A few weeks ago, Alaska Airlines and Virgin America said they were extending their anticipated date for winning Justice Department merger approval from late September to October 17. But the latter date has come and gone with no further word. So what’s going on?
According to media reports, the airlines are still involved in discussions with the Justice Department’s antitrust specialists. No one seems to think that DOJ will try to block the merger (according to TheStreet.com), but it may seek to impose some conditions on its approval.
Reuters, citing sources close to the talks, said that DOJ might require Alaska to terminate one or more of its existing code-share partnerships with other domestic airlines in order to gain antitrust approval, or at least to reduce the scope of that code-sharing to fewer routes.
Alaska currently has domestic code-sharing partnerships with Delta and American. Given the heated ongoing competitive battle between Alaska and Delta at Seattle, it’s unlikely that Alaska would be too upset about ending those code-shares. American might be another matter; last spring, Alaska and AA implemented a substantial expansion of code-sharing on domestic routes.
According to Reuters, JP Morgan analysts estimated that the Delta and American code-sharing partnerships bring about $350 million in annual revenues to Alaska.
Meanwhile, Sir Richard Branson told a Dallas TV station this week that if Alaska ultimately decides to fold Virgin America into the Alaska brand, he is likely to start up another new carrier with the Virgin name.
“I hope the Virgin America brand never goes away,” Branson said in an interview Dallas’ Channel 8 WFAA. “If Alaska decides to drop the brand – because we didn’t actually want the sale to happen – we’ll start again and Virgin America will very much back here.”
How likely is it that the Virgin American brand will survive long term? We’d love to hear your thoughts.
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