The skies clear for Alaska Air’s acquisition of Hawaiian as regulators lock in protections
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Contiguously noncontiguous… The Department of Transportation is waving in the $1.9B merger between Alaska Airlines and Hawaiian Airlines, clearing the runway for the first major US airline acquisition since 2016 (when Alaska scooped up Virgin America). For Hawaiian, the deal is seen as a lifeline, while Alaska is expected to level up its biz with more planes, workers, and customers (it’ll control half of Hawaii’s air-travel market). The DOT’s approval, which includes binding conditions, comes about a month after the merger made it out of antitrust review unchallenged.
Boarding instructions: The airlines agreed to maintain the value of their loyalty points, preserve routes within Hawaii, and ensure competitors’ access to the Honolulu hub airport. The DOT’s approval conditions will last for six years once the deal is finalized.
Wingspan: The combined airline will keep Hawaiian as a separate brand but operate as one carrier with a 360-plane fleet and 33K+ employees.
Clear skies, can’t lose: In the past six decades, Delta Air Lines, American, United, Southwest Airlines, and Alaska have acquired 42 rival airlines.
Merge-ulence… Airlines have faced tough regulator scrutiny under the Biden admin. This year, the US successfully blocked a JetBlue-Spirit merger, and last year it broke up a partnership in the Northeast between JetBlue and American (JetBlue’s probably annoyed this week). Concerned with rising airfare, the White House has also gone after airline junk fees. Antitrust scrutiny has paved the way for new budget airlines like Avelo and Breeze to emerge, and both expect to turn a profit this year. In the Alaska-Hawaiian approval, regulators opted to lock in consumer protections rather than risk a loss in merger court.
Cracking the big four won’t be easy… The four major US airlines (American, Delta, Southwest, and United) together control 80% of the domestic market. An Alaska-Hawaiian combo would control about 8%, fortifying its position as the fifth-largest US airline — but it’ll still control less than half of fourth-ranked United’s share.
Correction: An earlier version of this article misstated that Alaska Airlines in 2016 had acquired Virgin Atlantic, but it was Virgin America. We regret the error.