Just a little over two weeks ago, Alaska Airlines and their intended partner, Hawaiian Airlines, were cock-a-hoop that their merger was virtually a done deal. It was the day that the time for the US Department of Justice (DOJ) to complete its regulatory investigation expired, clearing all but the final hurdle in this drawn-out process of bringing the two airlines together.
What has happened in 2 weeks
Getting past more scrutiny from the Department of Justice (DoJ) was a major milestone. However, now the spotlight has moved to securing approval from another government body, the Department of Transportation (DOT), for an interim exemption application for the transfer of international route authorities.
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The DoJ is responsible for prohibiting mergers and acquisitions that could substantially lessen competition or create a monopoly, so it is easy to understand why Alaska Airlines and Hawaiian were ecstatic that the deadline passed without more investigation. The DOT’s focus is to grant or deny requests to exempt international airline agreements from antitrust laws, the final hurdle standing in the way of the $1.9 billion merger. This week, a DOT spokesperson said:
“Alaska Airlines and Hawaiian Airlines have filed a transfer application to combine under one certificate and cannot combine their operating authorities without the US Department of Transportation’s approval. The Department is reviewing the application and can only approve a transfer if it is in the public interest.”
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It is not all smooth sailing, as United Airlines has expressed its concerns about the merger to the DOT, claiming it would impact United’s interline, codeshare, special prorate and loyalty agreements with Hawaiian Airlines. There is also a motion to overturn the dismissal of a lawsuit to block the merger because it would result in job losses, fewer services, higher fares, and damage to Hawaii’s economy.
High level support in Hawaii
Hawaii Governor Josh Green is a committed supporter of the merger. Following the expiry of the DoJ investigation, he said that he and his administration had worked closely with Alaska Airlines’ leadership to carefully review the potential impacts of consolidation and had insisted that any changes expand travel options for residents and preserve union jobs. He added:
“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 continue to provide crucial passenger and air cargo service to, from, and within the Islands. 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.”
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The acquisition is garnering support from various unions, and according to the Honolulu Star-Advertiser, Captain Larry Payne, chair of the Airline Pilots Association International Hawaiian Airlines, said that after careful evaluation, and if executed properly, “we believe that the merger between Hawaiian Airlines and Alaska Airlines is not only beneficial for our combined group of 4,600 unionized pilots, it also serves in the best interests of our passengers and Hawaiian communities.”
Other sources suggest the deal will ultimately get DOT approval, making Alaska the fifth-largest US airline behind American, Delta, Southwest and United. It just seems that getting DOT’s approval will take more time and effort than was envisioned in the euphoria when the DoJ investigation ended.