The Department of Justice allowed the period of time to lapse for it to object and file suit against Alaska Airlines closing its deal to acquire Hawaiian Airlines.
It appears that they’re deferring to the Department of Transportation on approval. And DOT is taking time and – it appears – considering what conditions it will extract from Alaska.
Justice deferring to DOT is the most common process in airline mergers, though since the Trump administration DOT approved the partnership between American Airlines and JetBlue the Biden DOJ needed to sue to unwind it. (We’re still likely months away from a decision on appeal in that case, though the partnership was unwound by a district court judge in the meantime.)
United has gone to DOT with its complaints about the deal. While they likely can’t stop it they appear to be asking for the government to require Alaska to continue existing partnerships with mainland-based airlines.
United can fly between the Hawaiian islands if it wishes. They could also, presumably, partner with Southwest Airlines. There’s really no lack of competition on routes between the Hawaiian islands. Fares are low and so are passenger loads.But it prefers to carry passengers overwater to Hawaii and sell connecting tickets between the islands on Hawaiian, and at preferred negotiated pro-rating of fares.And it would like the federal government to order Alaska to continue allowing it to do so.
Since conversations with DOT staff on pending matters must be disclosed, to avoid their being considered ex parte and improper, the Attorney General of Hawaii’s conversation has been filed on the docket that they “spoke with Mohsin Syed, Chief of Staff for DOT Secretary Pete Buttigieg, and Brian Stansbury, Deputy General Counsel for DOT” about the deal. (HT: Enilria)
The State of Hawaii, and in particular the Governor, have been publicly supportiveAlaska Airlines has provided reassurances about their plans for Hawaiian AirlinesThe Attorney General would like to make those binding, it appears
Commitments from Alaska to a state aren’t binding under the Airline Deregulation Act, unless there’s an explicit quid pro quo (such as a contract for air service). However, such commitments could be required by DOT as a condition of approval.
Attorney General Lopez and DOT discussed the commitments made by Alaska Airlines for the future of Hawaiian Airlines and to Hawaii consumers and the enforceability of those commitments. Attorney General Lopez stressed the importance of protecting the interests of the people of Hawai’i in connection with this merger.
The issues laid out by Hawaii are:
“Affordable inter-island travel” and “preserving inter-island flights at an affordable price” so presumably commitments on service, perhaps including number of seats when the carrier retires Boeing 717s, as well as frequencies. They probably don’t want fewer flights or smaller planes like regional jets since reduction in seats could drive up fares.
“[C]oncern that Alaska Airlines would repurpose Hawaiian Airlines Airbus jets and usethem to replace Boeing jets on routes that do not serve Hawai’i.” Hawaii uses Airbus A330s for long range flying both from the mainland to Hawaii and on international routes from Honolulu. They use A321neos for flying between Hawaii and the mainland.
Alaska Airlines probably does want to move Airbus A330s to Seattle and operate international flights there rather than Honolulu. And if they looked at the combined flying between the West Coast and Hawaii on both Alaska and Hawaiian, and decided to reduce it, that might mean moving some Airbus A321s into mainland domestic service.
The discussion of Airbus versus Boeing is something of a euphemism here. We don’t even know that Alaska will keep the Airbus fleet, having just finally disposed of the planes they picked up in their Virgin America acquisition. Instead they’re talking about wanting to ensure that Hawaiian’s fleet operates current Hawaiian routes, which on its face is a bit absurd but there could be certain service guarantees imposed as an approval condition.
With DOT still to approve the deal, the opportunity for parties to get their wish lists in appears to be now. Approval so far has been helped by Hawaii’s supportive politicians. In exchange, Alaska has offered promises about what their stewardship of the brand and its routes will look like. It seems reasonable to expect some of those promises will be written into binding commitments by the federal government.