The Biden administration is allowing Alaska Airlines to complete its purchase of Hawaiian Airlines for $1 billion after the airlines agreed to certain terms, including maintaining current operations on routes between Hawaii and the U.S. mainland, where there is little competition.
U.S. Department of Transportation officials said Tuesday that there are no obstacles to completing the $1 billion deal and beginning the merger of the two airlines, although some final approvals still need to be granted.
Alaska Airlines expects to close the deal “in the next few days.”
Alaska shares closed down 1%, while Hawaiian Holdings shares rose 4% to $18, the price per share Alaska was willing to pay for its smaller rival.
The decision to clear the way for the two airlines to merge runs counter to the administration’s stubborn opposition to previous airline deals. The Justice Department successfully sued to stop JetBlue from buying Spirit Airlines for $3.8 billion and it went to court to end a partnership between JetBlue and American Airlines.
The Justice Department could still challenge the Alaska-Hawaii deal, but that seems unlikely.
The Department of Transportation, which also has to approve airline mergers, said Alaska and Hawaiian had committed to meeting certain conditions for six years.
These include maintaining subsidized flights to smaller communities in Alaska and Hawaii, and maintaining current levels of service between Hawaii and the mainland, where at most one other airline currently serves the same route. The Transportation Department could drop the latter requirement if the flights become unprofitable.
Alaska and Hawaiian also agreed to several consumer protections, including maintaining the value of frequent flyer awards when merging their loyalty programs, guaranteeing that families can sit together without additional fees and offering lower fares to military families.
Transportation Secretary Pete Buttigieg said the airlines had also promised passengers compensation for cancellations and significant delays for which they were responsible.
Seattle-based Alaska Airlines said in a statement that the promises were similar to its previous plans and “would not affect the synergies of the deal, which will increase competition and expand choice for consumers.”
The Transportation Department said it has granted Alaska and Hawaiian a waiver to combine their ownership — in other words, a merger. The department is still reviewing the two airlines’ application to fly international routes under one operating license, which is likely just a formality.
— David Koenig, The Associated Press
