Critical Analysis of Alaska Airlines’ Acquisition of Hawaiian Airlines

Alaska Airlines successfully navigated the U.S. Justice Department’s investigation into its acquisition of Hawaiian Airlines, marking a significant milestone in the deal. The two carriers announced a $1.9 billion agreement to merge, making it the largest merger of U.S. carriers since Alaska merged with Virgin America eight years ago. However, the final approval from the U.S. Transportation Department is still pending, which leaves uncertainty about the closing timeline.

The Department of Justice has a track record of intervening in airline mergers, as seen with JetBlue Airways’ failed acquisition of Spirit Airlines and the dissolution of a partnership between JetBlue and American Airlines. These cases highlight the thorough scrutiny that the DOJ applies to airline deals to ensure fair competition and consumer protection. The DOJ’s actions set a precedent for the aviation industry and influence the strategies of airlines pursuing mergers.

Hawaiian Airlines encountered several challenges leading up to the merger deal with Alaska Airlines. From natural disasters like the Maui wildfires to heightened competition from Southwest Airlines, Hawaiian Airlines’ operations were tested. Additionally, the slower recovery of travel to and from Asia post-Covid-19 added to Hawaiian Airlines’ struggles. Despite facing financial losses, the airline’s executives remain optimistic about the improving booking trends.

The market response to the merger announcement has been mixed, with Hawaiian Airlines’ shares showing an uptick while most other airlines’ shares have declined. This divergence in stock performance suggests that investors view the merger positively for Hawaiian Airlines. The consolidation of the two carriers into a larger fleet covering over 130 destinations could lead to operational efficiencies and enhanced competitiveness in the market.

Alaska Airlines’ acquisition of Hawaiian Airlines represents a significant development in the aviation industry. The successful clearance by the U.S. Justice Department underscores the rigorous regulatory process that airline mergers undergo. As the two carriers move closer to integration, stakeholders will be closely monitoring the final approval from the U.S. Transportation Department and the subsequent operational changes that follow.