Another proposed airline buyout has renewed debate over whether there has been too much consolidation in the industry, and whether it is hurting consumers.
The Biden administration has taken a tough stance against mergers, and it is certain to take a close look at Alaska Air Group's proposed $1.9 billion acquisition of Hawaiian Airlines.
The deal is smaller than the mergers that reshaped the airline industry more than a decade ago. But the Justice Department is already fighting another smallish deal - JetBlue's proposal to buy Spirit Airlines.
(COMBO) This combination of file pictures created on December 3, 2023 shows a Hawaiian Airlines plane as it sits at the gate at John F. Kennedy Intenational Airport in New York City on June 7, 2017, and an Alaska airlines plane at Los Angeles International Airport (LAX) in Los Angeles, California, on January 11, 2023. (Photo by Daniel SLIM / AFP)
Alaska Airlines parent Alaska Air Group announced Sunday that it will pay $18 per share for Hawaiian - a huge premium over Hawaiian's closing stock price on Friday.
Hawaiian has struggled to recover from the pandemic and new competition from Southwest on intra-islands flights. It has lost $159 million so far this year.
Alaska says Hawaiian will continue to operate as a stand-alone brand, an unusual step.
Here's some information about each airline's customer base, the way antitrust regulators will view the deal, and the impact of past mergers.
Alaska Air Group, based in Seattle, is the fifth biggest U.S. airline company by 2022 revenue, slightly ahead of JetBlue, but is not widely known beyond the West Coast.
Its biggest operation is in Seattle, and it bulked up in California in 2016 by buying Virgin America for $2.6 billion after a bidding war with JetBlue.
Hawaiian Airlines - only a quarter the size of Alaska Air by revenue - operates flights throughout the island chain and to the U.S. mainland and also relies heavily on traffic between Asia and Hawaii.
Alaska and Hawaiian are rather traditional airlines.
Their fares are typically in line with larger carriers and higher than those charged by discount airlines. In September, both charged slightly lower than average fares for economy-class seats between Hawaii and the mainland, according to figures from aviation-data firm Cirium.
Helped by good weather, Hawaiian often tops the industry for on-time flights, and Alaska usually ranks near the top too. Both score in the middle for consumer complaint rates, according to U.S. Department of Transportation data.
The Justice Department succeeded earlier this year in killing a partnership between JetBlue and American Airlines, and the trial over the government's lawsuit to stop JetBlue from buying Spirit Airlines is scheduled to wrap up this week.
Between them, Hawaiian and Alaska control about 40% of that market, according to Cirium.
Alaska CEO Ben Minicucci said buying Hawaiian will help it compete against the four biggest U.S. airlines.
That is exactly the same argument JetBlue made to defend its purchase of Spirit - and that didn't stop the Justice Department from suing.
Henry Harteveldt, a travel analyst for Atmosphere Research Group, said the fact that Alaska is not buying a low-fare airline like Spirit could improve the chances that regulators will let the purchase of Hawaiian go through.
