Alaska Airlines has reportedly clinched a deal to purchase Virgin America, snatching the opportunity away from JetBlue.
The Wall Street Journal reports that “people familiar with the situation” say that there’s no guarantee that Alaska will get Virgin, but if it does, Alaska Air is expected to pay around $2 billion for the Burlingame-based carrier– a price inflated by all the recent speculation that Virgin was actually up for grabs. (Prior to the kerfuffle about the sale, Virgin America was valued at around $1.5 billion.)
If Virgin and Alaska Air combined, it would create the nation’s fifth largest carrer– a title currently held by JetBlue.
I’m writing this post having just returned from the sunny slopes of Northstar at Lake Tahoe and my mind is of course bursting with speculation and possibilities…. here’s what I’m thinking. I’m curious to know what YOU are thinking, too, so read on and leave your comments below.
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-If Alaska Airlines buys Virgin America, which name would survive? If Alaska Airlines wants to be a national carrier, it will likely need to shed its regional name, right? But would Alaska be willing to pay whatever fee Richard Branson wants for it to carry the Virgin name? And speaking of regional-sounding names, Southwest Airlines sounds regional, but it has succeeded in becoming a national carrier, so who knows?
-What’s going to happen to Virgin’s hub at the fab Terminal 2 in San Francisco? It’s currently bursting at the seams so I’m not sure if Alaska’s operations are going to fit in there. But since there’s now the behind-security passageway between Terminal 1 C (Delta) and Terminal 2, Alaska could squeeze in there? Combined, the two carriers would become SFO’s second largest carrier, with 15% of all flights. (United will remain firmly in #1 position.)
-What’s going to happen with JetBlue? Will it just walk away from the deal… or will it come back with a higher bid (just like what’s been happening with Starwood/Marriott/Anbang). Who knows? But if the deal is done, the WSJ says that we could hear about it as soon as Monday. Wouldn’t it be interesting if Alaska Air bought BOTH Virgin and JetBlue? It could happen! Or…maybe Delta could swoop in at the last minute with a sweeter offer? And speaking of Delta, what’s going to happen with Delta’s relationship with Virgin Atlantic and Richard Branson if Alaska Air butts in?
-Frequent Flyer programs. Alaska Airlines has resisted following the pack of major airlines down the path of devaluation. As a matter of fact, it remains the largest airline with an intact mileage-based program versus the new-fangled spend-based programs of the majors. Virgin America’s spending-based Elevate program has never been a huge draw, so maybe integration with Alaska’s more popular and lucrative Mileage Plan would be a good idea.
–Hawaii flights could become more expensive. Alaska and Virgin have been competing heavily on fares to the islands ever since Virgin launched Hawaii nonstops last December. One less carrier in the market could mean higher fares.
-How will the two carriers integrate their fleets? Alaska Airlines is all Boeing. Virgin is all Airbus. While other airlines have both types in their fleet, it service issues could become more unwieldy/complicated.
-What’s going to happen the the hip fun culture that Virgin America has created? Will it be washed away in a take over? Alaska Airlines runs a great operation, and has similarly built up a loyal following with very good service, new planes and good on-time performance. Which culture will come out on top?
Okay. That’s it from me now. Time for some apres-ski time in sunny Truckee. Please share your speculations and comments below! We’ll regroup on Monday!
NOTE: Be sure to click here to see all recent TravelSkills posts about: Should I tip my Uber driver? + Boeing 747 nearing its end? + Bargain hunters travel guide for 2016 + World’s best airline lounge? + Fares to Europe tumble