Alaska-Hawaiian Airlines Merger Faces DOJ Scrutiny

Facts

• Alaska Air announced on Sunday that it has agreed to buy Hawaiian Airlines in a $1.9B cash and debt deal.¹
• Alaska will pay $18 in cash for each share of Hawaiian — whose stock closed at $4.86 on Friday — and take on nearly $900M in debt that currently belongs to the company.²
• Alaska Airlines CEO Ben Minicucci will head the combined company, which is set to retain the branding of both airlines' and be based in Seattle.²
• The deal is expected to face scrutiny from federal regulators, amid challenges to a merger between JetBlue and Spirit Airlines.³
• The top four US airlines — Southwest, American, Delta, and United — control nearly 80% of the nation's flight capacity. Alaska Air has a share of around 5%, while Hawaiian Airlines holds less than 2%.¹
• The Justice Department argues that the lack of competition due to consolidation by big aviation businesses adversely affects consumers by pushing up prices.⁴

Sources: ¹CNBC, ²NPR Online News, ³Washington Post and ⁴Forbes.

Narratives

• Narrative A, as provided by Quartz. The Alaska-Hawaiian merger will help consumers by facilitating increased connectivity and improved services. This consolidation differs from recent mergers struck down by the DOJ, because Alaska Air and Hawaiian Airlines have fewer overlapping routes and a much lesser combined market share.
• Narrative B, as provided by Associated Press. It's up to regulators to protect consumers' best interests and ensure that companies don't utilize unfair business practices to form monopolies and raise prices. The Biden administration must challenge alliances in the airline industry, which has become too consolidated at a cost to ordinary Americans.

Predictions