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The Honolulu Advertiser
Posted on: Thursday, December 20, 2001

Aloha-Hawaiian | End of a 55-year rivalry
Odds favor approval of carriers' merger

By Frank Cho
Advertiser Staff Writer

Hawaiian and Aloha airlines' proposed merger will face intense scrutiny by state and federal regulators for possible antitrust violations, a review that could take months before a final ruling.

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Some fear higher fares, fewer flights
Hawai'i's airlines at a glance
New boss is an airline turnaround expert
Still, observers and analysts said yesterday that despite the merger's creation of a monopoly interisland air travel market, chances of its approval appear good because of the relatively small size of the deal, the relatively relaxed attitude the Bush administration has taken toward antitrust issues, and the fact the entire airline industry is struggling to stay afloat.

Attorneys for the airlines met with the state attorney general's antitrust office yesterday morning to outline the planned merger, and state antitrust lawyers said they expect to take several months reviewing its potential impact on consumers before making a decision.

"We met with them already, but it's just too early to tell how long this investigation will take," said Michael Meaney, state deputy attorney general.

Yesterday, Gov. Ben Cayetano said the state would support the merger.

State and federal laws give the Justice Department and the state attorney general's office the authority to block the merger between the airlines.

State regulators said they could turn down the proposed merger, impose restrictions on the deal or even demand that Aloha find another buyer rather than allow it to merge with rival Hawaiian.

But the airlines said they are confident that they can win regulatory approvals once they present their case.

"I think we have really good points to make with the attorney general's office. We are very confident that they will look at those and agree with them," said Glenn Zander, Aloha's president and chief executive officer.

Zander said forcing Aloha to find a buyer would not make sense in the wake of the Sept. 11 terrorist attacks that have left the nation's airlines reeling from the downturn in travel.

"You look around the airline industry right now, airlines are not buyers of assets. Airlines throughout the industry are in deep trouble," Zander said. "The likelihood of airlines buying other airlines is remote, that is why in this case we are talking about a merger because a merger makes sense. I don't think you could find another carrier in the United States that is talking about growth."

Morten S. Beyer, an aviation and airline consultant and publisher of the International Aviation Oracle newsletter, said that when an airline is failing, regulators almost always permit these kind of mergers to save jobs and the airline.

"If the state politicians are supporting it, then it's almost a done deal because I think that is going to have a lot of influence in getting antitrust approval," Beyer said.

Advertiser Staff Writer John Duchemin contributed to this report.

Reach Frank Cho at 525-8088, or at fcho@honoluluadvertiser.com