Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Shares of Alaska Airlines gaining in the pre market. This morning,
Speaker 2: the Department of Transportation given the airline it's blessing to
Speaker 2: close a one point nine bidding and dollar merger with
Speaker 2: Hawaiian Airlines. Under the terms of the deal, Alaska and
Speaker 2: Hawaiian must protect the value of loyalty programs and maintain
Speaker 2: key routes as well. This is the first time the
Speaker 2: DOT has required airlines to agree to binding, enforceable protections
Speaker 2: before approving a merger. To discuss I'm ready please to
Speaker 2: say that. Giving us some of his time this morning,
Speaker 2: is the Transportation Secretary Pete Buddha. Jet's secretary Boodh Jedge.
Speaker 2: Welcome to the program, sir. I want to start with
Speaker 2: this deal and talk about some of the work you've
Speaker 2: been doing on it and whether you think this could
Speaker 2: serve as a model an example for future integration in
Speaker 2: the industry.
Speaker 3: Well, thank you, Yeah, we believe it really does represent
Speaker 3: a new chapter in the way the DOT approaches both
Speaker 3: consumer protection and competition. Has a lot of authorities, and
Speaker 3: in my view that means a lot of responsibility when
Speaker 3: it comes to competition. I think The Department of Justice's
Speaker 3: role is well known and well understood. The Department of
Speaker 3: Transportations role less so, partly because the Department has not
Speaker 3: been very proactive over the last thirty years or so
Speaker 3: as these airline mergers have come along. But we are
Speaker 3: concerned with competition and we are also concerned with consumer protection,
Speaker 3: and so when this deal came before us, we saw
Speaker 3: that the Department of Justice did not intervene. We still
Speaker 3: wanted to make sure that there were protections in place,
Speaker 3: which really come into two categories. One of them has
Speaker 3: to do with service itself, making sure that in places
Speaker 3: like inter island service in Hawaii.
Speaker 1: That nobody has made worse off because of this deal.
Speaker 3: But secondly, consumer protections that are in line with what
Speaker 3: we're trying to do more broadly for airline passengers, things
Speaker 3: like making sure that there's family seating available. Alaska does
Speaker 3: that that Hawaiian had not. We want to make sure
Speaker 3: it's the better and not the worse of those two
Speaker 3: and so they've committed to that. And then probably the
Speaker 3: most new and I think one of the most important
Speaker 3: things that we're doing, the rewards program and making sure
Speaker 3: there are provisions related to that points and mile system too.
Speaker 3: That really is breaking new ground for us as a department,
Speaker 3: but it's increasingly a very very important part of the
Speaker 3: customer experience, and it's looming larger and larger financially too,
Speaker 3: So we wanted to make sure it was contemplated in
Speaker 3: this agreement before we approved in the merger, the.
Speaker 4: Secretary bout judge, could the DOT have done anything different
Speaker 4: when it came then to Jet Blue and Spirit given
Speaker 4: you're now likely going to be using this blueprint.
Speaker 3: Well, of course, every proposed merger is different. It is
Speaker 3: evaluated on its merits and the impacts that it could
Speaker 3: have to competition. In that case, the DOJ took action
Speaker 3: based on a real concern about what happened on many routes,
Speaker 3: and our department took the step again something that our
Speaker 3: department hadn't really typically done in the past, of aligning
Speaker 3: ourselves with that and supporting that action. But yeah, I
Speaker 3: do think there are cases where if it's not something
Speaker 3: that just outright must be prevented by the analysis of
Speaker 3: competition law, still is something that you need to make
Speaker 3: sure it goes forward on terms that are consistent with
Speaker 3: our responsibility to support the public interest and those public
Speaker 3: interest determinations. A lot goes into that, a lot of
Speaker 3: market analysis, a lot of legal analysis, but some total
Speaker 3: of it for passengers should be a better passenger experience,
Speaker 3: and some assurances that this will mean a level up
Speaker 3: to the best rather than a level down to the
Speaker 3: worst of two worlds.
Speaker 1: When you have multiple airlines coming.
Speaker 4: Together, Well, I guess I'm asking because Hawaiian Air really
Speaker 4: needed this cash infusion the same way Spirit Air desperately
Speaker 4: needs a cash infusion. So why is the administration willing
Speaker 4: to let one country get the boost they one airline
Speaker 4: get the boost they need, and not the other.
Speaker 3: Well, again, there's a lot that goes into the competition analysis.
Speaker 3: A lot of it has to do with the loss
Speaker 3: of competition on key routes, evidence informing DOJ and US
Speaker 3: in a separate but somewhat overlapping scope of analysis, what
Speaker 3: happens to prices that consumers face and look, part of
Speaker 3: why this is a concern is because of what's happened
Speaker 3: over the years during the period when America went through
Speaker 3: the debate over deregulation, which which led to our modern
Speaker 3: airline system. A lot of the people involved in that
Speaker 3: policy were confidently predicting then in the future there would
Speaker 3: be about one hundred airlines in the United States. Instead,
Speaker 3: we've seen merger after merger, lots of consolidation, and so
Speaker 3: it's very important to take a very hard look anytime
Speaker 3: there's a proposal to go from more airlines to fewer
Speaker 3: airlines in a country that already has so few.
Speaker 4: Secretary, we're talking about fewer airlines, etc.
Speaker 1: We're having a question about whether we're going to have
Speaker 1: fewer planes.
Speaker 4: What's the threshold for the United States government to subsidize
Speaker 4: Boeing at a time are there real questions about its
Speaker 4: ability to continue to invest and its workers are striking.
Speaker 2: Well.
Speaker 3: Boeing has historically been an aerospace leader. Right now encountering
Speaker 3: a number of issues related to quality and safety that
Speaker 3: the FAA has required them to demonstrate how they're going
Speaker 3: to address.
Speaker 1: And as you mentioned labor issues as well.
Speaker 3: If you look at how Boeing competed so well in
Speaker 3: the past, it had to do with a focus on
Speaker 3: equality and on safety, and I believe that's absolutely compatible
Speaker 3: with doing right by workers and with Boeing's place in
Speaker 3: America's economy. But again, the most important thing, certainly from
Speaker 3: a Department of Transportation. Perspective is that the safety and
Speaker 3: the quality are there because everything else sort of gets
Speaker 3: multiplied by zero. If you have those kinds of problems
Speaker 3: that can shake, sure, they can shake the market, but
Speaker 3: the most important thing is the safety of the traveling public.
Speaker 2: Secretary, appreciate your time this morning. Hopefully we can have
Speaker 2: a longer conversation next time on some big, big issues,
Speaker 2: Thank you, sir, Secretary. People to judge on the latest
Speaker 2: in the airline industry, and just a little bit of
Speaker 2: the end there.
Speaker 1: Lisa on Bowick