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Why your flights may become even more expensive as two major US airlines plan to merge
As Alaska Air and Hawaiian Airlines get one step closer to merging with one another, one expert is warning that flights may get even more expensive.
News broke Tuesday that the US Department of Justice will not mount an antitrust challenge to the $1.9 billion deal that would see Alaska Air take over Hawaiian and its $900 million of debt.
Alaska Air and Hawaiian have both claimed that the proposed acquisition, which would preserve both airline brands, will expand benefits and the number of nonstop routes available for passengers, especially those residing in Hawaii.
Katy Nastro, a spokesperson for flight aggregator site Going.com, said Alaska Air's acquisition could also lead to less budget flights overall.
A 'merger between two airlines - whose route maps have a portion of flights that overlap – would result not in more cheap flights for consumers but, to some extent, fewer,' Nastro told Fox Business.
Alaska Air and Hawaiian Airlines have nudged one step closer to merging with one another now that the Department of Justice has declined to challenge it. Experts have mixed opinions on how this will affect airfare prices in the future
She added that the failed JetBlue-Spirit merger would have been far more disruptive to the overall market.
'If the Justice Department allowed JetBlue and Spirit to merge, there would be one fewer ultra-low-cost carrier helping to pull down prices,' Nastro said.
And a judge agreed, issuing a ruling in March that said the $3.8 billion deal violated antitrust law and would drive up fares.
It's not entirely clear why the DOJ, which has shown an extreme willingness to challenge supposed monopolies, declined the opportunity to block the Alaska-Hawaiian deal.
Especially because if Alaska and Hawaiian were to combine - a prospect that's increasingly likely - they'd make up 8.4 percent of the total domestic market share based on the most recent data from the Bureau of Transportation Statistics.
That's not too far off from the 10 percent JetBlue and Spirit would have controlled if they had merged.
While Clint Henderson, the managing editor of The Points Guy, was surprised that the DOJ let the review period of the Alaska-Hawaiian deal to lapse, he was keen to explain how this merger isn't likely to be 'as anticompetitive as a merger between larger players.'
'In this case, while both airlines are large in the market between Hawaii and the mainland, there is still a lot of competition in the market including from Southwest, Delta, American and United,' Henderson told Fox Business.
Henderson also believes this won't have any major impacts on prices.
'Alaska also has no flights between Hawaiian islands, so that is not a competitive threat. It’s mostly Southwest and Hawaiian that operate interisland flights,' he said.
The biggest winners in the merger would be Hawaiian frequent flyers, whose accumulated miles would become a lot more valuable since Alaska Air is part of the premium Oneworld airline alliance.
Hawaiian customers would be able to transfer their miles to luxury partners such as British Airways, Cathay Pacific, and Qatar Airways.
The Alaska-Hawaiian deal still needs to be approved by the Department of Transportation, according to filings with the Securities and Exchange Commission.
Both Alaska Air and Hawaiian Holdings, the parent company of Hawaiian Airlines, have been working with the DOT to iron out lingering issues, the filings said.