An
Alaska
Airlines
aircraft
flies
past
the
U.S.
Capitol
before
landing
at
Reagan
National
Airport
in
Arlington,
Virginia,
U.S.,
January
24,
2022.
Joshua
Roberts
|
Reuters
Alaska
Air
Group‘s
executives
spent
months
working
on
its
plan
to
buy
rival
Hawaiian
Airlines.
The
airlines’
leaders
will
now
spend
many
more
trying
to
convince
regulators
the
acquisition
should
go
ahead.
It
could
be
the
latest
in
a
string
of
challenges
brought
by
President
Joe
Biden’s
Justice
Department
against
airline
deals
it
views
as
anticompetitive.
The
$1.9
billion
cash
and
debt
deal,
announced
Sunday,
comes
less
than
a
year
after
the
Justice
Department
sued
to
block
another
deal:
JetBlue
Airways‘
$3.8
billion
cash
acquisition
of
budget
carrier
Spirit
Airlines.
The
Justice
Department
argued
that
the
purchase
of
Spirit
would
harm
consumers
in
the
form
of
higher
fares
if
the
budget
airline
is
absorbed
by
JetBlue.
Earlier
this
year,
the
Justice
Department
successfully
broke
up
JetBlue’s
partnership
with
American
Airlines
in
the
U.S.
Northeast.
In
both
that
limited
alliance
and
the
Spirit
acquisition,
JetBlue
argued
it
needed
to
team
up
to
better
compete
with
larger
rivals,
and
grow,
when
planes
and
pilots
are
in
short
supply.
More
than
a
decade
of
airline
mergers
left
four
airlines
—
American,
Delta,
Southwest
and
United
—
in
control
of
around
80%
of
U.S.
airline
capacity.
Alaska
has
a
more
than
5%
share
of
U.S.
airlines’
capacity
and
Hawaiian
has
a
less
than
2%
share,
according
to
Cirium
data.
The
Alaska-Hawaiian
deal
comes
as
Hawaiian
has
faced
a
host
of
challenges
including
like
the
Maui
wildfires,
increased
competition
in
Hawaii
from
Southwest
and
a
slower
recovery
of
some
long-haul
Asia
routes.
Deal
differences
The
Alaska-Hawaiian
and
JetBlue-Spirit
deals
are
different
in
approach,
but
the
Alaska
acquisition
could
still
face
hurdles
with
regulators.
For
example,
JetBlue
plans
to
remodel
Spirit’s
tightly
packed
yellow
planes
to
take
out
seats
and
bring
on
board
more
amenities
like
seat-back
screens,
while
getting
rid
of
the
Spirit
brand
and
model
entirely.
Alaska,
meanwhile,
said
it
plans
to
keep
separate
Hawaiian
and
Alaska
brands,
two
carriers
that
are
key
to
the
far-flung
states
they
serve.
That’s
different
from
Alaska’s
2016
acquisition
of
Virgin
America,
when
it
spent
years
getting
rid
of
Virgin’s
branding
and
fleet
of
Airbus
jets
in
favor
of
a
streamlined
Boeing
airline.
The
Justice
Department
declined
to
comment
on
the
Alaska-Hawaii
deal
on
Monday,
but
some
experts
said
they
expect
a
challenge
from
regulators.
“The
starting
point
is
one
of
skepticism,”
said
William Kovacic,
a
professor
at
the
George
Washington
School
of
Law
and
a
former
chair
of
the
Federal
Trade
Commission.
He
said
the
Justice
Department’s
review
of
the
deal
will
focus
on
where
Hawaiian
and
Alaska
compete
and
“consider
how
the
two
companies
might
have
expanded
service
in
different
ways
were
it
not
for
the
merger
itself.”
Alaska
and
Hawaiian
executives
have
defended
their
deal,
citing
little
overlap
and
the
ability
to
expand
their
reach.
The
carriers’
CEOs
said
the
deal
will
help
them
expand
their
networks,
giving
Alaska
access
to
Hawaiian’s
network
in
the
Asia-Pacific
region
and
expanding
Hawaiian’s
current
reach
with
Alaska’s
network
throughout
the
U.S.,
for
example.
“We’re
confident
that
this
is
unique
from
others
that
are
pursuing
combinations,”
Alaska
CFO
Shane
Tackett
said
in
an
interview
with
CNBC.
“We
have
very
similar
product
offerings
and
we
have
very
limited
network
overlap.”
He
said
that
the
two
carriers
have
about
a
3%
overlap
with
seats
and
12
routes.
In
the
Justice
Department’s
lawsuit
against
the
JetBlue-Spirit
deal,
“they
really
lean
heavily
on
the
catalyzing
role
that
Spirit
in
particular,
but
that
Spirit
and
JetBlue
can
play
in
the
market,”
said
Samuel
Engel,
a
lecturer
at
Boston
University’s
Questrom
School
of
Business
and
senior
vice
president
at
consulting
firm
ICF.
“I
don’t
think
anyone
has
every
argued
that
about
Alaska
and
Hawaiian,”
he
added.
“That
said,
the
posture
of
this
administration
has
suggested
there
are
not
many
mergers
they
would
embrace,”
he
said.
Alaska
and
Hawaiian
executives
said
they
expect
it
to
take
12
to
18
months
to
close
the
deal,
a
timeframe
which
would
push
it
beyond
next
year’s
presidential
election
and
potentially
into
a
new
administration.
Hawaiian’s
stock
nearly
tripled
on
Monday
to
$14.22
a
share,
though
still
below
the
proposed
purchase
price.
Alaska’s
shares
lost
14.2%
to
end
the
day
at
$34.08.