A group of US consumers have filed a lawsuit in a federal district court to block on anticompetitive grounds Alaska Airlines’ proposed $1.9 billion acquisition of rival West Coast carrier Hawaiian Airlines.
In a lawsuit filed 15 April in the US District Court for the District of Hawaii, plaintiffs represented by San Francisco-based Alioto Law Firm argue that Alaska’s deal to acquire Hawaiian violates US antitrust law by lessening competition in certain US airline markets – and potentially harming the island state’s $20 billion tourism economy.
“A loss of airline competition in key Hawaii-related markets due to airline consolidation could be catastrophic to Hawaii and may have significant anti-competitive ripple effects,” the lawsuit states. ”Alaska Airlines’ acquisition of Hawaiian Airlines may have such probable effects causing labour lay-offs, higher prices, less frequent flights inter-island, from Hawaii to the mainland and from Hawaii to [Asia-Pacific].”
Following a months-long courting process, Alaska signalled in December that it planned to acquire Hawaiian within 12-18 months, combining two “highly complementary networks” and assembling a combined fleet of an estimated 365 aircraft.
Alaska chief executive Ben Minicucci would take the top role at the combined company, which would be headquartered in Seattle.
Hawaiian’s shareholders voted in February to approve the deal, which is currently under review by the US Department of Justice. The federal government has yet to take any action against the tie-up.
Alaska and Hawaiian “directly overlap” on 12 routes between Hawaii and the mainland USA, the lawsuit states. If the carriers were allowed to pursue their tie-up, competition would be eliminated on those routes.
A post-acquisition Alaska would control more than two-fifths of the share of capacity on Hawaiian-to-mainland routes, allowing it to ”limit or eliminate flights, raise fares, add ancillary fees, lessen services and effectively control 40% of the seat capacity traffic between Hawaii and the US mainland”, assert the plaintiffs.
A loss of airline capacity between Hawaii and the contiguous USA would be “disabling” for Hawaii, which heavily depends on air travel and tourism to sustain its economy.
The lawsuit states that 9.2 million air travellers visited Hawaii in 2022, of which 85% came from the mainland.
International flights to cities throughout Asia-Pacific could also be affected by the deal, including the state’s vital link to Japan, the plaintiffs say.
”Hawaiian offers flights to 10 international destinations across seven countries in the Pacific and Asia, none of which are served by Alaska,” the plaintiffs say. “These are additional markets that Alaska is seeking to buy into, rather than compete into.”
Plaintiffs point to the recent precedent of a federal judge striking down JetBlue Airways’ $3.8 billion proposal to acquire competing low-cost carrier Spirit Airlines, which they characterise as a “similar acquisition”.
Some airline analysts have suggested the Alaska-Hawaiian deal has a better chance of receiving the blessing of the US government because it does not propose removing seat capacity.
JetBlue had planned to remove seats from Spirit’s fleet of Airbus A320-family aircraft to configure them like its own jets.
