The proposed merger between Alaska Airlines and Hawaiian Airlines took a significant step toward fruition this week as the U.S. Department of Justice (DOJ) concluded its regulatory investigation into the merger.

Initially announced in December 2023, the historic acquisition of Hawaiian by Alaska Airlines is anticipated to be valued at approximately $1.9 billion. If completed, the merger would substantially expand Alaska’s operations and solidify its position as the fifth-largest airline in the United States.

Following the mutual confirmation of merger intentions, the DOJ initiated a thorough review process. Originally slated to conclude on August 15, the review period was extended until August 19, raising concerns about the potential blocking of the deal.

However, that review period has passed without challenge from the DOJ, meaning the deal has now passed one of its major hurdles.

Competition Concerns in Hawaii

One of the main concerns surrounding the merger would be how it affects consumer competition, especially in Hawaii. Currently, inter-island flights within Hawaii are dominated by Hawaiian Airlines, although it faces strong competition from low-cost carrier Southwest Airlines.

Photo: Courtesy of Alaska Airlines

Meanwhile, Hawaiian shares a similar market share with United Airlines regarding flights to the mainland, but a combination of Hawaiian and Alaska’s networks would represent around 40 percent of the market share.

The DOJ and the Biden administration have previously taken a firm stance on major merger deals that could potentially harm competition. Earlier this year, it blocked JetBlue’s proposed $3.8 billion takeover of Spirit Airlines, claiming JetBlue would alter Spirit’s ultra-low-cost model and thus raise fares for consumers.

Other concerns surrounding Alaska’s proposed takeover of Hawaiian include its effect on its employees and brand. However, Alaska Airlines has long insisted that should the takeover go ahead, it will continue to operate flights under the Hawaiian Airlines brand and retain all its staff while enhancing connectivity within, to, and from the islands.

Alaska has confirmed that there are still some obstacles to overcome regarding the merger, including approval from the U.S. Department of Transportation (DOT), but that it is confident the deal will go ahead. If approved, the two airlines will combine their networks, which would serve over 130 destinations across the U.S., Japan, South Korea, Australia, and New Zealand.

Photo: Courtesy of Christian Brinkmann / Airbus

“This is a significant milestone in the process to join our airlines,” said Alaska Airlines. “During the DOJ’s review, Alaska worked closely with the Hawai’i Attorney General to reinforce and expand on our commitments for the future of Hawaiian Airlines and to Hawai’i consumers. These include plans to maintain the Hawaiian Airlines brand and local jobs and continue providing strong service between, to, and from the islands.

“The proposed combination remains subject to other customary closing conditions, including approval from the U.S. Department of Transportation (DOT) of an interim exemption application. Following that step, we will complete work to close the transaction, and proceed with integrating the two companies, welcoming Hawaiian Airlines guests and employees into Alaska Air Group, and expanding benefits and choice for consumers throughout Hawai’i, the Asia-Pacific region, continental United States and globally.”

Hawaii Governor Josh Green added: “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.

Photo: Courtesy of Alaska Airlines

“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.”

Leave a Reply

Your email address will not be published. Required fields are marked *