Alaska-Hawaiian merger clears DOT review, but airlines must preserve miles, routes

Alaska Airlines and Hawaiian Airlines

can go through with their planned merger, but they must maintain the value of their airline reward systems and preserve several key routes, the U.S. Department of Transportation said Tuesday.

The two carriers’ $1.9 billion merger agreement cleared the U.S. Justice Department’s review last month. That put it in the hands of the Transportation Department, which must also review airline mergers.

The DOT said the airlines must ensure that miles earned in the HawaiianMiles and Alaska Mileage Plan programs before the creation of a new, combined loyalty point system will not expire and that they can transfer at a 1-to-1 ratio.

They also must preserve “essential air support” for rural areas and maintain current levels of service for passenger and cargo routes between the Hawaiian islands, U.S. Secretary of Transportation Pete Buttigieg said on a press call.

The Department of Transportation noted that the airlines can begin the process of closing the merger, but still need approval for a transfer application, which allows them to combine and operate international routes under one certificate.

After the DOT’s announcement, Alaska said it would appoint an interim transition team to oversee the combination of the two companies as they seek a single operating certificate from the Federal Aviation Administration. Joe Sprague — who is currently Alaska Airlines regional president overseeing Hawaii — will be appointed CEO of Hawaiian Airlines once the transaction is closed until the FAA process is finished, the company said.

Hawaiian’s stock rose nearly 4% on Tuesday.

The two airlines said in December when they announced plans to combine that they would keep each carrier’s brand but operate under a single platform, combining into a more than 360-airplane fleet offering over 130 destinations.

Hawaiian must also adopt Alaska’s practices of guaranteeing family seating without an additional fee and providing compensation if the airline causes significant flight delays or cancellations, the DOT said.