Alaska Airlines closed its acquisition of Hawaiian Airlines nearly 18 months ago, but a lawsuit is still tryingto unwind the deal – it was revived on appeala nd the plaintiffs are now seeking a restraining order that would preserve Hawaiian as a standalone airline.
Yoshimoto et al. v. Alaska Airlines, Inc., et al. is a private Clayton Act suit filed by passengers that initially tried to stop Alaska Air Group’s acquisition of Hawaiian.
The deal closed September 18, 2024 following DOT approval in exchange for several commitments that run for six years.
- Maintain minimum capacity on each route where the two airlines overlapped with nonstop service and where there was only one or fewer other competitors.
- Maintain existing interline agreements with other U.S. airlines and on existing terms.
- Not to enter into agreements at Honolulu airport that exclude or discriminate against new entrants or smaller competitors.
- Improve Hawaiian’s Customer Service Plan to match Alaska’s more generous policies on things like compensation, rebooking, and family seating.
- Better benefits for military families like free checked bags and change waivers.
- Maintain Hawaiian islands capacity.
- Frequent flyer program commitments.
In the original complaint, the plaintiffs sought to block the merger. Now they want the deal unwound, with Alaska gaining “over 40% capacity share for Hawai‘i–U.S. mainland routes.”
The Clayton Act allows for private injunctive relief when a merger may substantial lessen competition, tending to create a monopoly, and the suit assets this in Hawaii – U.S. mainland, interisland Hawaii, and Hawaii – Pacific. As a result, they claim airfares will rise.
Alaska moved to dismiss on standing, failure to plead a plausible relevant market, failure to plausibly allege anticompetitive effects even in the proposed markets. The district court dismissed for lack of Article III standing, characterizing the lawsuit’s allegations as harms to the general public and not specific, concrete injuries to individual plaintiffs.
However, the Ninth Circuit Court of Appeals held that the plaintiffs didn’t even allege an intention to purchase an airline ticket in the future – but the district court should have let the plaintiffs cure this defect, refiling with specific travel plans. So now they can just say ‘I wanted to buy a non-stop Honolulu – Austin flight but Alaska killed that route’? It was the first one they went to in order to grab a widebody aircraft.
- Plaintiffs now get to go back and document real changes to fares and routes after the merger. They’ll argue that integration is making the merger increasingly irreversible, so without immediate relief the court cannot restore Hawaiian as an independent competitor later.
- Alaska will argue that changes to fares, routes, and other policies are ordinary course of business for an airline, not reduced competition from the merger, and the specific commitments made to the federal government mitigate competitive concerns. Besides, you don’t impose a restraining order when monetary damanges can compensate for harms. And divestiture wouldn’t even help – Hawaiian was a troubled carrier without the merger.
Under the Ninth Circuit ruling, plaintiffs should be able to gain standing. But they have to demonstrate a real link between higher prices and reduced competition from the merger (not just that they paid more for a ticket). And Alaska has already made substantive commitments to the federal government that address the most plausible concerns in the case. I see almost no way a court orders a restraining order blocking further integration or unwinding integration. But they’re in a better position to extract a cash settlement (a ‘strike suit’ or shakedown).
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