By David Shepardson
WASHINGTON (Reuters) -The U.S. Transportation Department said on Tuesday it had agreed to allow Alaska Airlines to close on its $1.9 billion acquisition of Hawaiian Airlines, after the carriers agreed to maintain key Hawaiian routes and adopt consumer protections.
The Justice Department in August opted not to block the deal that was announced in December by Alaska, the fifth-largest domestic U.S. airline, to Hawaiian, the 10th-largest carrier. The carriers said that they expect to close the deal on Wednesday.
DOT said Alaska and Hawaiian agreed to protect the value of frequent flyer rewards, maintain existing service on key Hawaiian routes to the continental United States and inter-island regions, ensure competitive access at the Honolulu airport and provide travel credits or frequent flyer miles for disruptions that are the fault of the airline.
The agreement does not specify the value of the travel credit or miles. Hawaiian shares closed up 4% to $18.
The agreement came after weeks of discussions between Alaska and DOT, which had sought wide-ranging concessions that went beyond what is in the agreement announced on Tuesday.
Transportation Secretary Pete Buttigieg said the agreement secures "binding protections that maintain critical flight services for communities, ensure smaller airlines can access the Honolulu hub airport, lower costs for families and service members, and preserve the value of rewards miles against devaluation."
Alaska and Hawaiian can close but must remain separate and independently operated until the DOT has ruled on their transfer application. If approved, the consumer protections will remain in effect for six years.
Alaska said on Tuesday that the commitments align with plans it announced at the time it signed the transaction and "do not impact the synergies of the deal, which will enhance competition and expand choice for consumers."
The carriers must ensure customers can transfer miles without penalty and the combined carrier cannot devalue HawaiianMiles miles and must maintain, or increase status for HawaiianMiles members in Alaska’s Mileage Plan program.