Alaska Airlines and Hawaiian Airlines have agreed to concessions ranging from sustaining key routes to ensuring loyalty program values aren't eroded in exchange for U.S. Transportation Dept. (DOT) approval needed for the two airlines to merge, the agency said Sept. 17.
Among the protections put in place: the carriers will continue to provide service on each nonstop overlap route where they are the only competitors or two of three in the market, ensure "reasonable access" for competitors at Honolulu's Daniel K. Inouye International Airport, and maintain commitments to serving rural and under-served communities in Alaska and Hawaii.
The combined entity also will not devalue either airline's frequent flyer miles, meaning among other things one-for-one mileage transfers will be allowed. The combined carriers' customer-service plan also must mirror Alaska's, which has the highest rating on DOT's customer service dashboard.
"For the first time, DOT is requiring airlines to agree to binding, enforceable public-interest protections in order to permit the airlines to close their merger," the agency said.
DOT laid out the requirements in an agreement issued alongside its granting of an exemption that permits the airlines to operate under common ownership while the agency considers a second application involving transfer of international route authorities. The exemption permits the merger to move forward while DOT evaluates the international-transfer application.
The agreed-upon protections would remain in place for six years following DOT's final approval. "The exemption allows Alaska and Hawaiian to close the deal and consummate their merger on the condition that they remain separate and independently operated until DOT has ruled on their transfer application," the agency said. Alaska Airlines parent Alaska Air Group said in a statement that the concessions "align with the plans Alaska announced at the time it signed the transaction" and are consistent with its longstanding commitments.
"These commitments do not impact the synergies of the deal, which will enhance competition and expand choice for consumers," the airline added. Alaska and Hawaiian unveiled merger plans--technically Alaska's purchase of Hawaiian for $1.9 billion--in December.
After agreeing to DOT's requirements, Alaska said it and Hawaiian would operate as one organization with two separate airline operations, under two individual operating certificates, with an interim leadership team leading Hawaiian. When the transaction closes, Alaska s regional president of Hawaii-Pacific Joe Sprague, will be named chief executive officer of Hawaiian Airlines, and current Hawaiian CEO Peter Ingram will step down. Ingram joined Hawaiian as CFO in 2005, and rose to Chief Commercial Officer in 2011 before rising to CEO in 2018.
The U.S. Justice Dept. signed off in August after an extended review. With DOT's blessing to move forward now in hand, they expect to close their agreement "in the coming days," Alaska said, and begin the multi-year process of combining two airlines into one while meeting the agency's requirements
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