Pago Pago, AMERICAN SAMOA — The proposed $1.9 billion merger between Alaska Airlines and Hawaiian Airlines has become a focal point of a rigorous review by the U.S. Department of Justice (DOJ) regarding its impact on air service to American Samoa.

The process, initiated after the merger was announced on December 3, 2023, has been marked by extensions and intense scrutiny, reflecting the broader antitrust concerns that have defined the Biden administration's approach to large-scale corporate consolidations.

The DOJ’s review began in early 2024 with an initial deadline set for August 5, 2024. As the deadline approached, concerns about the merger’s potential to significantly alter the competitive landscape, particularly in Hawaii and American Samoa, led the DOJ to extend its review by ten days, moving the decision date to August 15.

As the new deadline loomed, the DOJ requested one final extension, pushing the decision date to August 16, 2024. These extensions indicate the DOJ’s careful consideration of the merger's implications and the possible outcomes, which range from outright approval to the imposition of conditions or even blocking the merger altogether.

A central issue in the DOJ's review is market concentration.

The merger would result in Alaska Airlines controlling more than half of the flights to Hawaii, raising significant concerns about reduced competition.

For regions like American Samoa, where Hawaiian Airlines currently operates the only direct flights from Honolulu, the potential for a monopoly is particularly alarming. Reduced competition in such markets could lead to higher fares and fewer service options, which would directly impact consumers who rely on these routes.

The Biden administration's DOJ has made consumer protection a key priority, emphasizing the dangers of reduced competition.

This stance has already been demonstrated in its successful challenge to the JetBlue-Spirit merger earlier in 2024. The Alaska-Hawaiian merger faces similar scrutiny, with the DOJ particularly focused on whether it would result in fewer flight options, decreased service quality, or increased prices.

The overarching concern is whether this merger could harm consumers in the long term by consolidating too much power within a single airline.

Complicating matters is the ongoing litigation related to the merger.

Although a lawsuit challenging the merger on the grounds of potential harm to consumers and the Hawaiian economy was dismissed, the concerns it raised still linger. These legal challenges underscore the broader anxiety about the merger's potential consequences.

Depending on the DOJ's final decision, further litigation could emerge, especially if the merger is approved without sufficient safeguards.

The outcome of the DOJ’s review will set a significant precedent for future airline mergers. If the merger is approved with conditions or blocked, it will reinforce the administration’s hardline stance on antitrust enforcement. This could deter other airlines from pursuing similar deals or encourage them to address competition concerns proactively before proposing mergers.

The merger’s impact on air service to American Samoa is a critical concern.

Currently, Hawaiian Airlines is the only carrier providing direct flights between Honolulu and American Samoa, making the territory highly dependent on this route. If the merger is approved, the increased resources from Alaska Airlines could potentially improve service reliability. However, there is also a risk that the merger could lead to reduced service and higher prices due to decreased competition.

The DOJ’s decision will therefore have significant implications not just for the broader market but also for the residents and businesses in American Samoa who rely on affordable and consistent air travel.

As the DOJ’s final decision approaches, expected by (today) August 16, 2024, the stakes are high for all parties involved. The ruling will not only determine the future of this merger but will also influence the broader landscape of the U.S. airline industry, particularly for regions like American Samoa that depend on reliable air service for their economic and social connectivity.

BACKGROUND

Hawaiian Airlines (HA) being the only airline serving American Samoa to the U.S. has long been one of the issues that local residents have had about the HNL-PPG-HNL route, mainly pointing to high ticket prices, especially when compared to ticket prices to destinations of comparable distances from Honolulu (HNL) to the US mainland.

Its normal schedule of only 2 flights a week is also another complaint about HA’s route service, with the American Samoa Government citing the schedule as a barrier to developing the territory’s tourism/ economy.

ASG in a bid to resolve such issues, i.e cheaper fare and more frequent flights in & out of the territory, has consistently throughout the past years applied to the US Department of Transportation (USDOT) for exemption from cabotage rules.

The rules prohibit foreign aircraft from one country traveling into another country and picking up foreign nationals or citizens of the other foreign country and providing transportation to and between points within that foreign country.

USDOT has continued to uphold cabotage rules pertaining to American Samoa.

There have also been attempts to have another US airline fly to the territory to compete with Hawaiian Air and increase flight frequency into the territory, i.e. Aloha Airlines was the last one to try, but failed. Passenger load was cited by some for the failure, as not supporting two airlines, but nothing officially was stated.

A local airline, South Pacific Island Airways (SPIA), founded in 1973, by American Samoa resident US born George Wray attempted to also compete in the market, but was grounded in 1984, and operations ceased in 1987 due to financial issues.

Prior to SPIA, Pan American Airlines and Continental Airlines had also entered the market, but left.

Hawaiian Airlines launched regularly scheduled non-stop service between Honolulu and Pago Pago in October 1984 and continues to serve the local market.