DOT Allows Alaska-Hawaiian Merger To Proceed After Airlines Provide Concessions

What seems like the final hurdle has been cleared, and the merger between Alaska Airlines and Hawaiian Airlines should move forward, closing at some point in the future.

After clearing a waiting period for antitrust concerns and a lawsuit to block the merger being thrown out, the 2 airlines thought everything was on track until United Airlines expressed some “concerns” to the Department of Transportation (DOT).

Now, the airlines and the DOT have agreed to enforceable concessions that will protect Alaska Airlines and Hawaiian Airlines flyers from potential negatives when the merger is complete. Here’s the latest.

Concessions From the Airlines To Get DOT Approval

In order to approve this merger, the DOT has required the airlines to provide several concessions. These include preserving the value of the airlines’ rewards programs and the miles customers have earned, among other items. And these items are enforceable by the DOT.

“Our top priority is protecting the traveling public’s interest in this merger. We have secured binding protections that maintain critical flight services for communities, ensure smaller airlines can access the Honolulu hub airport, lower costs for families and service members, and preserve the value of rewards miles against devaluation. This more proactive approach to merger review marks a new chapter of DOT’s work to stand up for passengers and promote a fairer aviation sector in America.”

U.S. Transportation Secretary Pete Buttigieg

Key concessions include:

• Protecting the value of frequent flyer miles under both the Alaska and Hawaiian rewards programs, allowing transfers of miles between the programs at a 1:1 ratio, matching elite status, and agreeing not to expire miles earned under the current rewards programs
• Guaranteeing that families with children can sit together without added fees
• Promises of compensation for certain delays and cancellations
• Lowering costs for traveling military service members
• Critical inter-island and continental routes must be maintained as they are at present, including preserving essential air services in Hawaii and Alaska
• The combined airline can’t take any actions that would discriminate against new entrants at Hawaiian Airlines’ hub in Honolulu.
• Maintain a minimum value for all miles in the merged program in the future, though what this minimum value would be wasn’t specified

Details of Alaska’s Acquisition of Hawaiian Airlines

This acquisition has been rumored for quite some time as Hawaiian’s financial position in recent years became precarious, especially after the COVID-19 pandemic. Alaska Airlines will be purchasing Hawaiian Airlines for $18 per share, for a transaction value of approximately $1.9 billion. We first reported on this in 2023.

First and foremost, both brands will remain separate as they provide uniquely different price points and products but will be headquartered in Seattle under the leadership of Alaska Airlines CEO Ben Minicucci. While the airlines will remain separate, there will be a transition to a single loyalty program.

Although the headquarters will be relocated to Seattle, Honolulu will continue to have a strong presence, as Alaska Airlines plans to elevate it to a hub within the airline’s network.

Here’s what we know about the purchase:

• There will be a combined total fleet count of 365 aircraft. Alaska Airlines recently moved to an all-Boeing fleet to simplify aircraft maintenance, and Hawaiian Airlines has a significant Airbus fleet (including several younger Airbus A321s), so it will be interesting to see how this plays out.
• A total of 138 destinations, including 29 international markets. Hawaiian Airlines is uniquely situated to provide service to both Asia and the South Pacific, including Australia and Auckland. With this new acquisition, it will be possible to fly from New York (JFK) to Honolulu (HNL) to Sydney (SYD), all with Oneworld benefits, or from Chicago (ORD) to Seattle (SEA) to Honolulu (HNL) to Sydney (SYD) on a mix of Alaska Airlines and Hawaiian Airlines.
• More than 1,200 destinations are served through the Oneworld alliance. Because Alaska Airlines is part of Oneworld, the combined airline will also be part of the Oneworld alliance, which provides access to priority check-in counters, lounge access, and other perks for eligible travelers.
• The combined group will employ more than 31,200 employees.
• Across both airlines, there will be over 54.7 million passengers served, with approximately $13.1 billion in annual revenue.

A lot will happen over the next few months before the merger concludes, though the airlines now have some degree of certain as they begin to merge. The final approval will come from the Federal Aviation Administration (FAA) as it reviews and approves safety and operational plans between the airlines.

Legal Obstacles Surrounding the Merger

When 2 airlines merge, this requires government regulatory approval. A Department of Justice (DOJ) investigation could block the merger under antitrust concerns. The review period, which the airlines cooperated with, has passed. Since the DOJ declined to investigate, the airline merger can continue to move forward, subject to approval from the Department of Transportation (DOT).

Meanwhile, 8 airline passengers sued to block the merger, arguing it would violate antitrust laws and likely harm consumers.

However, Chief U.S. District Judge Derrick Watson in Hawaii has dismissed this suit, saying those bringing the suit suit didn’t have legal standing. “They allege no personal connection to either airline that would plausibly establish a concrete or particularized harm,” Watson said.

An attorney representing the consumer lawsuit said they plan to ask a U.S. appeals court to block the merger.

Later, United Airlines expressed concerns to the DOT about this merger, given its partnership with Hawaiian Airlines.

Final Thoughts

For those who like to visit the warmth of Hawai’i, this merger is exciting. You’ll now have more options to get there on both Alaska Airlines and Hawaiian Airlines. This is also incredibly beneficial to Oneworld flyers, with more options to utilize perks and rack up miles.

After clearing the main legal obstacles, the merger looks set for completion in the coming months. Between now and then, there will likely be updates as the airlines announce mileage transfers, elite status benefits, and other reciprocal perks across their reward programs.