What Alaska Airlines buying Virgin America means for travelers
Posted by Sin City Examiner
Virgin America, consistently ranked at the top of U.S. airlines by passengers, has accepted a buyout offer from Alaska Airlines at a value of $4 billion.
Pending approval by Virgin’s shareholders and federal regulators, the two airlines will merge — and the first lament for the deal came from Virgin Group founder Richard Branson.
“I would be lying if I didn’t admit sadness that our wonderful airline is merging with another,” wrote Branson. “Because I’m not American, the U.S. Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it.”
“There was sadly nothing I could do to stop it.”
Virgin America “started out of frustration,” he wrote. “As more airlines consolidated and grew larger and more focused on the bottom line, flying in the U.S. became an awful experience. Despite moves to block our airline from flying, Virgin America began service in August 2007 — with the goal of making flying good again.”
Though many airline mergers in recent years have not been great news for passengers, there is a potential bright spot in this purchase: Alaska is also consistently ranked as one of the top U.S. airlines.
On a website announcing the accepted offer, Alaska says it is “creating the premier West Coast airline.”
Virgin America’s route network complements Alaska’s:
“Our employees have worked hard to earn the deep loyalty of customers in the Pacific Northwest and Alaska, while the Virgin America team has done the same in California,” Brad Tilden, chairman and CEO of Alaska Air Group, said in a statement. “Together we will continue to deliver what customers tell us they want: low fares, unmatched reliability and outstanding customer service.”
But while both airlines are passenger favorites, they are also very different: Virgin America has worked hard to create a young and hip reputation, with catchy in-flight safety videos and mood lighting. Alaska, by contrast, is old reliable.
Alaska said it would “explore with the Virgin Group how the Virgin America brand could continue to serve a role,” meaning Virgin America may not entirely go away as we know it.
Meanwhile, Branson will retain control over Virgin Atlantic and Virgin Australia.
The U.S. Justice Department must approve the deal, which would create the fifth largest airline in the country after the big four — American, United, Delta and Southwest — which control 80% of the domestic industry.