The announcement this week that Alaska Airlines will acquire Hawaiian Airlines has suddenly created a new dynamic in air travel to Hawaii and raises questions about the future of Southwest Airlines on our islands.

Southwest, struggling to get a handle on its Hawaii business, is now under even greater pressure from a massively strengthened Alaska-Hawaiian competitive alliance. It’s looking increasingly likely that Southwest will significantly scale back its Hawaii service. Here’s why.

Southwest’s continuing problems in Hawaii.

Southwest’s expansion into Hawaii was initially met with enthusiasm from visitors and residents when the airline introduced its signature low-cost fares for interisland routes and direct flights from the mainland. However, over time, the airline’s performance has fallen short of expectations.

Despite cutting 50% of its flights to Hawaii and continuing adjustments that increase the cost of flights to the mainland, Southwest is reportedly struggling with low passenger numbers and growing financial losses in Hawaii. The inter-island market has proven particularly challenging, where Southwest has been unable to compete with Hawaiian Airlines’ dominant share.

In previous articles, Elliott Management, an activist investor in Southwest Airlines, has indicated that it may opt for a downsizing or even a withdrawal from Hawaii if profitability does not improve.

For more context on Southwest’s problems, see The Southwest Effect in Hawaii: Is it Officially Over?

What does Alaska Airlines’ acquisition of Hawaiian Airlines mean for Southwest?

The acquisition of Hawaiian Airlines by Alaska Airlines creates a new competitive force that have a profound impact on Southwest’s position in Hawaii. Hawaiian Airlines has long been the preferred choice for interisland flights due to its local loyalty, flight frequency, dedicated fleet methodology and strong island brand presenceThe acquisition of Hawaiian gives Alaska Airlines access to this established market share.

While Alaska’s primary focus has always been on mainland-to-Hawaii routes, the acquisition of Hawaiian could prompt the combined entity to refocus on consolidating its interisland dominance. This could further push Southwest out of the picture, making it difficult for them to continue to compete in the region. This is also true given their lack of a dedicated interisland fleet and less frequent/convenient flights.

These challenges are discussed further in The Next Shoe Drop in Hawaii Travel: Southwest.

The Southwest’s Inter-Island Dilemma.

For Southwest, the interisland market has been particularly tough to crack. Low passenger numbers and poor financial performance have plagued Southwest’s Hawaii operations, and the merger of Alaska and Hawaiian Airlines could be more or less the final blow to larger interisland ambitions.

Alaska will inherit and potentially expand Hawaiian Airlines’ dominance on interisland routes, leaving Southwest with even fewer passengers to compete for. Southwest’s cost structure and the complexity of operating these shorter routes make it difficult to become profitable, especially when pitted against a combined Alaska-Hawaiian force.

Mainland to Hawaii Routes: Will Alaska Refocus on the Southwest Here Too?

Alaska Airlines already has a strong presence on the West Coast. By acquiring Hawaiian, it could bolster its mainland-Hawaii routes in a way that would pose a new challenge to Southwest. Alaska would be able to focus resources on improving its already robust West Coast-Hawaii network. Without a doubt, this would give Southwest a much stronger competitor on all of its Hawaiian routes.

It won’t be long before Southwest decides whether this means further cuts to Hawaii, or whether the airline will focus more on routes to the Hawaiian mainland, where it seems to be doing slightly better than in the inter-island market.

What’s next for Southwest?

1. Given the mounting pressure, growing financial losses and mounting investor problems, Southwest will undoubtedly want to make significant changes to its Hawaii operations.
2. Southwest could choose to maintain its core mainland routes, but the likelihood of reduced inter-island service seems high.
3. Alternatively, though seemingly less likely, Southwest could attempt to fight back with aggressive pricing strategies. However, the financial toll this would take at such a challenging time for “LUV” could prove unsustainable.
4. The most likely option for Southwest is to consolidate and reduce its Hawaii routes and focus on markets where it performs better financially.

Southwest’s Withdrawal from Newark: A Hawaii Parallel?

Southwest’s struggle to gain a foothold in Hawaii is similar in some ways to its previous attempt to enter another competitive market at Newark Airport (EWR). After nearly a decade of Newark operations, Southwest pulled out in 2019, citing multiple issues. Those included financial performance, competition from United Airlines, which dominates the airport, and the grounding of its Boeing 737 MAX fleet. CEO Kelly said at the time: “Newark’s financial results have been below expectations, despite the efforts of our excellent team in Newark.”

Southwest once had as many as 20 daily departures from Newark to 10 cities. In Hawaii, Southwest also entered the market with high hopes, but has faced stiff competition, especially in the interisland market dominated by Hawaiian Airlines. That has proven to be a particularly tough nut to crack, with Southwest’s larger planes, low passenger numbers and mounting financial losses.

While the situation in Hawaii appears to be driven more by competition and financial issues than operational challenges, there are still similarities. Southwest may have to make choices in Hawaii to focus on markets with proven performance.

The challenges in Hawaii have intensified this week, making the competitive landscape look much tougher. Unlike Newark, where Southwest has moved to a nearby market, LaGuardia, Hawaii flights face geographic and logistical challenges that may not offer the same flexibility.

Conclusions on flights to Southwest Hawaii now.

Alaska Airlines’ acquisition of Hawaiian Airlines marks an unprecedented shift in Hawaii’s air travel market, and the impact on Southwest Airlines will undoubtedly be profound. While nothing is certain, several signs point to the possibility of a sharp decline in Southwest’s flights to Hawaii, particularly in the interisland market, where it has struggled to compete.

Visitors and residents of Hawaii can expect significant changes to flights to Hawaii, including Southwest’s Hawaii service, in the coming months as a combined Alaska-Hawaii entity strengthens its position and presents Southwest with difficult decisions.

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