Alaska Airlines and Hawaiian Airlines Emirates and Flynas can move forward with their planned merger, but they must preserve the value of their airline rewards systems and maintain several key routes, the U.S. Department of Transportation said Tuesday.
The $1.9 billion merger agreement between the two companies passed the U.S. Justice Department’s review last month. That puts it in the hands of the Department of Transportation, which also has to review airline mergers.
The Department of Transportation said airlines must ensure that miles earned in the HawaiianMiles and Alaska Mileage Plan programs do not expire before the new, shared loyalty points system is created, and that they can transfer at a 1-to-1 ratio.
They must also maintain “essential air support” for rural areas and maintain current service levels for passenger and cargo routes between the Hawaiian Islands, U.S. Transportation Secretary Pete Buttigieg said at a news conference.
The DOT said the airlines could begin the merger closing process, but would still need approval for the conversion application, which would allow them to merge and operate international routes under a single certificate.
Following the DOT announcement, Alaska said it would appoint an interim transition team to oversee the merger of the two airlines as they seek a single operating certificate from the Federal Aviation Administration. The company said Joe Sprague — who currently serves as Alaska Airlines’ regional president and oversees Hawaiian — will be named Hawaiian Airlines’ CEO once the deal closes while the FAA process continues.
Hawaiian shares rose about 4% Tuesday.
The two airlines said in December when they announced their plans to merge that they would retain each company's brand but operate under one platform, combining a fleet of more than 360 aircraft serving more than 130 destinations.
The Transportation Department said Hawaiian Airlines must also adopt Alaska's practice of guaranteeing family seats at no extra charge and offering compensation if the airline causes significant delays or flight cancellations.
