Alaska-Hawaiian Merger Faces Wary Justice Department

04.12.2023 - 07:42 / skift.com / Spirit Airlines / U.S.Airlines / Hawaiian Airlines / Edward Russell / Justice Department

Alaska Air Group CEO Ben Minicucci gave an eerily familiar line when asked about his view on U.S. government approval of the carrier’s proposed $1.9 billion merger with Hawaiian Airlines.

“I think this is a pro-consumer combination,” he told analysts Sunday. “It’s pro-competitive, it makes us larger to compete against the Big Four [American, Delta, Southwest, and United] … So we’re hopeful it will be seen in a positive light.”

Sound familiar? It’s almost identical to the case made by JetBlue Airways CEO Robin Hayes when he was bidding for Spirit Airlines last year. “The combination of JetBlue and Spirit would [benefit] competition by creating the fifth-largest domestic airline,” Hayes said that April.

We all know how the JetBlue-Spirit story went. The U.S. Justice Department challenged the $3.8 billion merger in April. The trial in the regulator’s suit to block the combination is underway in Boston and expected to wrap soon. Then the industry waits for a judge’s opinion.

Alaska and Hawaiian have yet not discussed their proposed deal, unveiled publicly Sunday, with the government, said Minicucci.

The Biden Justice Department has taken a tough stance against consolidation. In a July 2021 executive order, the president called it out for contributing to the increase in fees.

The administration scored a win when the Justice Department sued and won its case to unwind the American and JetBlue alliance in the northeast. In the ruling, the judge wrote that U.S. antitrust law only considers a reduction in the number of independent competitors in a market and not the competitive benefits of a so-called stronger competitor; American and JetBlue made the latter case, that together they offered passengers a strong alternative to Delta and United.

Regulators elsewhere, including in Europe, have also taken a tougher stance towards airline mergers.

“There’s no relationship between what we’re doing and what’s happening with Spirit and JetBlue,” Minicucci said when questioned by analysts.

He said the Alaska and Hawaiian only have 12 overlapping routes, and added that the two networks are “complementary.”

Alaska and Hawaiian together would have a nearly 40% share of seats between Hawaii and the continental U.S., including the state of Alaska, according to Cirium Diio data. The next largest airline, United, has a nearly 23% share.

“Given that the route networks of Alaska and Hawaiian wouldn’t lead to the same concentration as the networks of say, American and JetBlue or JetBlue and Spirit, the probability is higher that the Alaska-Hawaiian deal would go through,” said Saikat Chaudhuri, a director at the University of California, Berkeley’s Haas School of Business and College of Engineering.

When two U.S. airlines merge,