Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Official Canadian airline industry competition study cleared for takeoff, (Jul 30, 2024)
Organizations Mentioned:Air Canada | Alaska Air Group | Alaska Air Group, Inc. | Alaska Airlines, Inc. | Hawaiian Airlines, Inc. | Hawaiian Holdings, Inc. | Marlin Acquisition Corp.
By Kenneth H. Ryesky, M.B.A., J.D.
Across the border, the proposed merger between parent holding companies of Alaska Airlines and Hawaiian Airlines still awaits clearance before becoming airborne.
The Canadian Competition Bureau (CBC) has completed its preparations and is now launching a market study of competition in the Canadian domestic passenger airline industry. The Competition Bureau became concerned for various reasons, including possible lingering effects from the COVID-19 pandemic, and notable levels of flight delays and cancellations. Meanwhile, the Department of Justice Antitrust Division has been scrutinizing the merger agreement between Alaska Air Group, Inc. and Hawaiian Holdings, Inc.
Canadian airline industry. The country of Canada covers vast geographic territory, such that a healthy passenger airline industry is vital to its economy and legal system. The Canadian market for domestic air travel is highly concentrated, with Air Canada and WestJet accounting for approximately 95 percent of the industry revenue; the February 2024 cessation of operations by Lynx Air has made the domestic airline industry an effective duopoly. Air Canada and WestJet have scaled back services in some remote areas of Canada, resulting in increased domestic air fares and heightened congestion; this stands in contrast to a more robust and competitive market for the more populated regions of Canada, as well as international air travel to and from Canada, in which many passenger carriers compete and air fares have remained stable or have decreased.
The fare increases and service cutbacks in the domestic air travel market have been accompanied by increased flight delays and cancellations, and a greater number of consumer complaints filed.
These conditions have led to a desire on the part of diverse Canadian governmental authorities to gain a more complete factual knowledge of Canada's domestic passenger air travel industry. On May 27, 2024, CBC published notice of a draft market study requesting public comments. The comments were considered and analyzed, and the CBC's final notice of a market study was approved on July 26, 2024. The next business day, Monday, July 29, 2024, the market study was officially launched.
The CBC's study will examine (1) competition in the Canadian airline industry; (2) barriers to market entry; and (3) consumer choice impediments. The study aims to address how policymakers in various governmental offices can facilitate expansion and growth of passenger services, especially in underserved regions, and also how consumers can be assisted in their choices of air travel services. The CBC has targeted June 2025 for publication of its final report from the study.
Alaska Airlines-Hawaiian Airlines merger. The Alaska Air Group, Inc. (AAG) is the parent holding company of air carrier Alaska Airlines, Inc. Hawaiian Holdings, Inc. (HH) is the parent holding company of air carrier Hawaiian Airlines, Inc. On December 2, 2023, AAG and HH agreed that AAG's wholly-owned subsidiary Marlin Acquisition Corp. would be absorbed via merger into HH, resulting in HH being a wholly-owned subsidiary of AAG and a corporate sister of Alaska Airlines, Inc. The deal received shareholder approval. The Antitrust Division requested information from the companies in order to review the proposed merger; this triggered a review period with an agreement whereby AAG and HH would hold in abeyance the consummation of the merger until August 5, 2024. On July 29, 2024, AAG and HH acceded to a Justice Department request to further delay the merger until August 14, 2024; AAG reported this extension to the SEC the next day, July 30, 2024. As late as July 30, 2024, the Justice Department reportedly remains undecided as to whether it will or will not oppose the consummation of the proposed merger.
Companies: Alaska Airlines, Inc.; Alaska Air Group, Inc.; Hawaiian Holdings, Inc.; Hawaiian Airlines, Inc.
News: Antitrust AcquisitionsMergers