Alaska Airlines and Hawaiian Airlines have jointly filed two critical applications with the U.S. Department of Transportation in anticipation of the transaction completing their planned merger.
In one filing, the airlines requested a “de facto transfer of Hawaiian’s international route authorities” to the Alaska Air Group and the re-issuance of each airline’s respective international route authorities in the name of the other. In a concurrent filing, the airlines asked for “an interim exemption” allowing them “to operate under common ownership” pending approval of the mutual transfer of their routes.
These approvals would allow each airline to begin planning joint ticketing and operations as part of the same group and ensure a seamless transition for their customers once the merger is approved.
As the airlines state in their application, “Following the Transaction closing, Alaska and Hawaiian will be commonly owned and controlled, but will continue to operate separately until their operations can be merged under a single operating certificate. During this transition period, Hawaiian will be a wholly owned subsidiary of AAG.”
Merger Approval Pending
The U.S. Department of Justice has until August 5th to decide whether to approve the merger, which has faced some opposition. A lawsuit filed in Hawaii’s Federal Court in April of this year claimed Alaska’s plans to buy Hawaiian violated federal law by “substantially” lessening competition, potentially creating a monopoly, and would “also threaten Hawaiʻi’s economy and the well-being of Hawaiʻi’s people.” The attorneys raised concerns that selling Hawaiian Airlines to the Alaska Air Group would lead to “labor layoffs, higher prices, less frequent flights interisland, from Hawaiʻi to the mainland, and from Hawaiʻi to Asia and Pacific.”
When announcing stockholder approval of the merger, Hawaiian Airlines President and CEO Peter Ingram promised that the merger would “bring stronger competition to the U.S. airline industry, deliver more value to our guests and the communities that we serve, and provide greater job opportunities for our employees.”
For his part, Alaska Airlines CEO Ben Minicucci said in a company statement on the merger, “We have a longstanding and deep respect for Hawaiian Airlines, for their role as a top employer in Hawai‘i, and for how their brand and people carry the warm culture of aloha around the globe.” He added that the Alaska Air Group is “fully committed to investing in the communities of Hawai‘i and maintaining robust Neighbor Island service that Hawaiian Airlines travelers have come to expect.”
Nothing is certain after the court decision that squashed the JetBlue merger with Spirit Airlines. But this is a different proposition. Neither Alaska Airlines nor Hawaiian Airlines operate as low-cost carriers. The judgment against the JetBlue Spirit merger hinged on the judge’s concern that passengers who rely on low fares would be harmed.
Alaska Airlines Dissolution Of Virgin America
Still, Alaska Airlines’ previous history of mergers—specifically, the acquisition and ultimate dissolution of the popular Virgin America brand—is worth considering.
As it has done with Hawaiian, Alaska also approached the Virgin merger, celebrating the differences between the two airlines and vowing to retain their unique cultures.
“Together, we’ll offer more flights, with low fares, more rewards and more for customers to love, as we continue to offer a distinctive travel experience,” said Brad Tilden, CEO of Alaska Air Group, when the Alaska Airlines and Virgin American deal was announced.
Ultimately, Alaska decided against its “different works” message and eliminated all traces of Virgin America, including the Airbus fleet. This expensive decision forced former Virgin America pilots to retrain to operate Alaska’s Boeing 737s.
However, Alaska still has to pay for the abandoned Virgin brand. Last month, the carrier lost an appeal in a UK court of its $160 million obligation to pay for the Virgin trademark through 2039, whether or not they use it.
No similar iron-clad legal provision would protect the Hawaiian Airlines brand icon, Pualani, in the new merger, though Alaska would be very foolish to kill her off.
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