required migrating millions of customer accounts, accrued miles, and elite status benefits. The October 1, 2025 migration transferred all HawaiianMiles members to the Atmos program while preserving their miles balances and status.
Shared Airport Systems: Gate agents and customer service representatives now use common systems for check-in, boarding, and irregular operations recovery, enabling more flexible staffing and consistent service across both brands.
Mobile and Digital Experience
Both Alaska and Hawaiian have invested in mobile technology to meet modern travelers’ expectations. The Alaska mobile app now includes functionality for managing Hawaiian reservations, checking in for Hawaiian flights, and accessing mobile boarding passes. Future development will further integrate the two carriers’ digital experiences.
Key digital capabilities include:
Mobile check-in and boarding passes
Real-time flight status notifications
Digital baggage tracking
Self-service rebooking during irregular operations
In-app customer service messaging
Mobile wallet integration for boarding passes
Operational Technology
Behind the scenes, operational technology systems are being integrated to improve efficiency and reduce costs. These systems include:
Flight Operations: Flight planning, weather monitoring, and aircraft performance optimization systems help pilots and dispatchers make optimal decisions about routing, fuel loading, and alternate airports.
Maintenance Systems: Aircraft maintenance tracking, parts inventory management, and maintenance planning systems ensure aircraft remain airworthy while optimizing maintenance costs.
Crew Scheduling: Automated systems create crew pairings and schedules that comply with FAA regulations and union contracts while maximizing crew productivity.
Network Planning: Sophisticated optimization algorithms help planners determine which routes to operate, what aircraft to assign to each route, and how to price seats to maximize revenue.
Challenges and Risk Factors
Despite the strategic logic of the Alaska-Hawaiian merger and the progress achieved through 2025, significant challenges and risks remain as the integration continues through 2026 and beyond.
Integration Execution Risk
Airline mergers have a mixed track record in the U.S. industry. While some mergers (Delta-Northwest, United-Continental) ultimately succeeded, they often faced years of operational disruptions, labor strife, and customer service problems during integration. Hawaiian and Alaska face similar risks:
Technology Failures: Complex IT systems must work flawlessly to prevent booking errors, lost reservations, or operational disruptions. The July 2025 IT outage that affected Alaska’s operations demonstrated the vulnerability of airline systems to technical failures.
Labor Integration: Merging seniority lists, integrating work rules, and aligning pay scales across different workgroups creates tension and potential for labor disputes. Unresolved labor issues could result in work slowdowns or operational disruptions.
Brand Dilution: If the integration eliminates too many distinctive aspects of Hawaiian’s service, the carrier risks losing the brand differentiation that attracted loyal customers. Balancing operational efficiency with brand preservation requires careful management.
Economic and Market Risks
External economic factors pose substantial risks to Hawaiian’s performance:
Recession Risk: A significant economic downturn would sharply reduce discretionary travel spending, disproportionately affecting vacation-oriented destinations like Hawaii. Hawaiian’s transpacific routes are particularly vulnerable to economic cycles.
Fuel Price Volatility: Jet fuel represents airlines’ largest variable cost. In Q3 2025, Alaska Air Group’s economic fuel price averaged $2.51 per gallon, elevated by West Coast refining prices. Further fuel price increases would pressure profitability, particularly if competitive dynamics prevent passing costs through to consumers via higher fares.
Interest Rate Environment: The merger added substantial debt to Alaska Air Group’s balance sheet. Rising interest rates increase debt service costs and may constrain financial flexibility for fleet investments and network expansion.
Competitive Threats
While Southwest Airlines has pulled back from Hawaii, competitive threats remain:
Ultra-Low-Cost Carriers: Carriers like Spirit Airlines or Frontier Airlines could enter Hawaii markets with deeply discounted fares, forcing Hawaiian to match prices and eroding yields.
International Competitors: Foreign carriers (particularly Asian airlines like ANA, Japan Airlines, or Korean Air) could increase service to Hawaii, competing for international visitor traffic that Hawaiian relies on for its transpacific routes.
Alaska’s Strategic Priorities: As Hawaiian becomes a wholly-owned subsidiary of Alaska Air Group, strategic decisions will prioritize the overall group’s interests rather than Hawaiian’s independent needs. Situations could arise where resources are allocated to Alaska’s operations at Hawaiian’s expense.
Operational Risks
Fleet Age and Reliability: The aging Boeing 717 fleet becomes more maintenance-intensive each year. Aircraft-on-ground (AOG) situations increase costs and reduce schedule reliability. If Alaska does not commit to a timely fleet replacement, Hawaiian’s interisland operation could face worsening operational problems.
Pilot and Crew Shortages: The U.S. airline industry faces structural challenges in hiring sufficient pilots and other crew members. Competition for qualified personnel could increase labor costs and potentially constrain growth opportunities.
Climate and Environmental Factors: Hawaii’s vulnerability to natural disasters (hurricanes, volcanic eruptions, tsunamis) creates operational risks. Climate change may increase the frequency or severity of these events. Additionally, increasing regulatory pressure to reduce carbon emissions may require expensive investments in sustainable aviation fuel or newer, more efficient aircraft.
Regulatory and Political Risks
Antitrust Scrutiny: While the Department of Justice approved the Alaska-Hawaiian merger without significant conditions, any future merger activity or alliance expansion could face more skeptical regulatory review, particularly if concerns arise about reduced competition in Hawaii markets.
Hawaiian Sovereignty and Tourism Policy: Hawaii state and local governments have grappled with tension between economic dependence on tourism and resident concerns about overtourism, housing affordability, and cultural preservation. Potential policy changes (tourism taxes, visitor caps, restricted beach access) could affect Hawaii’s attractiveness as a destination.
Federal Aviation Regulations: Changes in FAA regulations regarding crew rest requirements, aircraft maintenance intervals, or safety standards could increase operating costs or constrain capacity.
Strategic Opportunities and Growth Vectors
Despite these challenges, Hawaiian Airlines and Alaska Air Group have significant opportunities to grow and enhance profitability through 2026 and beyond.
Network Expansion and Optimization
Transpacific Growth: With the transfer of 787 Dreamliners to Alaska’s certificate, the combined carrier gains capability to serve longer-range routes from the West Coast to Asia and Oceania. New routes connecting Seattle or Los Angeles to Asian cities could feed traffic to Hawaiian’s Hawaii network while providing cargo opportunities.
Mainland Expansion: Alaska’s extensive network on the West Coast and beyond provides opportunities to add Hawaii service from currently unserved or underserved cities. Secondary markets in the Mountain West, Midwest, and even East Coast could support seasonal or year-round Hawaii flights with Alaska’s marketing support.
Interisland Evolution: If Southwest continues reducing interisland capacity, Hawaiian could restore frequencies on routes where capacity was cut during the competitive battles of recent years. Reduced competition could allow yield improvements on these traditionally low-margin routes.
Business Class Enhancement: Both carriers offer premium seating products, but further investment in lie-flat seats, enhanced meal service, and premium ground services could attract more business travelers and command higher fares on long-haul routes.
Premium Economy: Many international carriers have introduced premium economy as an intermediate product between standard economy and business class. Hawaiian could develop a premium economy product for transpacific routes, capturing passengers willing to pay more than economy fares but unable or unwilling to purchase business class.
Airport Lounges: Alaska operates Signature Lounges at several airports, while Hawaiian has historically had limited lounge presence. Expanding lounge access for premium customers and elite frequent flyers improves the customer experience and generates ancillary revenue.
Ancillary Revenue Growth
Airlines increasingly rely on ancillary revenue (baggage fees, seat selection fees, onboard sales, etc.) to supplement ticket revenue. Hawaiian has opportunities to expand ancillary offerings:
Onboard Retail: Enhanced food and beverage offerings, duty-free shopping, and premium amenity kits generate revenue while improving the customer experience.
Seat Selection and Upgrades: More sophisticated dynamic pricing for preferred seats and upgrades can extract additional revenue from passengers willing to pay for enhanced comfort.
Bundled Products: Package offerings that combine flights, hotels, and activities create convenience for customers while generating higher margins than flight-only sales.
Cargo and Specialty Operations
Amazon Partnership Expansion: The success of the A330 freighter operation for Amazon creates opportunities to expand this partnership. Additional aircraft, new routes, or enhanced services could generate incremental revenue with relatively low marginal costs.
Belly Cargo Growth: Passenger aircraft belly space provides cargo capacity without the capital cost of dedicated freighters. Hawaiian’s transpacific routes are ideally positioned to carry high-value cargo between Hawaii, the U.S. mainland, and international destinations.
Charter and Military Operations: Hawaii’s strategic location in the Pacific makes it important for U.S. military operations. Hawaiian could pursue contracts for military charter flights or cargo operations, providing stable government-backed revenue.
Sustainability and Environmental Leadership
Sustainable Aviation Fuel: As environmental concerns grow, airlines that lead in sustainability may gain competitive advantages with environmentally conscious travelers and corporate customers. Hawaiian could partner with sustainable aviation fuel producers to reduce carbon emissions while burnishing its environmental credentials.
Fleet Modernization: Replacing the aging 717 fleet with modern, fuel-efficient aircraft (regardless of which type is selected) would significantly reduce emissions and operating costs while improving the customer experience with quieter cabins and better amenities.
Carbon Offset Programs: Offering passengers convenient carbon offset options generates ancillary revenue while addressing environmental concerns. Hawaii’s pristine natural environment makes sustainability particularly relevant for the Hawaiian brand.
Outlook for 2026 and Beyond
As Hawaiian Airlines approaches 2026 as part of Alaska Air Group, the carrier’s trajectory will be shaped by the successful execution of integration initiatives, broader economic conditions, and strategic choices about fleet and network development.
Near-Term Outlook (2026)
The year 2026 represents a crucial period for completing integration milestones while returning Hawaiian to sustainable profitability within the Alaska Air Group structure. Key developments expected in 2026 include:
Single Brand Operations: As Hawaiian joins the oneworld alliance in spring 2026, passengers will gain access to benefits across the alliance’s member carriers. This connectivity enhancement should drive increased loyalty program enrollment and revenue from partner earnings.
787 Fleet Transition: The transfer of Hawaiian’s four 787-9 aircraft to Alaska livery will be completed by spring 2026. Alaska will begin operating these aircraft on long-haul international routes from Seattle, including the new Seattle-Rome service launching in April 2026.
Operational Synergies: A full year of operations under a single operating certificate should generate the cost savings projected in the Alaska Accelerate plan. Maintenance efficiencies, consolidated purchasing, and integrated technology systems will contribute to improved margins.
Labor Stability: With major union contracts settled or under negotiation, labor relations should stabilize, allowing management to focus on operational execution rather than contract negotiations.
Tourism Recovery: If UHERO’s forecast proves accurate, Hawaii tourism will begin recovering in late 2026, supporting demand for Hawaiian’s transpacific and interisland services. However, the first half of 2026 may continue to show softness compared to prior years.
Medium-Term Outlook (2027-2028)
By 2027, Hawaiian Airlines should be substantially integrated into Alaska Air Group’s operations while maintaining its brand identity in the Hawaii market. Expected developments include:
Profitability Targets: Alaska Air Group has set a target of achieving $10 earnings per share in 2027, enabled by $1 billion in incremental profit from the Hawaiian acquisition. Meeting this target requires successful realization of both revenue and cost synergies.
Fleet Decisions: Alaska Air Group will need to commit to a 717 replacement strategy by 2027 at the latest, given the fleet’s age and Boeing’s 2006 production halt. The choice of replacement aircraft will shape Hawaiian’s interisland operations for the next 20+ years.
Network Maturation: The combined network should be fully optimized, with route additions and eliminations based on several years of performance data under common ownership. Unprofitable routes will be eliminated, while high-performing routes receive additional capacity.
International Growth: Alaska’s stated strategy includes international expansion, leveraging the combined carrier’s scale and resources. Additional international routes from West Coast gateways could generate significant incremental revenue while building the carrier’s profile as a global airline.
Long-Term Outlook (2029 and Beyond)
Over the longer term, Hawaiian Airlines’ success depends on maintaining its brand relevance while benefiting from Alaska Air Group’s resources and strategic vision:
Hawaiian Brand Preservation: If Alaska successfully preserves Hawaiian’s distinct brand identity and service culture while achieving operational integration, the combined carrier will have a unique competitive advantage in the Pacific market. Failure to maintain Hawaiian’s differentiation could result in commodity competition based primarily on price.
Fleet Modernization: A successful 717 replacement program and potential widebody fleet renewal would position Hawaiian’s fleet among the youngest and most efficient in the industry. Modern aircraft reduce maintenance costs, improve reliability, and enhance the customer experience.
Pacific Strategy: Hawaii’s geographic position makes it a natural hub for routes connecting the U.S. mainland with Asia-Pacific destinations. Alaska Air Group could develop a comprehensive Pacific strategy that leverages Hawaiian’s Hawaii operations as a connecting point for transpacific services, competing more directly with established Asian carriers.
Market Share Growth: With Southwest reducing its Hawaii presence and Hawaiian benefiting from Alaska’s resources, the combined carrier has opportunities to grow market share in the Hawaii market. Sustained growth in market share, combined with improving yields, would drive strong financial performance.
Economic Cycles: Airlines are cyclical businesses, with profitability closely tied to economic conditions. Hawaiian will experience multiple economic cycles over the coming decade. The question is whether the carrier has built sufficient financial resilience (through cost efficiency, revenue diversification, and conservative debt levels) to weather downturns while capitalizing on growth during expansions.
SCENARIO ANALYSIS: HAWAIIAN AIRLINES 2027-2028
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Base Case (60% probability):
- Integration largely successful
- Tourism recovers to 10M+ annual visitors by 2028
- 717 replacement decision made, implementation begins
- Market share stable to slightly growing
- Profitability improves but faces occasional volatility
- Alaska Air Group achieves $10 EPS target in 2027
Optimistic Case (20% probability):
- Integration exceeds expectations with minimal disruption
- Strong tourism recovery exceeds forecasts
- Significant market share gains as competitors reduce capacity
- Successful new route launches drive revenue growth
- 717 replacement program announced with favorable terms
- Alaska Air Group exceeds $10 EPS target
Pessimistic Case (20% probability):
- Integration challenges persist through 2026-2027
- Tourism recovery stalls due to recession or external shocks
- Labor strife disrupts operations
- Competitor aggression reduces yields
- 717 fleet problems increase before replacement program launches
- Alaska Air Group falls short of $10 EPS target
My Final Thoughts
Hawaiian Airlines stands at a pivotal moment in its 95-year history. The acquisition by Alaska Air Group has fundamentally transformed the carrier from an independent, Hawaii-focused airline into the Pacific subsidiary of a major U.S. airline group. This transformation brings both tremendous opportunities and significant challenges.
The strategic logic of the merger remains sound. Alaska gains access to the Hawaii market and transpacific network, while Hawaiian benefits from Alaska’s financial resources, operational scale, and extensive domestic network. Together, the carriers form a formidable competitor with unmatched presence on the West Coast and in the Pacific region.
Execution of the Alaska Accelerate strategy will determine whether this promise becomes reality. The targets set forth – $1 billion in incremental profit by 2027, $10 earnings per share, successful network integration, and labor harmony – are ambitious but achievable if management maintains focus and discipline.
For aviation industry professionals assessing Hawaiian Airlines’ prospects for 2026 and beyond, several factors warrant close monitoring:
Integration milestone achievement and operational performance metrics
Resolution of labor integration issues without service disruptions
Tourism demand recovery in Hawaii and maintenance of yield discipline
Fleet modernization decisions, particularly 717 replacement timing and aircraft selection
Competitive dynamics, especially regarding Southwest’s future Hawaii strategy
Synergy realization versus targets, measured through quarterly financial results
Brand preservation efforts that maintain Hawaiian’s unique market position
The path forward for Hawaiian Airlines leads through the challenges of integration toward the potential of an enhanced competitive position in 2026 and beyond. Success requires executing complex operational changes while preserving the authentic Hawaiian service culture that differentiates the brand.
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