Alaska Airlines announced this morning it’s buying 9-year-old Virgin America in a deal worth $2.6 billion. It will turn Alaska into the fifth largest U.S. carrier. It’s too early to say how it might affect service for traveling Alaskans, but if any of the Virgin brand makes it onto Alaska’s jets, passengers can expect a flashier ride.
Alaska CEO Brad Tilden says the deal will give Alaska valuable slots at New York airports and Reagan National in Washington, D.C. And, Tilden says, it will expand the airlines ability to serve Californians traveling east.
“So it’s really valuable real estate and it gives us a shot of being your go-to airline if you live anywhere up and down the West Coast,” the CEO said, in a conference call with financial analysts.
Tilden did not offer many specifics about the impact on Alaska-based passengers, who are already heavily dependent on the airline.
“There will be the added benefit, of course, for people that are loyal to the frequent flier program,” says Brett Snyder, who blogs about the airline industry on CrankyFlier.com. “They’ll have more options, be able to do more through San Francisco, LA and head east … but I don’t really expect to see a ton of changes for people who are in Alaska itself.”
Snyder says whenever there’s a merger, consumers want to know the practical effects, like how the two airlines will merge their frequent flier programs and whether the seat amenities will change.
“And the reality is these guys don’t know,” Snyder said, referring to airline executives. “They know that the numbers make sense. They’ve created a story from their perspective where the combined networks are going to work. And this is going to help them grow and achieve their goals. But the specifics we just don’t know, and so these will be revealed over time.”
The airlines expect to win regulatory approval this year and begin operating as one carrier at the start of 2018.
It will be a meeting of two very different brand personas. Alaska, at more than 75-years-old, is all traditional and buttoned up. Snyder says young Virgin, with mood lighting and rock music, is far cooler.
“You know, Virgin –you feel like you’re going to the club,” Snyder said. “Anytime I walk on a Virgin airplane, I kind of look like there should be a bouncer who’s telling me I’m not allowed on.”
Virgin, for instance, transformed the mundane safety briefing into a slick dance video.
As a brand, Alaska Airlines will prevail, but the Alaska CEO also hinted that the Virgin image may live on in some form. Virgin brand founder Richard Branson says the consolidation is sad but as a minority shareholder he was unable to stop it. The sale does not affect the British carrier Virgin Atlantic, which is separate.