How an Alaska Air-Hawaiian Airlines Merger Could Destroy Cheap Flights
If the deal goes through, travelers will likely see fewer affordable fares, experts warn.
Booking airfare always requires some strategy. Depending on how flexible your dates are, you can play around to find the lowest rates, or even check out a different airport if there's another option nearby. When you do score that unbeatable price, you can't deny the feeling of accomplishment—especially if it means you can put more money toward other parts of your vacation. But those cheap flights could soon be a thing of the past thanks to a new merger between Alaska Airlines and Hawaiian Airlines. Read on to find out why experts believe the carriers' planned union could end up costing travelers more.
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Alaska Airlines is buying Hawaiian for almost $2 billion.
In a Dec. 3 press release, Alaska Airlines announced plans to buy rival Hawaiian Airlines for $1.9 billion.
"This combination is an exciting next step in our collective journey to provide a better travel experience for our guests and expand options for West Coast and Hawai'i travelers," Ben Minicucci, Alaska Airlines CEO, said in the release. "We have a longstanding and deep respect for Hawaiian Airlines, for their role as a top employer in Hawai'i, and for how their brand and people carry the warm culture of aloha around the globe."
The deal involves Alaska taking on $900 million of Hawaiian Airlines' debt, as the airline has reported continual losses since the beginning of 2020, CNBC reported. The carrier struggled following the Maui wildfires earlier this year, as well as increasing competition from Southwest Airlines in Hawaii.
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The deal needs approval before it can take effect.
Both carriers will keep their own brand under a single platform, according to the press release, but before they can join forces, they will need approval from federal regulators.
In the past, these mergers have been approved without issue, CNN reported, paring down the number of major U.S. airlines from 11 to just four. (United, Delta, American, and Southwest control roughly 80 percent of the U.S. market. Alaska is the nation's fifth-largest airline.)
President Joe Biden's Justice Department has been more stringent in merger approvals, however. In 2022, the Justice Department won a lawsuit to break up a regional partnership between JetBlue and American, and it is currently challenging a merger between JetBlue and Spirit Airlines, CNBC reported.
While smaller carriers argue that they need to merge with larger ones to compete, the Biden Administration contends that mergers reduce the number of choices for customers and raises fares. If Alaska and Hawaiian are given the green light to team up, industry experts say that's exactly what will happen.
Expect fewer cheaper flights, experts say.
Speaking with Fox Business, Katy Nastro, Going.com travel expert, explained that the Alaska-Hawaiian merger, like other mergers, gets rid of competition and impacts fares.
"Competition between airlines means they have to come to the table with something to offer consumers to sway their buying decision," Nastro said. "When it comes down to it, for a leisure consumer, price will always be the deciding factor."
Consumers "want competition" no matter what, she explains, noting that people typically want more than one airline to choose from at certain airports or for certain routes. With Alaska and Hawaiian merging, those options dwindle, which ends up hurting the consumer.
Going.com founder Scott Keyes echoed this speaking with The Washington Post, noting that competition is the "single biggest cause of cheap flights." He added that the merger between Alaska and Hawaiian, which have overlapping flight routes, "would result not in more cheap flights for consumers, but fewer."
Thankfully, Nastro told Fox Business that while the merger is anticipated to yield fewer cheap flights, it doesn't mean you won't ever be able to find a cheap fare or that overall prices are going to soar sky-high.
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Some good could come from the deal, too.
We may not be looking forward to shelling out more for airfare, but Nastro also told Fox Business that the deal could be beneficial for certain U.S. citizens.
"Especially if I live in Hawaii or on the West Coast, now I can get more connectivity to potentially Asia," she said. "They are definitely looking at Honolulu as being this sort of gateway for Alaska [Airlines]."
During a Dec. 3 call with investors, Minicucci addressed this as well, noting that the merger would give these customers "tremendous choice, an expanded domestic platform, an expanded international platform."
Additionally, contrary to Keyes' argument about Hawaiian and Alaska Airlines eliminating cheap flights because they serve so many of the same routes, airline execs said the shared routes could be a pro for regulators.
"When you combine these complementary networks, we'll have about 1,400 flights a day," Minicucci said on the investor call. "On those 1,400 flights, we only have 12 overlap markets. So from a competitive standpoint, I think that lands really, really well."
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