Alaska and American Leave Their Partnership Hanging By a Thread With New Cuts

Alaska Airlines, American

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.

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25 comments on “Alaska and American Leave Their Partnership Hanging By a Thread With New Cuts

  1. Alaska used to have pretty full partnerships with American, Delta, Northwest, and Continental. Those were the glory days: 1 frequent flyer account to rule them all!

  2. Strange that American would be doing this so close on the heels of the loss of LATAM – it may not be that big of a change, but I’d think American would want to concentrate on solving that issue before creating a new problem for themselves.

    So what will Alaska do? Between American’s decision and the “Battle for Seattle” with Delta, their options are limited:

    * Go it alone
    * Some sort of partnership with United
    * Partnership with JetBlue (anything from reciprocal FF earning to a full-on merger)

    I can’t see AS doing much with Spirit or Frontier, the products are too different. Even JetBlue’s lack of Mint on most flights makes them a bit incompatible (I do think that at least for the A220s and new A320/A321neo aircraft, JetBlue should consider expanding Mint further.)

    I think that last year AS said they were considering joining “oneworld Connect”, but with the relationship change with AA, this seems unlikely.

    My guess is that they’ll either try to go it alone or start to cozy up to JetBlue. (My official 2019 prediction was that AS and B6 would at least begin merger exploratory talks.)

    1. I’m selfishly hoping for a partnership with United. It’d make my travel considerably easier to not have to go to SFO for everything (vs. SJC on AS).

      1. Is this really possible? Could UA “steal” AS from AA like DL did with LATAM? I would think the competition at SFO would be problematic, but it could really beef up UA’s competitive position at LAX (and really all up and down the west coast). Maybe even let them cut some unprofitable west coast routes from LAX. It also makes UA-IAD more attractive to all those new Amazon employees in DC. And it would really boost Alaska at Seattle vs. Delta. Any thoughts Cranky?

  3. The major losers here are AA customers, no matter how AA wants to try and spin this. AA’s award availability on its own metal is dismal. Actually it’s beyond abysmal. In the Western half of the US when you search for saver awards, 90% of the availability is on AS, and the tiny amount that is on AA metal uses their obnoxious logic of forcing 6 hour+ connections to piece together a saver itinerary. So, this will be a major loss for AAdvantage members unless AA steps up its award availability game, which we all know the answer to that one…

    1. If you fly AA a lot, and you want to use your points for AS flights, you could always credit your AA flights to a BA account instead of your AAdvantage account.

  4. If one listened to some of the pundits during and after the US Airways/American merger, there were dire predictions about the end of airline competition. Apparently, that’s not the case. The Delta/LATAM hook up and this story are evidence that competition is alive and well in the industry.

  5. correct me if I am wrong but didn’t the first round of cutbacks in the AA-AS FF cooperation happen as a result of the Dept. of Justice’s requirement that AS drop a significant amount of its codeshare activity with AA in order to get AS’ merger with Virgin America approved?
    at some point the market adapts to the new level of cooperation.

    1. The DOT required reductions in the codeshares. From my point of view, that was by far the least important part of the partnership as a consumer.

  6. I just found out the hard way that you can no longer earn AA miles flying AS. My reaction to this cannot be printed on a family website.

    1. Would be great for me and I’d love to see it, but I can’t quite figure out how it could work. The interisland operation and the west coast flying would make sense for AS, but the long haul flights not so much. And how would they integrate HA’s product and operations without giving up a substantial chunk of the brand equity they paid for?

  7. If anything, I would think it could push people in Seattle to Delta and maybe United in San Francisco. If you have a need to go to smaller mid-west or east coast cities that would never make sense for Alaska to serve out of any of their west coast hubs along with cities up and down the west coast, Delta becomes the only option to fly them all on one FF program.

    I see it as a loss for both AA and Alaska.

  8. In terms of Alaska’s claim that 90% of the cities to which AS passengers redeemed AA awards are still in the network: perhaps in isolation, yes. ORD and BOS or BOI and DFW are all still served by AS. That doesn’t mean that routings between those cities are at all sensible on AS without the AA partnership. There is no doubt that AS’s frequent flyer program (and therefore credit card, a significant profit center to my understanding) is dramatically less attractive today than it was last week. But that doesn’t mean doom. There are two quite large, narrow body only US airlines — one a bit smaller than AS and one much bigger — with much smaller partner networks (no partners in one case) who each do just fine.

  9. “it’s rare that this codeshare is ever priced competitively from what I’ve seen.”

    I agree – I’ve connected from Alaska to American only a handful of times because it’s almost always cheaper to go directly on American or another airline via a different connecting city. When I have done it is almost always through Dallas to places like Tulsa. If they don’t keep the codeshares from DFW, might be interesting to see if Alaska makes better use of its slots in Love field.

  10. It’s very unfortunate. Just this year I have redeemed AA miles on international awards that included AS feeder flights.

  11. Bad news for both. AS was one of few bright spots for domestic sAAver award space with AA’s married segment/ridiculously long layover logic.

    AS now has to send east coasters wanting to get to Dallas on AS miles via California or Washington state. Not to mention the loss of AA’s reach into the Caribbean and central and South America. LATAM partnership is basically useless for redemption, as they make AA look generous when it comes to releasing award space.

  12. I wonder if/when AS join oneworld connect, whether anything would be restored, or if AA would simply choose not to be a sponsor, letting other oneworld members sponsor/partner with AS?

  13. I’m just very happy that I won’t have to see AA on my award calendar where I’m looking for JL ever again.

  14. The Korean-Delta JBA had a condition by DOT that DL could not materially interfere with the Korean-Alaska partnership. Little reason to think that won’t happen with LATAM.

  15. “What I can’t figure out is why this partnership isn’t ending entirely” …. Yep!

    The AA/AS rupture is inevitable for all the reasons that Cranky outlined, especially the low value of the old partnership to MileagePlan and AAdvantage members.

    This last step before the final break-up concerns me, though: I think it could be a sign of how hard it may be for AS to maintain its current partnerships with other airlines and to connect with new partners in the future. Without those partnerships, MileagePlan benefits kinda lose their appeal to many members, except those whose travel is pretty much confined to the West Coast, where AS’s main assets are concentrated.

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