There’s some positive news for Alaska Airlines and Hawaiian Airlines, when it comes to their merger. The airlines won’t face the same fate as JetBlue Airways and Spirit Airlines…
Alaska’s takeover of Hawaiian clears major hurdle
In December 2023, plans were announced for Alaska Airlines to acquire Hawaiian Airlines, in a $1.9 billion deal. Hawaiian has been struggling in recent years due to a variety of factors, while Alaska is looking to grow, and viewed this as an attractive opportunity.
When the merger was announced, one immediate question was whether this deal would face any regulatory scrutiny. After all, the Department of Justice (DOJ) under the Biden Administration has taken a very aggressive approach with trying to block consolidation. The DOJ sued to block the merger between JetBlue and Spirit, and was successful, causing the merger to be called off.
For the past several months, there has been a review period during which the DOJ could challenge the merger. Well, that has officially expired as of yesterday (Monday, August 19, 2024), and since the DOJ didn’t request an extension for the review period, that means the merger won’t be challenged. Interestingly the DOJ didn’t even require the combined airline to agree to any specific conditions in order to get the deal to close.
This is a significant milestone in the merger between the two airlines. The proposed combination remains subject to other customary closing conditions, including approval from the Department of Transportation (DOT). Following that step, the airlines will work to close the transaction, and proceed with integrating the two companies.
Alaska reaffirms commitment to state of Hawaii
Obviously the major concern with Alaska Airlines’ takeover of Hawaiian Airlines is what the impact will be on Hawaii travel. This includes the impact on the inter-island market, the Hawaii to mainland market, and the Hawaii to other international destination market:
- Hawaiian has been struggling with inter-island flying, given how much competition it has faced from Southwest, and it’s obviously very important to the state for this service to be maintained
- Hawaiian has roughly had the same market share as United between Hawaii and the mainland, and when you combine Alaska and Hawaiian, the airlines will control around 40% of market; that’s not a monopoly, but there are concerns about what this means for competition
- Hawaiian offers the most service from Hawaii to other international destinations in the Pacific, and it’s important for the state that this service is maintained, and that it isn’t lost in the merger
So it’s not surprising that Alaska has reaffirmed its commitment to Hawaii. The airline has stated that it worked closely to reinforce and expand its commitments for the future of its presence in Hawaii, including plans to maintain the Hawaiian Airlines brand and local jobs, and continue providing strong service between, to, and from the islands.
Hawaii Governor Josh Green has released the following statement following this latest development:
“Over the past several months, my administration and I have worked with the leadership of Alaska Airlines to carefully review the potential impacts of a consolidation and we insisted that any changes expand travel options for our residents and preserve union jobs.”
“Alaska has reinforced commitments to our state and will maintain the Hawaiian Airlines brand, preserve and grow union jobs in our Hawai‘i, as well as continue to provide crucial passenger and air cargo service to, from, and within the islands.”
“The merger will vastly expand the number of destinations throughout North America for Hawai‘i residents that can be reached nonstop or one-stop from the islands, and HawaiianMiles members will retain the value of their miles while gaining access to more destinations around the world.”
“I am confident that by the joining of these two airlines, a stronger company will emerge and offer more travel options for Hawai‘i residents and local businesses — and will enhance competition across the U.S. airline industry.”
“I appreciate the DOJ’s strong consideration of Hawai‘i’s unique needs during its review of the proposed merger. I look forward to this merger proceeding and the overwhelming consumer, employee and community benefits that will result from it.”
Bottom line
In December 2023, Alaska announced plans to acquire Hawaiian. Over the past several months, the DOJ had the opportunity to challenge this merger, which could have caused a similar outcome to what we saw at JetBlue and Spirit.
Ultimately the DOJ has let the review period expire, meaning that the DOJ doesn’t intend to challenge this takeover. Now the merger can proceed, so we’re one step closer to the latest US airline industry merger. This will have implications for your miles, so this potentially creates some opportunities.
What do you make of the DOJ not challenging Alaska’s takeover of Hawaiian?
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