Alaska-Hawaiian Merger Moves Forward

The U.S. Department of Transportation (DOT) has issued an order granting Alaska Airlines an exemption that allows for the carrier’s merger with Hawaiian Airlines to move forward.

In a news release published Tuesday by Alaska Airlines, the carrier states that the two companies expect to close their $1.9 billion merger transaction in the coming days. This comes nearly a year after the merger was first proposed in December 2023.

On July 15, 2024, Alaska and Hawaiian filed a transfer application requesting that DOT allow them to combine and operate international routes under one certificate as a merged carrier, according to a DOT news release. The two airlines also filed an exemption application asking DOT to permit them to operate under common ownership prior to the requested transfer, which would allow them to close the deal.

The news release stated that by locking in terms from Alaska and Hawaiian upfront, DOT is establishing a more proactive approach to the Department’s merger review process. For the first time, DOT is requiring airlines to agree to binding, enforceable so-called public-interest protections in order to permit them to close their merger.

The Department of Justice’s deadline to review the proposed merger expired in mid-August, allowing the transaction to move forward, and DOT approved the airlines’ exemption on Tuesday.

Exemption Rules

The two airlines and DOT agreed to certain commitments pertaining to the exemption order, including:

• Protecting the value of miles rewards for Alaska and Hawaiian customers by transferring miles at a one-to-one ratio, maintaining the value of the miles and not allowing for them to expire.
• Maintaining critical inter-island and continental routes for Hawaii’s rural island communities that were dependent on passenger and cargo services provided by Hawaiian Airlines.
• Ensuring competitive access to Honolulu hub airport by barring the combined airline from taking actions that would discriminate against new airline entrants or smaller competitors’ access to airport infrastructure at the Daniel K. Inouye International Airport in Honolulu.
• Guarantee fee-free family seating for adjacent seats with children 13 or under and an accompanying adult at no additional cost for all fare types.
• Providing alternative compensation for delays and cancellations caused by the airline.
• Lowering costs for service members and their families through providing at least one free standard carry-on and at least two free standard checked bags for service members and their accompanying spouses and children. Change fees will also be waived for service members and their families who reschedule flights due to a military order or directive.

“Our top priority is protecting the traveling public’s interest in this merger,” said Transportation Secretary Pete Buttigieg in a DOT news release. “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.”

Alaska said in its news release that these commitments “do not impact the synergies of the deal, which will enhance competition and expand choice for customers.”

“We look forward to formally welcoming Hawaiian Airlines’ guests and employees into Alaska Air Group,” said Ben Minicucci, CEO of Alaska Air Group, in the release. “We sincerely appreciate the exceptional care and service that employees of both companies have continued to show for one another and our guests throughout this process, and the support of both airlines’ labor unions, as we proceed to realize the vision for this combination and build a stronger future together.”

The two airlines are expected to maintain separate brands but operate under one certificate.

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