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Alaska Air gets go-ahead to buy Virgin America

December 12, 2016 Headline News No Comments Email Email

egtmedia59Alaska Air will take over Virgin America, having gained approval from the US Department of Justice, which clears the way for the USD 2.6 billion purchase to proceed and create America’s fifth-biggest airline.

The deal will enhance Seattle-based Alaska’s operation on the US West Coast and let it compete more effectively with larger airlines.

There were a couple of provisos.

“The proposed settlement prohibits Alaska and American [Airlines] from codesharing on routes where Virgin and American today and on routes where Alaska would otherwise be likely to launch new service in competition with American following the merger,” the Department of Justice said in a statement.

According to the Dallas Morning News, there are 45 such markets.

Alaska does not have to give up any airport gates or other assets as part of the merger.

The Department of Justice said limiting Alaska’s codeshare relationship would give Alaska “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,” Renata Hesse, acting assistant attorney general of the Justice Department’s Antitrust Division, said in a statement.

Written by Peter Needham

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