When Alaska Airlines finalized its acquisition of Virgin America, most observers assumed that the latter carrier’s identity would be absorbed into the purchaser’s, which has happened with other U.S. airline mergers. But that might not be the case.
Alaska CEO Brad Tilden, speaking in New York this week and following up with an Associated Press interview, said his company is “looking at” the possibility of maintaining the separate brands of the two airlines, although no decision has been made yet.
Tilden told the AP that he is “taking a good look at running two brands for some period of time, perhaps forever.”
“We believe in the power of the Virgin America brand and we don’t want to lose all that loyalty and revenue that exists today,” he said.
Tilden noted that while the acquiring carrier in U.S. mergers traditionally extends its own brand to the merger partner, that has not been the case in Europe – e.g., Air France and KLM maintain their separate identities even though they are a single company, and the Lufthansa Group has maintained the previous brands of its acquisitions, including Swiss and Austrian Airlines.
In any case, Alaska and Virgin have very distinct products, and trying to decide which parts to keep and which ones to discard in a single merged brand might be a real problem, especially given the loyalty of Virgin’s flyers to its unique characteristics, like its mood lighting and the ability to order meals from seatback screens.
The two airlines are currently undergoing the usual investigation by the Justice Department’s Antitrust Division prior to government approval of the merger, and shareholders must give it their OK as well. Tilden said he expects the regulatory approval process to be completed within the next few months.
Readers: Do you think Alaska should keep Virgin America as a separate brand? If not, which parts of the Virgin experience should Alaska adopt for the combined airline?
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