WEBVTT - Transportation Secretary Pete Buttigieg Talks Alaska-Hawaii Merger

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Shares of Alaska Airlines gaining in the pre market. This morning,

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<v Speaker 2>the Department of Transportation given the airline it's blessing to

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<v Speaker 2>close a one point nine bidding and dollar merger with

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<v Speaker 2>Hawaiian Airlines. Under the terms of the deal, Alaska and

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<v Speaker 2>Hawaiian must protect the value of loyalty programs and maintain

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<v Speaker 2>key routes as well. This is the first time the

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<v Speaker 2>DOT has required airlines to agree to binding, enforceable protections

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<v Speaker 2>before approving a merger. To discuss I'm ready please to

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<v Speaker 2>say that. Giving us some of his time this morning,

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<v Speaker 2>is the Transportation Secretary Pete Buddha. Jet's secretary Boodh Jedge.

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<v Speaker 2>Welcome to the program, sir. I want to start with

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<v Speaker 2>this deal and talk about some of the work you've

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<v Speaker 2>been doing on it and whether you think this could

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<v Speaker 2>serve as a model an example for future integration in

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<v Speaker 2>the industry.

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<v Speaker 3>Well, thank you, Yeah, we believe it really does represent

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<v Speaker 3>a new chapter in the way the DOT approaches both

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<v Speaker 3>consumer protection and competition. Has a lot of authorities, and

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<v Speaker 3>in my view that means a lot of responsibility when

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<v Speaker 3>it comes to competition. I think The Department of Justice's

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<v Speaker 3>role is well known and well understood. The Department of

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<v Speaker 3>Transportations role less so, partly because the Department has not

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<v Speaker 3>been very proactive over the last thirty years or so

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<v Speaker 3>as these airline mergers have come along. But we are

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<v Speaker 3>concerned with competition and we are also concerned with consumer protection,

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<v Speaker 3>and so when this deal came before us, we saw

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<v Speaker 3>that the Department of Justice did not intervene. We still

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<v Speaker 3>wanted to make sure that there were protections in place,

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<v Speaker 3>which really come into two categories. One of them has

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<v Speaker 3>to do with service itself, making sure that in places

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<v Speaker 3>like inter island service in Hawaii.

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<v Speaker 1>That nobody has made worse off because of this deal.

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<v Speaker 3>But secondly, consumer protections that are in line with what

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<v Speaker 3>we're trying to do more broadly for airline passengers, things

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<v Speaker 3>like making sure that there's family seating available. Alaska does

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<v Speaker 3>that that Hawaiian had not. We want to make sure

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<v Speaker 3>it's the better and not the worse of those two

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<v Speaker 3>and so they've committed to that. And then probably the

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<v Speaker 3>most new and I think one of the most important

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<v Speaker 3>things that we're doing, the rewards program and making sure

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<v Speaker 3>there are provisions related to that points and mile system too.

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<v Speaker 3>That really is breaking new ground for us as a department,

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<v Speaker 3>but it's increasingly a very very important part of the

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<v Speaker 3>customer experience, and it's looming larger and larger financially too,

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<v Speaker 3>So we wanted to make sure it was contemplated in

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<v Speaker 3>this agreement before we approved in the merger, the.

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<v Speaker 4>Secretary bout judge, could the DOT have done anything different

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<v Speaker 4>when it came then to Jet Blue and Spirit given

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<v Speaker 4>you're now likely going to be using this blueprint.

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<v Speaker 3>Well, of course, every proposed merger is different. It is

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<v Speaker 3>evaluated on its merits and the impacts that it could

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<v Speaker 3>have to competition. In that case, the DOJ took action

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<v Speaker 3>based on a real concern about what happened on many routes,

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<v Speaker 3>and our department took the step again something that our

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<v Speaker 3>department hadn't really typically done in the past, of aligning

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<v Speaker 3>ourselves with that and supporting that action. But yeah, I

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<v Speaker 3>do think there are cases where if it's not something

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<v Speaker 3>that just outright must be prevented by the analysis of

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<v Speaker 3>competition law, still is something that you need to make

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<v Speaker 3>sure it goes forward on terms that are consistent with

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<v Speaker 3>our responsibility to support the public interest and those public

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<v Speaker 3>interest determinations. A lot goes into that, a lot of

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<v Speaker 3>market analysis, a lot of legal analysis, but some total

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<v Speaker 3>of it for passengers should be a better passenger experience,

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<v Speaker 3>and some assurances that this will mean a level up

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<v Speaker 3>to the best rather than a level down to the

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<v Speaker 3>worst of two worlds.

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<v Speaker 1>When you have multiple airlines coming.

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<v Speaker 4>Together, Well, I guess I'm asking because Hawaiian Air really

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<v Speaker 4>needed this cash infusion the same way Spirit Air desperately

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<v Speaker 4>needs a cash infusion. So why is the administration willing

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<v Speaker 4>to let one country get the boost they one airline

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<v Speaker 4>get the boost they need, and not the other.

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<v Speaker 3>Well, again, there's a lot that goes into the competition analysis.

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<v Speaker 3>A lot of it has to do with the loss

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<v Speaker 3>of competition on key routes, evidence informing DOJ and US

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<v Speaker 3>in a separate but somewhat overlapping scope of analysis, what

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<v Speaker 3>happens to prices that consumers face and look, part of

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<v Speaker 3>why this is a concern is because of what's happened

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<v Speaker 3>over the years during the period when America went through

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<v Speaker 3>the debate over deregulation, which which led to our modern

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<v Speaker 3>airline system. A lot of the people involved in that

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<v Speaker 3>policy were confidently predicting then in the future there would

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<v Speaker 3>be about one hundred airlines in the United States. Instead,

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<v Speaker 3>we've seen merger after merger, lots of consolidation, and so

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<v Speaker 3>it's very important to take a very hard look anytime

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<v Speaker 3>there's a proposal to go from more airlines to fewer

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<v Speaker 3>airlines in a country that already has so few.

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<v Speaker 4>Secretary, we're talking about fewer airlines, etc.

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<v Speaker 1>We're having a question about whether we're going to have

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<v Speaker 1>fewer planes.

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<v Speaker 4>What's the threshold for the United States government to subsidize

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<v Speaker 4>Boeing at a time are there real questions about its

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<v Speaker 4>ability to continue to invest and its workers are striking.

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<v Speaker 2>Well.

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<v Speaker 3>Boeing has historically been an aerospace leader. Right now encountering

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<v Speaker 3>a number of issues related to quality and safety that

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<v Speaker 3>the FAA has required them to demonstrate how they're going

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<v Speaker 3>to address.

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<v Speaker 1>And as you mentioned labor issues as well.

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<v Speaker 3>If you look at how Boeing competed so well in

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<v Speaker 3>the past, it had to do with a focus on

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<v Speaker 3>equality and on safety, and I believe that's absolutely compatible

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<v Speaker 3>with doing right by workers and with Boeing's place in

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<v Speaker 3>America's economy. But again, the most important thing, certainly from

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<v Speaker 3>a Department of Transportation. Perspective is that the safety and

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<v Speaker 3>the quality are there because everything else sort of gets

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<v Speaker 3>multiplied by zero. If you have those kinds of problems

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<v Speaker 3>that can shake, sure, they can shake the market, but

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<v Speaker 3>the most important thing is the safety of the traveling public.

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<v Speaker 2>Secretary, appreciate your time this morning. Hopefully we can have

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<v Speaker 2>a longer conversation next time on some big, big issues,

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<v Speaker 2>Thank you, sir, Secretary. People to judge on the latest

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<v Speaker 2>in the airline industry, and just a little bit of

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<v Speaker 2>the end there.

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<v Speaker 1>Lisa on Bowick