Turns out Alaska/Hawaiian have some strings attached. They have to maintain all of the interisland flights as well as existing Hawaii to mainland routes. Also have to give up some gates in HNL to let competitors grow there.

"DOT conditions for the merger include that Alaska and Hawaiian protect the value of rewards programs, maintain existing service on key Hawaiian routes to the continental United States and inter-island, preserve support for rural service, ensure competitive access at the Honolulu hub airport, and and lower costs for military families."