Mixed signals are coming as an extended deadline for federal antitrust enforcers to review the proposed $1.9 billion merger between competitors Alaska Airlines and Hawaiian Airlines draws to a close.
The Department of Justice’s formal review period for the proposed merger was originally slated to end Aug. 5. It was pushed to 12:01 a.m. Eastern time Thursday after both airlines agreed to the DOJ’s request for a 10-day extension.
Hawaiian and Alaska need DOJ approval to complete their proposed merger, which was announced Dec. 3 and includes $900 million in Hawaiian debt. The delay has allowed more time for DOJ and state attorneys general to decide whether to block the deal or allow it to proceed, and for investors to experience angst.
The wait is almost over. Brian Hanna, a trial attorney with the DOJ’s antitrust division who was involved in a lawsuit to block the $3.8 billion JetBlue and Spirit merger, has filed an application notifying the the U.S. District Court of Hawaii of his intention “to appear before this court on behalf of the United States and to attend to the interests of the United States.”
U.S. District Court Judge Micah W.J. Smith on Monday issued an order permitting Hanna to appear and practice before the court. A spokesperson for the DOJ did not immediately respond to a request for comment, but it is generally understood that the DOJ has a range of options at its disposal from granting full regulatory clearance to setting conditions in a consent decree to seeking additional time to review the case to challenging the merger in court.
A merger between Alaska Airlines and Hawaiian Airlines requires the approval of the DOJ, which under the Biden administration has taken a tough stance against airline industry consolidation. In 2023 the DOJ, along with the Attorneys General of the Commonwealth of Massachusetts, the State of New York, and the District of Columbia, filed a civil antitrust lawsuit to block the merger of JetBlue and Spirit.
The nation’s chief law enforcement officer, Attorney General Merrick B. Garland, said in a news release at the time, “As our complaint alleges, the merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers, with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly. Companies in every industry should understand by now that this Justice Department will not hesitate to enforce our antitrust laws and protect American consumers.”
In Hawaii, Chief U.S. District Judge Derrick Watson on Monday dismissed a lawsuit that sought to block Alaska Airlines’ plan to buy Hawaiian Airlines on the grounds that the merger would result in higher fares, job losses and fewer flights, and cause injury to Hawaii’s economy.
Alaska Airlines said in a statement, “We are pleased with the court’s decision in this case. We continue to believe this proposed combination will expand benefits and choice for consumers in Hawaii, the continental United States, and globally. We remain committed to working through the regulatory review process.”
The suit was filed in April on behalf of eight passengers: Warren Yoshimoto, Kristin Barroga, Sean Kettley, Carolyn Fjord, Don Freeland, Don Fry, Bill Rubinsohn and Clyde Stensrud. The passengers, including three Hawaii residents, were represented by antitrust attorney Joseph Alioto and Tatiana Wallace of the Alioto Law Firm in San Francisco and Terence O’Toole, Andy Lautenbach and Kukui Claydon of the Starn, O’Toole, Marcus and Fisher law firm in Honolulu.
Watson’s dismissal order stated that the passengers did not have legal standing, adding that “they allege no personal connection to either airline that would plausibly establish a concrete or particularized harm.”
Alioto, the lawyer for the consumers, said Watson dismissed the case without prejudice, so he plans to file a “new case, and a motion for a temporary restraining order to prohibit the acquisition.”
There is rampant speculation among investors that Hanna’s arrival could mean that the DOJ plans to block the Alaska Airlines and Hawaiian Airlines merger. But Alioto said he is expecting the DOJ to propose a consent decree Thursday “in an effort to thwart the private lawsuit that seeks to attempt to prevent the acquisition altogether.”
“The idea of government trying to determine what business should be is absurd,” he said.
Alioto opined that if the acquisition were allowed, Alaska would control “over 40% and in some cases 50% of the flights from Hawaii to the mainland and from the mainland to Hawaii.”
He added that the merger also would mean that Alaska immediately would “buy its way into” occupying about “70% of the interisland market.”
“The natural effect of an acquisition is to raise prices, fire people in mass, and limit production and capacity — that happens in every acquisition ever and that it would happen (to) such an important industry with the state of Hawaii is unthinkable,” Alioto said.
Hawaiian and Alaska, which are small carriers relative to the four major U.S. airlines, have argued the merger would benefit customers by allowing travelers to reach more places, and that there only 12 overlapping routes between the two airlines.
