Alaska Airlines And Hawaiian Airlines Set To Merge
Two Become One - Alaska and Hawaii Announce Merger
In December of 2023, Alaska Air Group (parent company of Alaska Airlines) announced its intentions to purchase Hawaiian Airlines. The proposed merger would unite the US's two resident-Pacific airlines, combining Alaska's ever-growing continental footprint with Hawaiian's exciting international footprint for a combined coverage of 140 domestic and international destinations. This news set the travel world ablaze, as the merged entity would cement Alaska - a second-time buyer after its 2016 Virgin America purchase - as the fifth largest domestic airline. As there's been a significant development in this story, let's run through the details. I'll cover what excites me most (and what folks underestimate) about this potential merger in a different piece.
DOJ Declines to Block The Merger
Facing an August 20, 2024, deadline, The Department of Justice declined to file suit against the proposed merger between Alaska Airlines and Hawaiian Airlines. Viewed as the most significant regulatory hurdle blocking this merger from happening, the process now clears the way for these two airlines to shack up. While opinions on whether this decision was 'expected' differ, it's worth looking at the recent history of airline consolidation and the current climate surrounding this potential merger.
The DOJ's move here is interesting in that this administration's M.O. is staunchly anti-consolidation. In the last four years, we've seen two potential airline mergers crumble under some combination of regulatory scrutiny and bidding wars—first Spirit and Frontier, now Jetblue and Spirit. Additionally, you need to look no further than its decision to terminate American Airlines and Jetblue's northeast alliance to understand this Justice Department's playbook.
Or so we thought?...
One would be remiss not to consider the current political and economic climate surrounding this merger. In case you just stepped out of the Delorean and are still determining where you're at - we are in an election year, and with that comes heightened political scrutiny. A prolonged, drawn-out, full-nine suit to block this merger may not be the headline the current administration wants. Keeping with politics, it's worth calling out the sizable support behind this merger - with Hawaii's governor coming out strongly in favor of the move. Not to be overlooked are the numerous reports pointing to Hawaiian Airlines' sluggish recovery from depressed pandemic travel and how damaging that has been to the airline's ongoing financial operations. The DOJ may have viewed this as more of a lifeline - a preventative one that staves off a true failure case for Hawaiian Airlines. Whether these points hold weight, they are, at least, plausible factors in the quick stamp of approval here (or really lack of stamping).
What's Looming?: The DOT
Next up for this merger is the common ownership review by the Department of Transportation. This process is operational permissioning, where the two airlines will seek approval from the DOT to integrate operations formally. Hawaiian will transfer international route operations to Alaska, and the unified airline will move forward under a single operating certificate. As an aside for any regulatory nerds out there, there is no need for ETOPS hell, as both of these airlines already fly the necessary twin jets in their respective fleets.
Assuming the DOT review goes as expected, we'll soon have one entity—a significantly larger Alaska Airlines. Alaska's management team has an idea of what the combined loyalty programs might look like (hint: Bonvoy-esque), and we've also learned more about how the two programs will harmonize frequent flier mileage balances.
As mentioned, I'll dive deeper into these items and other intriguing parts of this potential link-up in a future post, but for now it appears as if this merger is on its way.