Justice Department clears Alaska Air Group’s acquisition of Virgin America

The Department of Justice announced Tuesday that it will require Alaska Air Group Inc. to significantly reduce the scope of its codeshare agreement with American Airlines, the world’s largest airline, in order for Alaska to complete its $4 billion acquisition of Virgin America Inc, the DOJ said in a statement.

The department said that these modifications will ensure that Alaska will have the incentive to vigorously compete with American as Virgin does today.

“Smaller airlines, such as Alaska and Virgin, provide a critical competitive check on the larger carriers,” said Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division.  “Although this merger offers hope that a strengthened Alaska can be an even stronger competitor than before, because of Alaska’s extensive codeshare agreement with the world’s largest airline, the merger threatened to blunt important competition and reduce choices for consumers.  Today’s settlement ensures that Alaska has the incentive to take the fight to American and use Virgin’s assets to grow its network in ways that benefit competition and consumers.”

The Justice Department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the merger, along with a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit, DOJ staff said in a statement.

The merger of Alaska and Virgin would combine the nation’s sixth- and ninth-largest airlines, respectively, to create the fifth-largest U.S. carrier.

“We couldn’t be more excited about receiving DOJ clearance for our merger with Virgin America,” said Alaska Air Group Chairman and CEO Brad Tilden. “With this combination now cleared for take-off, we’re thrilled to bring these two companies together and start delivering our low fares and great service to an even larger group of customers.”