In a significant but under-the-radar development, Alaska Airlines just announced that the U.S. Department of Justice (DOJ) has allowed the review period for its proposed acquisition of Hawaiian Airlines to expire without further comment. This represents a critical step in the Hart-Scott-Rodino (HSR) Act proceedings and brings Alaska Airlines closer to completing its strategic acquisition of Hawaiian Airlines.
The next hurdle is approval from the U.S. Department of Transportation (DOT), which must decide on a preliminary request for an exemption before the deal can be completed.
The Justice Department’s review period passed without any action.
Under the HSR Act, certain large mergers and acquisitions, including the proposed merger of Alaska Airlines and Hawaiian Airlines, are subject to mandatory pre-merger notification and a subsequent waiting period.
During this time, the DOJ will review the merger’s potential impact on competition. The agency may choose to allow the waiting period to expire, end it early, or make a request for additional information – commonly referred to as a “second request.” If the agency finds antitrust concerns, it may take steps to block or modify the merger.
In this case, the Justice Department allowed the waiting period to expire without further action after several extensions. This suggests that, from the Justice Department’s perspective, the merger does not raise significant antitrust concerns, or at least none that require immediate action. This is a significant victory for Alaska Airlines as it navigates the complex regulatory landscape surrounding large mergers.
Industry insiders were surprised by the latest developments.
The expiration came as a surprise given the numerous delays and potential obstacles that previously raised doubts about the success of the agreement, at least in its full proposed form. The quick and unnoticed expiration of the Department of Justice review surprised many, especially given concerns about competition, market overlap, interisland service commitments, and the overall impact on Hawaii’s air travel landscape.
There has been much speculation for weeks that several problems may have caused the merger to fail. But now Alaska Airlines appears to be moving forward with the takeover, albeit quietly for now. The industry is wondering what might have changed behind the scenes to allow the deal to go through so unexpectedly and uneventfully today. We hope to find out at some point what actually happened.
Alaska Airlines’ commitment to Hawaii.
During the Department of Justice’s review, Alaska Airlines worked closely with the industry and state government to address the specific concerns of our local market. Alaska Airlines has reiterated its commitment to uphold the Hawaiian Airlines brand, preserve local jobs and continue to provide reliable service to, from and within the Hawaiian Islands. The company has also committed to maintaining the value of HawaiianMiles on a one-for-one basis when converted to Alaska Mileage Plan miles.
Their pledge is seen as critical to gaining the support of both regulators and the people of Hawaii, where the airline industry plays an essential role in our travel economy and daily lives.
Alaska Airlines’ strategic approach appears to be geared toward mitigating any potential negative reaction to the merger. By retaining the Hawaiian Airlines brand and promising to protect local jobs, Alaska has portrayed the merger from the outset as beneficial, rather than disruptive, to Hawaii’s air travel market.
There are still further steps to be completed in the merger process.
Although the expiration of the U.S. Department of Justice review period is an important milestone, the merger is not yet a complete done deal. The planned merger still requires approval from the U.S. Department of Transportation (DOT).
Alaska Airlines has applied for a temporary waiver. If approved, the merger can proceed while the U.S. Department of Transportation completes its own review. This process typically involves further thorough review of the merger.
If the U.S. Department of Transportation grants preliminary approval and approves the merger in the near future, Alaska Airlines will begin the complex process of integrating Hawaiian Airlines into its operations, aligning the two airlines’ fleets, routes, loyalty programs, technology and other key aspects. Alaska Airlines has stressed that this integration will be handled carefully to ensure a smooth transition for employees and customers.
Impact on industry and consumers.
The deal could now reshape the competitive landscape in air travel, particularly in the Pacific. For consumers, the merger could mean more extensive route networks and more travel options between the mainland US, Hawaii and destinations in the Asia-Pacific region. However, concerns remain about reduced competition and possible fare increases on certain routes.
In Hawaii, where Hawaiian Airlines has long been a dominant player, the impact of the merger will be particularly severe. Alaska Airlines has sought to reassure shareholders that it will continue to support the local economy and maintain the level of service customers have come to expect from Hawaiian Airlines. However, industry observers will be watching closely to see how the merger affects fares, service levels over time and overall competition in the region.
As Alaska Airlines clears this enormous hurdle to acquire Hawaiian Airlines, the completion of the review phase by the U.S. Department of Justice without further comment represents a critical step. Alaska Airlines appears to be strategically positioning itself to integrate Hawaiian Airlines in a way that will hopefully benefit both the company and the customers it serves. The coming months will be critical as the final pieces of this merger fall into place and its true impact on the airline industry and Hawaii travel becomes clear.
