What Happens During an Acquisition
When an airline acquisition occurs, the buying airline makes an offer to purchase the selling airline. Both companies negotiate the price and terms of the deal. Once they agree, regulators like the Department of Transportation review the acquisition to make sure it won't reduce competition or harm consumers. If approved, the purchase officially closes and the buying airline takes ownership of the sold airline's planes, employees, routes, landing rights, and customer loyalty programs.
Why Airlines Are Acquired
Airlines acquire other airlines for several reasons. A larger airline might want to expand into new cities or countries by gaining the smaller airline's flight routes. They may want more airplanes to carry more passengers. Sometimes an airline buys another airline to reduce competition or to gain valuable landing slots at busy airports. A strong airline might also purchase a struggling airline to prevent it from failing entirely.
What Happens to Employees and Customers
During an acquisition, the buying airline usually keeps most or all of the employees from the purchased airline, though some jobs may change or be eliminated. Customers of the acquired airline get absorbed into the larger airline's system. Their frequent flyer miles, ticket bookings, and reservations are typically transferred to the acquiring airline's system. Flights may be combined, routes may change, and customer service procedures may be standardized across both airlines.
Government Approval Process
Before an airline acquisition can be finalized, government regulators must approve it. In the United States, the Department of Transportation and Department of Justice review the deal. They examine whether the acquisition will keep prices fair for customers and prevent one airline from having too much power in certain markets. If regulators believe the acquisition would hurt consumers, they can reject it or require the airline to sell off certain routes or assets.
Recent Airline Acquisitions
Notable airline acquisitions include Southwest Airlines acquiring AirTran Airways in 2011 and Alaska Air Group acquiring Virgin America in 2016. These deals created larger airlines with more routes and destinations. Some acquisitions have been blocked or modified by regulators who worried about reduced competition, such as attempted mergers between major carriers that would have combined too much market power.
Risks and Challenges
Airline acquisitions can be risky and difficult. The buying airline may struggle to integrate the purchased airline's different systems, schedules, and operating procedures. Merging two airline cultures and management teams can cause problems. If the acquisition is not well-managed, customer service may suffer, and the combined airline may lose some customers to competitors. Additionally, unexpected costs or problems discovered after the deal closes can make the acquisition less profitable than expected. 
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