Alaska and Hawaiian Airlines have to convince several regulators to approve their tie-up, and now appear to have cleared their biggest hurdle.

Multiple airlines in the United States merged or acquired each other in the decade following 9/11. This industry consolidation continued at a slower pace into the 2010s, the last one involving Alaska Airlines, which acquired Virgin America in 2018.

However, the prelude to the merger of Alaska and Hawaiian looks quite different, which set the scene when their merger talks were announced last December. We have seen that JetBlue failed to convince regulators to allow it to acquire Spirit Airlines.

Before that, JetBlue had sought a code-sharing and network partnership with American Airlines, called the Northeast Alliance. Regulators stopped that move, too. On both of these occasions, the government agency that intervened was the U.S. Department of Justice.

Well, this week, Alaska and Hawaiian announced that the DoJ cleared their acquisition deal after completing its review on it. The news boosted the shares of both airlines, with Alaska emphasizing that it is “…a significant milestone”.

Alaska and Hawaiian – Transportation Department Still To Go

The process isn’t over. Now, the acquisition goes to the Transportation Department for its own review. This agency announced that it will only approve the move “…if it is in the public interest”.

For Alaska Airlines, the cost of acquiring Hawaiian under this deal is $1.9 billion, which includes Hawaiian’s debt. Even with regulatory approval, such mergers are always a challenge, as airlines also need to merge various company policies, procedures, seniority lists, pay scales and more.

Just days before getting the all-clear from the DoJ, Alaska and Hawaiian avoided another potential legal hurdle. A consumer group had sued Alaska Airlines, to stop the acquisition, arguing that it would hurt consumers.

A judge dismissed this lawsuit, arguing that the consumer group had not shown that they have a connection with either airline, which would allow them to establish a specific way that the deal would harm them.

Previous mergers and acquisitions stumbled on similar competitive grounds, after suits by the Department of Justice. That’s why the DoJ’s approval is a big deal, although the Transportation Department could theoretically make a similar argument.

Operationally, incorporating Hawaiian’s fleet, employees, and network won’t be straightforward for Alaskan. The airline’s “Proudly all-Boeing” fleet won’t be, when the deal goes through.

Alaska recently handed all its ex-Virgin America Airbus fleet to lessors, but Hawaiian has both single-aisle A321neos (18) and A330 widebodies (25). The bigger jets are necessary, given Hawaiian’s existing route network. Alaska Airlines has never operated widebodies before.

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