Alaska Airlines buys Virgin America: what it means for Aussie travellers

By Chris Chamberlin , April 5 2016
Alaska Airlines buys Virgin America: what it means for Aussie travellers

Alaska Airlines is moving to takeover Virgin America in a landmark US$2.6 billion (A$3.4b) deal, consolidating the two brands as one under the existing ‘Alaska Airlines’ banner: but what does the merger mean for travellers and frequent flyers jetting to the USA and beyond?

For the moment, not too much – both airlines will continue as normal, meaning that flights will operate as they currently do, frequent flyer points can be earned and redeemed without change and lounges will continue to welcome the same travellers.

That means if you’ve booked a flight with Alaska Airlines or Virgin America, or were making a new booking, your flight reservation will be honoured as usual with Qantas Frequent Flyer members earning points on Alaska Airlines flights and Virgin Australia Velocity members earning with Virgin America.

Single frequent flyer scheme

Those arrangements are expected to remain in place until at least January 1 2017 – by which time the airlines anticipate regulatory approval for the merger will have been granted and the mammoth task of absorbing Virgin America into Alaska Airlines can begin.

During the process, Virgin America’s own Elevate frequent flyer program will cease to exist, with all Elevate members welcomed into the Alaska Airlines MileagePlan scheme and any remaining Elevate points converted into MileagePlan miles at a rate to be determined.

Also unknown is whether the new Alaska Airlines will be an airline partner in Virgin Australia’s Velocity scheme – as is currently Virgin America – or whether Alaska’s existing tie-up with Qantas Frequent Flyer will continue.

Whatever the circumstances, the process of joining both airlines and rebranding Virgin America as Alaska Airlines is on-track for completion by Q1 2018, by which time Virgin America as we know it will be taking its final flight.

Also read: Alaska Airlines reinvigorates Seattle Board Room lounge

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Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller, and lives by the motto that a journey of a thousand miles begins not just with a single step, but also a strong latte, a theatre ticket, and later in the day, a good gin and tonic.

This is very sad to see. Alaska is a basic airline. A such America will lose a quality airline in terms of American standards (even Australian standards).

31 Mar 2016

Total posts 644

"Alaska is a basic airline."

Product-wise may be but the fact is that AS also rank @ the top among all U.S. legacy carriers(e.g. DL, AA, UA, etc.) by consumers for 8 straight yrs(See J.D. Power & Associates research results for details).  I hv flown with AS Group a few times and I attest to that ranking: AS is not your avg/typical U.S. network carrier in terms of customer/pax service.

It's also 1 of the most consistently profitable U.S. carrier(Contrast with Virgin Am which had been deeply loss-making until 2013)  and 1 of only 6 airlines in the Dow Jones Index.

Qantas - Qantas Frequent Flyer

21 Jul 2014

Total posts 144

I flew them return LAX to YVR and it was a great flight, well priced, upgraded to business for $50 and the food was pretty good compared to other American planes I had been on.

The return flight was in economy and can't fault it. Staff were very friendly and warm. I think they are a great pairing.

Qantas - Qantas Frequent Flyer

13 Jul 2012

Total posts 120

I wish they kept Virgin America as the name of the combined airline.

Alaska Airlines sounds a bit bizarre for an airline with nation-wide reach.

Qantas - Qantas Frequent Flyer

12 Jul 2014

Total posts 110

Bizzare? Its no Different to the Sydney based and Australian Flag Carrier:

Queensland And Northern Territory Aerial Services, not Sydney or NSW Airline.

31 Mar 2016

Total posts 644

Exactly.

Otherwise, why else do we think QF always need to include <Spirit of Australia> or <The Australian Airline>(Earlier incarnation) into the branding title on every fuselage in its fleet?  Same kinda branding 'bandage' can be added to a merged AS+VAm entity to aid/reinforce corp/national identity for mkting purposes. 

If we try to be a bit less Aussie-centric here, I bet U more folks on earth outside Australia recognize the geog name Alaska than they do re Queensland or N.Territory....

Qantas - Qantas Frequent Flyer

13 Jul 2012

Total posts 120

LondonAussie, this is certaunly a fair point.

However, I tend to think 99+% of regular travellers generally have no idea that "Qantas" is actually an acronym.

That knowledge is limited to air-travel-obsessed geeks.

You never see "Queensland and Northern Territory" spelt fully on a side of a plane, so the geographical connection is completely lost on 99+% of Qantas passengers.

To most people, it is "The Spirit of Australia" that Qantas is now associated with.

31 Mar 2016

Total posts 644

If as u said most folks hv no identity/recognition issue re an abstract brand name such as QANTAS, what exactly can go wrong/is bizarre with a more concrete brand name such as Alaska even if going national?

I'll give U another one:

The brand Southwest clearly implies S.Western U.S. yet it is the 3rd largest carrier in the U.S.(larger than UA) with a comprehensive national network and Chicago+Atlanta(No one will refer to these 2 cities as located in the U.S. S.West) are among its largest op bases.

For other examples, contrast the brand name of WestJet vs its network across Canada.  Hainan(4th largest carrier in China) is even more funny with hubs/bases as far north as Beijing.  Yet the brand refers to a Southern Chinese island province but none of its rapidly expanding intercon routes(With 787 x40 in op or on firm order) touch any city within or even near Hainan island.

Qantas - Qantas Frequent Flyer

23 Sep 2014

Total posts 6

To be honest, it's not going to be a big deal.  Sarah Palin really put Alaska on the map all the world over.

31 Mar 2016

Total posts 644

Per the related official press release(In case U've not read it), AS Group(Alaska Airline Group) has not ruled out retaining Virgin Am as a separate op brand after merger is completed(Targeted for Jan17).  At present, it only confirmed AS brand is retained and undecided re Virgin Am brand.

As for AS itself, it was born 84yrs ago but attained real "nation-wide" reach only from 2000 when it launched its 1st ever route to cross time zone into the eastern U.S.  Even today, AS' mkt presence is still mainly on the W.coast.  It's pretty logical & natural for AS to still use Alaska within its branding @ least upto now.

Hi FLX, Jan 2017 is when the airlines are hoping the deal will have been approved by and the cash transaction completed, not the date when the final process of merging will have been completed (that's Q1 2018).

Also, this is from the merger website:

"Alaska Airlines and Virgin America will continue to operate as separate airlines until closing and while they pursue a single operating certificate. Once combined, the company and customer-facing brand will be Alaska Airlines."

02 Nov 2011

Total posts 3

That is my interpretation of it too, FLX - and the conference calls and interviews with AS management seem to imply they haven't fully shut the door yet.

Of course, they have already announced the FF programs will merge.

Most likely it will live or die with the A320 fleet - the single operating certificate is the least of the issues - crews,leases,whether to repaint and refit the fleet to AS config. Some of the US majors still operate as separate parts internally (despite having the same cert)!

Malaysia Airlines - Enrich

27 Mar 2016

Total posts 5

Any idea on whether they'll retain virgin's a320? What about the order for virgin's a320neos? 

Nope - the merger has only just been announced and we've reported what's known.

Malaysia Airlines - Enrich

27 Mar 2016

Total posts 5

Thanks for replying,  chris. Its such an honour!

31 Mar 2016

Total posts 644

Fm what I hv read fm the media /industry insiders, total cancellation penalty for ALL of VAm's 320/321Neo on firm order is about US$25m or equivalent to the current mkt value of a single early built, used 737NG/320 frame......relatively a drop in the bucket for a carrier like AS.

VAm's current 320Ceo family fleet is even easier to dispose of if desire.  Only about 5-10 frames are actually owned with the remaining 50-55 frames all on lease which will beign to expire less than 4yrs from now(Or just 2 yrs after target completion date for the merger process as Chris indicated).

Malaysia Airlines - Enrich

27 Mar 2016

Total posts 5

Thanks for the insight FLX. Was very helpful. Cheers!

31 Mar 2016

Total posts 644

U're welcome.

On the other hand, I suspect Airbus may not be unhappy if VAm cancel its 320/321Neo x40 order.  Airbus may even be thrilled because:

1.  VAm was 1 of the very 1st launch customers(If I recall correctly, it was indeed the 1st ever 320Neo order annoucement back then) for the 320Neo program.  It means the deal was sealed @ the typical ultra-low launch discount price(i.e. unprofitable for Airbus).

2.  Airbus has been facing critical shortage in 320Neo delivery slots especially the near term ones.  Essentially, new customers want to select it or existing customers want to buy more but Airbus can't sell to them due to 320Neo production is currently sold out for many yrs.  There's a long waiting list for early 320Neo slots.

If VAm abandon its 320/321Neo order, Airbus will collect the penalty, instantly gain back 40 production slots and resell those slots @ much much higher current contract price(i.e. more profitable) to customers on the waiting list.

How can Airbus be unhappy for losing the VAm order?

06 Apr 2016

Total posts 1

I'm an American who lives in the Pacific Northwest, so I wanted to chime-in here.  Seattle-based Alaska (AS) is the airline of choice for travelers in this part of the USA, but is barely known in other parts of the country.  Virgin America (VX) is San Francisco-based and is very California-centric.  Alaska's product is solid: cabin crew may smile when boarding, food for sale, when offered, is improving, tea and water are still complimentary.  No Business Class (only First), or Premium Economy,  but all seats are leather.  Lounges are silmiliar to United's and they use United Club in some cities.  I haven't flown VX (they have limited routings and didn't start service to Oregon until 2012) is considered more novelty, but has been ranked #1 for two years in a row as best airline in the USA, based on in-flight experience, entertainment, and healthy food options.  Alaska was the surprise suitor, as it had been rumored Delta was looking at VX.  For Alaska, buying VX was a strategic move to soldify routes (there's a turf war going on between Delta and Alaska, here on the West Coast).  For the traveler, I fear, the lack of competion will mean a downgrade in service and an uptick in prices, especially in some markets.  Cheers from Oregon.


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