It’s time for a rare Wednesday post. After already cutting their partnership back after Alaska and Virgin America merged, American and Alaska will be nearly severing their ties starting in March. Unlike this week’s LATAM mess, this one seems to be a mutual decision. Still, I’m sure the timing could have been better for American.
I spoke with both Nat Pieper, Alaska’s new SVP of Fleet, Finance, and Alliances and a spokesperson with American to learn more. Here’s a brief rundown of what’s changing.
- Alaska Mileage Plan members will no longer earn miles on American international flights (domestic earning was cut previously)
- Alaska Mileage Plan members will no longer be able to redeem miles on any American flights
- American AAdvantage members can no longer redeem miles on any Alaska flights (earning was cut previously on Alaska-marketed flights)
Yeah, so, that leaves… not much. Here is all that remains of this shell of a partnership:
- Alaska will continue to codeshare on American flights to some cities beyond Chicago in the Midwest and East Coast so those will still earn Mileage Plan miles when booked under the AS code
- American will continue to codeshare on some Alaska flights (though there will be reductions) to some cities beyond Seattle and Anchorage so those will still earn AAdvantage miles when booked under the AA code
- There is still a reciprocal lounge agreement between the two airlines
That’s it. Even if this semblance of a partnership still exists in some form, it has very little utility left. Then again, it has had little utility since the cuts began back in 2017.
The partnership is about 20 years old, and in that time, Alaska has become much bigger. It grew on its own, but then the acquisition of Virgin America really changed things. That massive, overnight growth in California put Alaska head-to-head against American much more often than before. Back when the last round of cuts came out in 2017, I noted “… the math must show that there’s more to be gained by Alaska by scaling back this partnership than there is to be lost. The same goes for American.” Apparently the math has shifted again.
I haven’t been able to get an answer on who really pushed for this move, but it seems most likely that it was American. After all, even with the US Airways merger, American didn’t encroach much more on Alaska’s turf. The partnership still made sense. But when Alaska bought Virgin America, that changed things significantly. These two compete far more than they did before.
Considering that backdrop, what I can’t figure out is why this partnership isn’t ending entirely. What’s left is pretty insignificant to both airlines even if it does extend their reach a bit. Maybe it has something to do with maintaining “competitive” access to smaller cities. I put that in quotes because it’s rare that this codeshare is ever priced competitively from what I’ve seen. That being said, it is still another airline on which you can buy a ticket in some of these small to mid-size markets.
Alaska doesn’t sound overly concerned about Mileage Plan members losing American’s network. Of the 3 percent of Mileage Plan members who earned or redeemed on American in the last year (down from 4 percent in 2016), 90 percent went to places where Alaska and its other partners fly. American told me that 1.7 percent of all miles redeemed were on Alaska in the most recent year, but it’s been going down. And of the people who redeemed on Alaska, 97 percent went to places American serves.
Those kind of numbers make it sound like this really won’t be missed on either side, but I would say Alaska has the biggest risk. Remember, Alaska loves to tout how it along with its mileage partners can get you all over the place. But when it comes to flying to Latin America, the disappearance of American options leaves LATAM as the only significant partner down there. And how many people think that relationship is long for this world?
When Delta swoops in and buys a stake in a company, that company usually walks away from Alaska. (Korean is an exception… so far.) Now that Delta has bought into LATAM, I’d say the end is probably coming. Of course, this is all speculation, and since the LATAM news broke this week, it probably wasn’t part of the consideration set. It is probably an area of concern for Alaska now.
Forgetting about what may or may not happen in the future, this isn’t a huge hit to either airline today, and it’s unlikely to matter much to American at all in the future. Sure, there’s something left, but most people can just pretend the partnership is over. If you’re a loyalist on Alaska and a slave to Mileage Plan, then maybe you can squeeze out some utility when you travel to the Midwest. Same goes for AAdvantage members heading northwest. But for the vast majority, what’s left of this partnership dies on March 1 of next year.