DOT Approves Alaska/Hawaiian Merger With Special Terms And Conditions

After announcing merged intentions in December 2023, Alaska Airlines and Hawaiian Airlines have cleared the final stumbling block after being given the green light by the U.S. Department of Transportation (USDOT) to proceed with the merger.

Officially, the USDOT granted an exemption relating to the transfer of international route authorities in the combination of Alaska Airlines and Hawaiian Airlines. With that in mind, the two companies expect to close their merger transaction in the coming days.

In a statement, Ben Minicucci, CEO of the Alaska Airlines Group said:

“We look forward to formally welcoming Hawaiian Airlines’ guests and employees into Alaska Air Group. We sincerely appreciate the exceptional care and service that employees of both companies have continued to show for one another and our guests throughout this process, and the support of both airlines’ labor unions, as we proceed to realize the vision for this combination and build a stronger future together.”

However, the USDOT has laid out an extensive list of terms and conditions that both airlines will be required to fulfill in order to protect consumers affected by this merger.

Rewards programs to be protected

Both airlines have agreed to the first-ever rewards protections against devaluation that ensure that consumers will receive the rewards, benefits, and status they have earned. The stipulations are as follows:

• No expiration for miles earned under current programs: All HawaiianMiles miles and Alaska Mileage Plan miles earned prior to conversion into the new combined loyalty program must not expire.  
• Transfer miles at 1:1 ratio: Rewards members can transfer HawaiianMiles miles to and from Alaska Mileage Plan miles at a 1:1 ratio prior to the launch of the new combined loyalty program.
• Maintain value of miles: The combined airline must not take any actions that would devalue HawaiianMiles miles, must maintain the value of each unredeemed HawaiianMiles mile earned prior to the merger closing, must honor all active HawaiianMiles promotions from prior to the merger closing, and must continue to award HawaiianMiles miles at the same or greater value. 
• Match, maintain, or increase status: Under the new combined loyalty program, the combined airline must match and maintain the equivalent status levels that HawaiianMiles members hold under the HawaiianMiles program, match and maintain status levels and conferred benefits that are equivalent to Alaska’s Mileage Plan program, and match or increase status and conferred benefits as necessary to ensure members of each existing loyalty program are treated no less favorably relative to status, including by matching or increasing members’ elite status in the new combined loyalty program, for the remainder of the applicable program year.
• No new junk fees: The combined airline must not impose change or cancellation fees on rewards redemption tickets for travel on carrier-operated flights.  

Essential Air Services, Inter-island routes and other services guaranteed

Credit: Bradley Wint/Gate Checked

With mergers come restructuring. In this particular scenario, an unregulated merger might have resulted in a number of essential air services and inter-island operations being affected within the Hawaiian chain. To protect against that, the USDOT laid out the following terms:

• Maintaining critical inter-island and continental routes: Hawaii’s rural island communities are uniquely dependent on the passenger and cargo services provided by Hawaiian Airlines. The combined airline must maintain robust levels of service for critical Hawaiian inter-island passenger and cargo service and for the key routes between Hawaii and the continental United States at risk of a loss of competition. 
• Preserving support for essential air service in Alaska and Hawaii: The combined airline must preserve its support for Essential Air Service in Alaska’s and Hawaii’s small, rural communities where such service is a lifeline to health care, education, and economic well-being. 
• Ensuring competitive access to Honolulu hub airport: The combined airline is barred from directly or indirectly taking actions that would discriminate against new airline entrants or smaller competitors’ access to airport infrastructure as part of new or existing investments at the Daniel K. Inouye International Airport in Honolulu, a key vacation destination and hub for the State of Hawaii. 
• Guaranteeing fee-free family seating: Hawaiian Airlines must join Alaska Airlines in guaranteeing adjacent seats for children 13 or under and an accompanying adult at no additional cost for all fare types.  
• Providing alternative compensation for delays and cancellations caused by the airline: Hawaiian Airlines must join Alaska Airlines in providing a travel credit or frequent flyer miles when, due to circumstances within the control of either airline, a flight is cancelled and they wait three hours or more for a new flight, or a flight is delayed by three hours or more from the scheduled departure time. 
• Lowering costs for service members and their families: The two airlines must lower costs for the nation’s military and their families, a significant population in both Alaska and Hawaii, by waiving certain fees. Both airlines will update their customer service plans to provide at least one free standard carry-on and at least two free standard checked bags for service members and their accompanying spouse and children. They will also waive change fees for service members and their families who reschedule flights due to a military order or directive. 

Merger to be finalized in coming days

This isn’t the usual merger, as the soon to be merged group will be required to fulfill a number of obligations on both ends. However it does cover a lot of aspects in terms of consumer protection.

With the paperwork now being finalized, we can expect to hear about the successful merger within the next few days.

I’m just curious what Alaska has planned for Hawaiian. Will they eventually transition the airline to an all-Boeing fleet. Hawaiian plans to take on a total of 12 Boeing 787-9 Dreamliners as part of its strategy to replace its older Airbus A330s, however they also have 18 much newer Airbus A321neos. Will those also see the boot in favor of Boeing 737 MAX 10s?

Featured image: Bradley Wint/Gate Checked