< Reveal sidebar

Alaska Airlines’ Acquisition of Virgin America Is Cleared For Takeoff by DOJ

Alaska Airlines (top) and Virgin America (bottom) (Photos: Greg Linton/AirlineGeeks.com)

Alaska Airlines has been cleared by the Antitrust Division of the United States Department of Justice (DOJ) to proceed with the acquisition of Burlingame, CA-based Virgin America.

According to Alaska, they were not required to divest any assets by the DOJ, however, the department will require them to significantly downsize their codeshare agreements with American Airlines. In a statement, the DOJ added that these changes will ensure that Alaska will have the incentive to compete with American as Virgin does today.

“Smaller airlines, such as Alaska and Virgin, provide a critical competitive check on the larger carriers,” said Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division. “Although this merger offers hope that a strengthened Alaska can be an even stronger competitor than before, because of Alaska’s extensive codeshare agreement with the world’s largest airline, the merger threatened to blunt important competition and reduce choices for consumers. Today’s settlement ensures that Alaska has the incentive to take the fight to American and use Virgin’s assets to grow its network in ways that benefit competition and consumers.”

The proposal settlement requires that Alaska and American do not codeshare on routes in which Virgin America and American compete today. This also includes competitive routes that Alaska is likely to launch following the merger. In addition, Alaska must obtain the DOJ’s approval before selling or leasing any of the gates or slots that were previously divested to Virgin. With this, the department hopes that they can preserve the competitive benefits brought to Virgin by the American-US Airways merger in 2013.

Alaska has agreed to implement limited changes to their codeshare agreements with American and expects codeshare flights to remain mostly intact.

“We couldn’t be more excited about receiving DOJ clearance for our merger with Virgin America,” said Alaska Air Group Chairman and CEO Brad Tilden.

The airline plans to close the transaction “in the very near future.”

AirlineGeeks.com Staff

Author

  • AirlineGeeks.com Staff

    AirlineGeeks.com was founded in February 2013 as a one-person blog in Washington D.C. Since then, we’ve grown to have 25+ active team members scattered across the globe. We are all here for the same reason: we love deep-diving into the fascinating realm of the airline industry.

    View all posts

Subscribe to AirlineGeeks' Daily Check-In

Receive a daily dose of the airline industry's top stories along with market insights right in your inbox.

Related Stories

Kalitta Air Faces $400,000 Penalty for FAA Violation

The Federal Aviation Administration has proposed a civil penalty of $400,000 against cargo airline Kalitta Air for allegedly operating flights…

Southwest Strikes Deal With Archer for Electric Air Taxi Service

Southwest Airlines is set to become the third major U.S. commercial airline to offer air taxi services using an unusual…

Boeing Pleads Guilty in Criminal Case

Boeing has agreed to plead guilty to a criminal fraud conspiracy charge related to two fatal 737 MAX accidents that…