What Does the Alaska/Virgin Buyout Mean for Travelers?
Brad Tilden photo courtesy Alaska Airlines. Richard Branson photo courtesy of Getty Images.
As reported last week, Virgin America had announced that it was fielding buyout offers from interested airlines. Those airlines were revealed to be Alaska and JetBlue, and on Monday morning, Alaska Airlines announced to the world that they are the victor, and will be “Creating the premiere West Coast airline.”
The move by Alaska to buy an airline so unlike themselves came as a surprise to just about everyone, prompting many industry analysts to simply say, “I don’t get it.” And while we’ve seen a handful of mergers over the past several years, let’s look at why this one caught so many off guard and makes so little sense. The deal is said to be worth about $2.6 Billion.
On Alaska’s corporate blog Monday morning, CEO Brad Tilden said, “From our roots in our namesake state to today, we’ve been committed to our customers, our employees and the communities that we serve. Today with the acquisition of Virgin America, our company, and that commitment to both ours and Virgin America’s customers, is only getting stronger.” Culturally, this is an apples to oranges case. Virgin America is known for being edgy and hip, while Alaska is far more conservative.
On the Virgin Group blog, founder Sir Richard Branson expressed disappointment over the sale, saying, "I would be lying if I didn't admit sadness that our wonderful airline is merging with another… As more airlines consolidated and grew larger and more focused on the bottom line, flying in the U.S. became an awful experience," and also said he could do nothing to stop the sale, because his shares in the airline are non-voting, meaning he could not influence it.
Graphic courtesy of Alaska Airlines
For travelers, we have a pretty good idea of what their combined route network will end up looking like. The two airlines only complete on their routes currently, between Seattle to SFO and LAX, and from Portland to SFO. The merger isn’t expected to hit any roadblocks during the approval process from the Department of Justice. Both airlines have their hubs on the west coast, with Alaska in Seattle, and Virgin America in San Francisco. Virgin largely does trans-continental routes, while Alaska does shorter hops, though most of theirs are still based on the hub-and-spoke system.
Alaska prides itself on their history of innovation, having pioneered the sale of plane tickets on the internet, GPS navigation for pilots, and are now the first U.S. airline to test electronic bag tags. These bag tags use Bluetooth technology to track customers’ bags throughout their travel process, and have a lifespan of two years.
Virgin America is no stranger to innovation themselves. Their aircraft cabins are the most tech-savvy in the skies. Every aircraft in their fleet is equipped with WiFi, either from Gogo or ViaSat. The seatback entertainment screens allow passengers to order food and drinks, and even send texts to other people on the plane. Their famous “mood lighting” creates lively hues and an upbeat atmosphere while passengers soar through the sky in an aluminum tube with 150 strangers. Alaska doesn’t offer any built-in entertainment, but passengers can stream shows and movies to their devices via their Gogo Vision product.
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