#300 What’s on the Radar? Legal and Regulatory Analysis of Airline Mergers in the U.S.
Nov 18, 2024
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Courtney Dyer, an antitrust partner at O'Melveny & Myers LLP, and David Heffernan, Chair of Transportation & Trade at Cozen O'Connor P.C., delve into the intricate world of U.S. airline mergers. They discuss the role of various regulatory bodies in overseeing these transactions, with a spotlight on recent cases like the Alaska Airlines and Hawaiian Airlines merger. The conversation covers market definitions, competitive dynamics, and shares amusing personal anecdotes, enhancing the understanding of this complex industry.
The regulatory review process for airline mergers involves crucial roles from the DOJ and state attorneys general to ensure competitive market conditions.
Recent mergers, like Alaska's acquisition of Hawaiian Airlines, highlight the evolving evaluation criteria focusing on consumer harm and route overlap.
Deep dives
Overview of Recent Airline Mergers
Airline mergers have gained significant attention recently, particularly with the acquisition of Hawaii Airlines by Alaska Airlines and the blocked merger between JetBlue and Spirit. The discussion provides insight into the regulatory review process for airline mergers, outlining the key roles of various agencies involved, primarily the Department of Justice (DOJ) and state attorneys general. Mergers historically tend to follow patterns, with a noticeable wave of consolidations from 2009 to 2013 that shaped the current airline landscape, leading to a few major carriers dominating the market today. The review process considers the competitive impacts such mergers could have, particularly in the context of consumer options and overall market health.
The Role of Antitrust Regulations
The evaluation criteria for airline mergers have evolved over the years, with the DOJ assessing potential consumer harm and competition levels when reviewing proposed deals. Courts reportedly have leaned towards maintaining or enhancing competition, particularly in previously concentrated markets identified during earlier merger waves. Specific mergers may face obstacles if the DOJ identifies significant overlap in service routes, as seen in the detailed analysis of the Alaska-Hawaiian and JetBlue-Spirit transactions. The DOJ emphasizes the importance of ensuring competitive options remain available to consumers throughout these regulatory processes.
Impact of State Agencies in Merger Reviews
State attorneys general play a critical role in the regulatory review of airline mergers, often collaborating with the DOJ to assess the implications for local travelers and market dynamics. In the Alaska-Hawaiian merger, states like Washington, Oregon, California, and Hawaii were instrumental in ensuring community interests were represented, while also monitoring competition levels. Their involvement can vary, from actively participating in discussions to listening in on depositions to ensure that the needs of local constituents are met. Ongoing commitments from airlines to maintain service levels, particularly for remote communities, are essential to securing state-level approval.
Future of Airline Mergers and Regulatory Scrutiny
The landscape of airline mergers appears set for continued scrutiny, especially with evolving agency roles and regulatory frameworks. The Department of Transportation (DOT) has been observed to adopt a more involved stance in reviewing airline mergers, potentially leading to increased regulatory oversight. Commitments made by carriers, like Alaska's promises to preserve the Hawaiian Airlines brand and maintain job levels in Hawaii, impact the assessment process significantly. Whether this heightened supervision will persist or revert to a more limited approach remains a topic of debate among legal experts and industry observers.
The U.S. passenger airlines have seen waves of active mergers and acquisitions including in 2009 through 2013 and again recently since 2023. But who is involved in the legal and regulatory reviews of an airline merger? Courtney Dyer of O'Melveny and David Heffernan of Cozen O'Connor, both with extensive experiences guiding airlines through regulatory processes, speak to Kelsey Paine and Anora Wang about their deal experiences and insights. Listen to learn about origin-destination pair, route overlap, recent matters including the Alaska Airlines' acquisition of Hawaiian Airlines completed in September 2024, and beyond.
With special guests:
Courtney Dyer, Partner, O'Melveny & Myers LLP and David Heffernan, Chair of Transportation & Trade, Cozen O'Connor P.C.
