By Mary Schlangenstein and Keith Laing | Bloomberg
The US Department of Transportation is giving a green light to the merger of Alaska Air Group and Hawaiian Holdings after the carriers agreed to institute new consumer protections, lifting the last hurdle to close the $1.9 billion deal.
Under the terms of the agreement, Alaska and Hawaiian must protect the value of loyalty program rewards, maintain existing service on key routes and preserve support for rural service, the Transportation Department said Tuesday in a statement. The companies also must ensure competitive access at the Honolulu hub airport.
“This is the first time the US Department of Transportation has required airlines to agree to binding, enforceable protections as a precondition before we would allow a merger to move forward,” Transportation Secretary Pete Buttigieg said on a call with reporters.
The DOT decision allows Alaska to buy Hawaiian shares and start the process of closing, the agency said. The deal, announced last December, cleared a key step when the US Justice Department last month decided against challenging it.
Alaska and Hawaiian expect the deal to close on or about Sept. 18, according to a regulatory filing.
The agreement between the department and the airlines is binding for six years. The combined carrier will be required to submit a written report to DOT outlining its compliance with the terms beginning 90 days after the deal closes and continuing annually through the length of the pact, according to text of the accord.
After closing the merger, the airlines face months of work to physically combine operations, including meshing management, flight schedules, training processes and manuals and other standards. That work must be approved by the US Federal Aviation Administration before the airlines are allowed to shift to a single operating certificate.
That process can also take time. American Airlines Group Inc. and US Airways closed their merger in December 2013, and received their single operating certificate in April 2015.
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