Can Virgin America Remain the Darling of Domestic Flyers?
Photo by Paul Thompson
Since Virgin America first took to the skies in 2007, the carrier has been beloved by its loyal contingent of travelers. With its trendy “mood lighting,” generous leg room, and seat-back entertainment options, there is certainly a lot to like — but will its merger with Alaska Airlines put an end to it all?
Virgin America is the brainchild of British media mogul and entrepreneur Sir Richard Branson. He launched the airline to give American travelers a newer, friendlier option in the skies. But the airline’s biggest problem all along has been that only a small portion of American travelers have had access to Virgin America’s flights, as the airline only serves nineteen continental U.S. destinations, along with two in Hawaii and three in Mexico.
During its first several years, Virgin America was basically a transcontinental airline, avoiding the central U.S. and other airline hubs like Atlanta and Phoenix. Big sister Virgin Atlantic does fly to Atlanta, but operates a codeshare with Delta for passengers to connect to domestic flights. It was only this May when it began flying to (United hub) Denver, but only three flights a day each way to San Francisco, (also a United hub) are offered.
For all of its lovable qualities, Virgin America has struggled to make money. It didn’t have a first full-year profit until 2014. In comparison, Southwest has made annual profits since its third year of operation (1974). The big difference between the two airlines is their fleet. All of the things that make flying on Virgin America awesome cost a lot of money, which means its fleet expenses are significantly higher. Southwest keeps airplane cabins relatively bare bones in terms of frills, and doesn’t even offer power outlets on its planes.
The biggest question right now for Virgin America is what will happen now that the company is being bought out by Alaska Airlines. The acquisition was announced on April 4 of this year. The strategic move by Alaska Airlines aims to create “The West Coast’s Premier Carrier.” The combined airlines have hubs in Anchorage, Los Angeles, Seattle, Portland and San Francisco.
The two airlines have their West Coast bases in common, but there are more differences than similarities between the two. Alaska’s mainline fleet is all Boeing 737s, and the airline proudly proclaims to be “All-Boeing” because of its Seattle hub, where all of its planes were built. Virgin America’s fleet is all Airbus A320-family aircraft, built in Europe. It wouldn’t be that difficult to keep both fleets under the combined airline — American, Delta and United each have an Airbus/Boeing hybrid fleet.
Speaking of the combined airline, we don’t know what that will end up looking like at this point. In April, Alaska CEO Brad Tilden acknowledged it would be difficult to keep Virgin America’s loyal customers. Then in June, he said one of the options would be to keep both brands running as different products. That would be unusual, but not unheard-of — and it would appease the two groups of people who are loyal to each airline.
Another possibility would be for Alaska to extinguish the Virgin America brand while choosing to either keep or do away with some or all the trendy perks. Alaska could choose to keep the Airbus planes, or slowly sell them off as the company is able to replace them with 737s.
The combined networks of the two airlines include about 1,200 daily flights, 39 million annual passengers and just over 280 planes.
Virgin America has won awards annually from publications like Travel & Leisure, including being named “Top Domestic Airline” — but many industry insiders argue the legitimacy of such awards. If the airline is lucky enough to stick around, it will be under the corporate hand of Alaska. Alaska just unveiled a completely new corporate branding scheme and aircraft livery early this year, so there’s no way all of that would be tossed aside in favor of keeping the Virgin America brand as the face of the company.
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