On Tuesday, the U.S. Department of Transportation approved Alaska and Hawaiian Airlines' request to operate under common ownership, which will allow them to close their merger deal. 

What You Need To Know

  • On July 15, 2024, Alaska and Hawaiian filed a transfer application asking the DOT for approval to combine and operate international routes under one certificate. The airlines also filed an exemption application asking DOT to permit them to operate under common ownership prior to the requested transfer

  • The DOT approved the exemption, which will allow the airlines to close the merger deal

  • The DOT's approval requires the airlines to preserve the value of rewards miles, key Hawaiian routes, rural service, competitive access at the Honolulu airport, fee-free family seating, compensation for controllable disruptions, and lower costs for military families

  • This is the first time DOT has required airlines to agree to public-interest protections in order to close a merger

Per the USDOT’s order, the airlines must preserve the value of rewards miles, key Hawaiian routes, rural service, competitive access at the Honolulu airport, fee-free family seating, compensation for controllable disruptions, and lower costs for military families.

“Our top priority is protecting the traveling public’s interest in this merger. 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,” said U.S. Transportation Secretary Pete Buttigieg in a statement. “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 announced on Dec. 2, 2023, it was hoping to buy Hawaiian in a $1.9 billion deal, while taking on $900 million of Hawaiian’s debt. They said the merged company would continue to operate both airlines with independent brands while combining their operating platform.

Last month, the U.S. Department of Justice ended its formal review period, during which, if warranted, could have initiated legal action to block the merger.

On July 15, 2024, Alaska and Hawaiian filed a transfer application asking the DOT for approval to combine and operate international routes under one certificate. The airlines also filed an exemption application asking DOT to permit them to operate under common ownership prior to the requested transfer.

The DOT approved the exemption, which will allow the airlines to close the deal. However, the airlines must continue to operate separately until DOT has ruled on the transfer application. If approved, the conditions will remain in effect for six years.

By stipulating the terms in advance, the DOT said it is taking a proactive approach to the merger review process that prioritizes protecting the public interest from the outset. This is the first time DOT has required airlines to agree to public-interest protections in order to close a merger.

The two airlines have agreed to the DOT’s terms, according to Alaska. Alaska Airlines said in a statement that the terms align with Alaska’s previously announced plans.

“We look forward to formally welcoming Hawaiian Airlines’ guests and employees into Alaska Air Group,” CEO of Alaska Air Group Ben Minicucci said. “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 protections for Alaska and Hawaiian travelers will be effective when the merger is closed.

They include:

  • All HawaiianMiles and Alaska Mileage Plan miles previously earned must be converted into a new loyalty program at a 1:1 ratio and must not expire.
  • The combined airline must honor all active HawaiianMiles promotions from prior to the merger closing.
  • The combined airline must maintain a minimum dollar value for all miles of the new loyalty program, measured by the guest-facing value of miles redeemed for carrier-operated flights.
  • The combined airline must match the equivalent status levels members previously held, which includes matching or increasing members’ elite status in the new combined loyalty program, for the rest of the applicable program year.
  • The combined airline must not impose change or cancellation fees on rewards redemption tickets for travel on carrier-operated flights.
  • The combined airline must maintain robust levels of service for critical Hawaiian inter-island passenger and cargo services and for key routes between Hawaii and the continental U.S. at risk of a loss of competition.
  • The combined airline must preserve its support for Essential Air Service in Alaska's and Hawaii’s small, rural communities.
  • The combined airline is barred from taking actions that would discriminate against new airline entrants or smaller competitors’ access to airport infrastructure as part of new or existing investments at the Daniel K. Inouye International Airport in Honolulu.
  • Hawaiian Airlines must join Alaska Airlines in guaranteeing adjacent seats for children 13 or under and an accompanying adult at no additional cost for all fare types.
  • Hawaiian Airlines must join Alaska Airlines in providing a travel credit or frequent flyer miles when, if it is within the control of either airline, a flight is canceled and the passenger waits three hours or more for a new flight, or a flight is delayed by three hours or more from the scheduled departure time.
  • Both airlines will update their customer service plans to provide at least one free standard carry-on and at least two free standard checked bags for service members and their accompanying spouse and children. They will also waive change fees for service members and their families who reschedule flights because of a military order or directive.

Michelle Broder Van Dyke covers the Hawaiian Islands for Spectrum News Hawaii. Email her at michelle.brodervandyke@charter.com.

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