In the face of unprecedented shortages in new planes, jet engines, and qualified pilots, U.S. airlines are increasingly turning to acquisitions as a means of sustaining growth. The scarcity of essential resources has forced carriers into a strategic dance with antitrust regulators, with Alaska Airlines (ALK.N) making headlines by announcing its intention to acquire Hawaiian Airlines for a hefty $1.9 billion.
This move by Alaska Airlines comes at a time when the U.S. Department of Justice (DOJ) is actively challenging JetBlue’s proposed merger with Spirit Airlines, underscoring the industry’s contentious relationship with antitrust authorities. Despite potential regulatory hurdles, Alaska’s surprising bid for Hawaiian Airlines indicates the urgency felt by airlines to secure growth avenues in an environment characterized by limited options.
The aviation sector is grappling with severe supply and labor constraints, leading major players like Alaska to explore acquisitions as a viable growth strategy. The Biden administration has expressed reservations about further consolidation in the industry, but the pressures of shortages have left airlines with few alternatives. Currently, American Airlines, United, Delta, and Southwest Airlines collectively control 80% of the domestic market, leaving little room for new entrants or organic growth.
Industry experts, such as Addison Schonland, partner at consulting firm AirInsight, emphasize the competitive nature of the airline business. “This is an industry that is constantly looking for an angle,” Schonland noted. “If Alaska didn’t move on Hawaiian, what would stop somebody else moving on Hawaiian?”
The Alaska-Hawaiian deal is particularly noteworthy as it allows Alaska Airlines, primarily a domestic carrier with a focus on narrowbody planes, to expand its horizons. The acquisition provides Alaska access to Hawaiian’s widebody jets, a pool of experienced pilots, and an international network, creating opportunities for growth in long-haul international markets.
In an interview, Alaska CEO Ben Minicucci expressed confidence in the strategic move, describing it as “a great investment, a great step change” for the company. Minicucci emphasized that pursuing long-haul international routes independently would be both more expensive and significantly more challenging.