Alaska Airlines’ acquisition of Hawaiian Airlines cleared by regulator

The Transportation Department said Tuesday that it would allow Alaska Airlines to close its $1.9 billion acquisition of Hawaiian Airlines, clearing the way for the first major U.S. airline merger in nearly a decade.

To receive that approval, the airlines agreed to some conditions, including maintaining the value of loyalty points and preserving service on some routes within and to Hawaii. The conditions will remain in effect for six years once the department formally allows the company to operate as a single airline, a decision federal officials said was still pending. Until that approval is received, the airline must remain independently run.

“We have secured binding, enforceable, upfront protections for passengers and communities, including some new customer service guarantees that did not exist before at any airline,” Transportation Secretary Pete Buttigieg said on a call with reporters Tuesday.

Under the agreement, points already earned with either airline won’t expire and can be transferred on a one-to-one basis, while status at either airline must be matched. The combined carrier must also maintain “robust levels” of inter-island passenger and cargo flights, and service to small and rural communities in Hawaii must be preserved, the department said in a news release.

Other conditions include guaranteeing that children 13 or younger can sit next to an accompanying adult regardless of the ticket they’ve purchased, providing compensation for some flight delays and cancellations, and lowering costs for military members and their families.

“We look forward to formally welcoming Hawaiian Airlines’ guests and employees,” Alaska’s CEO, Ben Minicucci, said in a statement. The airline said it expected to close the merger “in the coming days.”

The deal cleared another important hurdle about a month ago when the Justice Department did not challenge the acquisition in federal court on antitrust grounds.

The deal allows Alaska to expand its operations on the West Coast, grow internationally, particularly in Asia, and gain access to more planes, pilots and other skilled workers.

The combined airline will command nearly 8% of the U.S. market, less than half the share of the next-largest carrier, United Airlines, which has 16%. American Airlines, Southwest Airlines and Delta Air Lines each have more than 17%.