Topline
The Department of Transportation on Tuesday allowed Alaska Airlines to close its $1.9 billion acquisition of Hawaiian Airlines, clearing the final regulatory hurdle for a major industry merger that comes after federal officials blocked other deals, after both airlines agreed to several concessions.
The two airlines agreed to preserve reward miles and “essential air support” for rural areas as part … [+]
Key Facts
The Transportation Department said Alaska Airlines and Hawaiian Airlines agreed to several terms laid out by the agency to close the deal, among others: Ensuring miles earned in frequent flyer rewards programs offered by both airlines would be maintained, “essential air support” for rural areas is preserved and service between Hawaiian islands and the continental U.S. remains the same.
Hawaiian Airlines also agreed to adopt Alaska Airlines’ policies of guaranteeing family seating with additional fees and providing refunds for significant flight delays or cancellations, the agency said.
Though both airlines can begin to close their merger, the Transportation Department said it still needs to approve a transfer application, which would allow Alaska Airlines and Hawaiian Airlines to combine and operate international routes.
Alaska Airlines said in a statement it expects the merger to be completed “in the coming days.”
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Surprising Fact
Shares of Hawaiian Holdings, Hawaiian Airlines’ parent firm, increased by nearly 4% to roughly $18 after the announcement.
Key Background
Alaska Airlines announced its acquisition of Hawaiian Airlines in December, creating a combined airline that would be the fifth-largest carrier in the U.S. behind United Airlines, Delta Air Lines, American Airlines and Southwest, respectively. The deal allows Hawaiian Airlines to operate as an independent brand, despite combining operations with Alaska Airlines to feature a fleet of nearly 400 planes. Both airlines cleared regulatory scrutiny from the Justice Department last month, after Alaska Airlines said antitrust regulators failed to file a lawsuit to block the deal in time.
Tangent
The Biden administration has increased scrutiny of airline acquisitions in recent years, following a wave of mergers in the preceding decades involving Delta, American, United and Southwest. The Justice Department successfully sued to block a $3.8 billion merger between JetBlue Airways and Spirit Airlines in January. The agency won another lawsuit last year to end a partnership between JetBlue and American in the Northeast, after arguing a deal to collaborate on flights in Boston and New York would drive up fares. Regulators argued the deals would lead to higher prices, while JetBlue said they’d help the airline compete against larger carriers.