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Alaska reportedly bidding on Virgin America

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Old Mar 28, 16, 3:20 pm
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Alaska reportedly bidding on Virgin America

Surprised they would actually be bidding on an all Airbus carrier, but its one way to grow.

http://www.bloomberg.com/news/articl...-takeover-bids
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Old Mar 28, 16, 3:25 pm
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Makes sense to me. SFO is the only major West Coast city that they don't have substantial operations out of. Would be nice to have another major hub besides SEA. SFO transcons would be a good alternative to going through SEA or LAX. Of course, they need to start SFO-ANC!

I thought it kind of silly that none of the expert bloggers saw this coming!
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Old Mar 28, 16, 3:32 pm
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Originally Posted by lg20 View Post
Surprised they would actually be bidding on an all Airbus carrier
Fleet commonality is only a small piece of the puzzle. And frankly, it's negligible in the grand scheme of things.

Strategically, this would be a huge advantage. Having another hub is worth quite a bit. SEA is under pressure from DL, and having another hub will insulate AS a bit if things get worse there.

Further, SFO is much more strategically placed than SEA for a higher volume of traffic. In addition to giving them access to the Bay Area population, they would gain access to a lot of Southern Cal. population via connections. While still out of the way, SFO is a lot more logical a connection than SEA for many of the East-West flows.

When you look at the alternative -- let B6 have VX and build a massive bi-coastal niche carrier, leaving AS up in SEA with the majority of the route network not viable for those who don't live in AK or the PNW, while a trendy carrier grows, that's not a good thing for AS.

The best outcome is for AS to get VX, and fortify itself as a solid West Coast player in the second and third largest West Coast markets (in addition to the LAX focus). Oh, and hopefully learn a thing or two about IFE and service in the process.
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Old Mar 28, 16, 3:34 pm
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Originally Posted by Major G View Post
Makes sense to me. SFO is the only major West Coast city that they don't have substantial operations out of.
They do have some vestigial non-hub operations out of SFO: PSP and PVR come to mind. It's true that their emphasis has been elsewhere.

I have to wonder how you'd integrate VX's model into AS's operations without infuriating one or the other set of customers. Snatching away F upgrades for MVPs and above and making everyone pay for F (and turning the FFP into a revenue-based model ala WN/B6) is going to infuriate a lot of existing AS customers (the screams of anguish on FT will be a mighty din indeed). Degrading VX F to AS standards (and it would be a huge degradation) is going to make a bunch of folks at the higher end of revenue walk. Getting rid of VX IFE for the AS model I suspect isn't going to go all that well either (but I have to think AS is going to strongly consider it, that's a lot of extra weight floating around at 35,000 feet).

If the merger happens, there's a very good chance they'll go revenue-based FFP (for accrual AND spend) once the merger completes. So like they say, be careful what you wish for... you might get it.

Last edited by eponymous_coward; Mar 28, 16 at 3:43 pm
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Old Mar 28, 16, 3:37 pm
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Back in my UA days, we flew through SFO quite a bit and all it took was a cloud or two to send operations into "flow control"....majorly delay prone...would there be enough space at SJC to shift bay area operations to that airport?
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Old Mar 28, 16, 3:46 pm
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SJC and OAK have room but it doesn't seem realistic to move much service once you have the VX presence at SFO. Distribution of air service in the Bay Area doesn't really make sense if you're drawing it up based on where the airports are located - it all flows to SFO despite the convenience of the other airports for larger numbers of people and the frequent lengthy delays at SFO with any weather.

Edit - I assumed SJC has room but I could be wrong (see comment below). OAK certainly has room but recent Bay Area expansion has been mostly at SJC (they didn't consult me unfortunately)

Last edited by ucdtim17; Mar 28, 16 at 4:23 pm
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Old Mar 28, 16, 3:48 pm
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Originally Posted by PDXPremier View Post
Back in my UA days, we flew through SFO quite a bit and all it took was a cloud or two to send operations into "flow control"....majorly delay prone...would there be enough space at SJC to shift bay area operations to that airport?
Given that AS already occasionally ends up at a gate way far away from their SJC luggage carousels during busy periods, I doubt it. Plus that sounds like a great way to trash the value of your acquisition; immediately make a ton of changes in operations that inconvenience existing the customer base (and a merger is going to have that happen anyway). People DO in fact live in SF and Oakland, customers for whom SFO is a way better choice than SJC.

My guess is if there's a merger they'll treat the Bay Area like DL treats NYC and like how AS treats QLA; at least some service out of multiple airports. If there's going to be a loser airport that gets snipped it would probably be OAK.
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Old Mar 28, 16, 4:00 pm
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Hopefully nothing comes of this. The more competition, the better
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Old Mar 28, 16, 4:07 pm
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Originally Posted by eponymous_coward View Post
Snatching away F upgrades for MVPs and above and making everyone pay for F (and turning the FFP into a revenue-based model ala WN/B6) is going to infuriate a lot of existing AS customers (the screams of anguish on FT will be a mighty din indeed). Degrading VX F to AS standards (and it would be a huge degradation) is going to make a bunch of folks at the higher end of revenue walk.
I don't think this is too hard to do in the long run, which would be to have VX's current F setup only on key routes (LAX/SFO - JFK or something like that) and make those ineligible for complimentary F upgrades. The remaining VX aircraft would end up with a product similar to the current AS F product. Obviously, the pricing for F on LAX/SFO - JFK would be quite a bit higher than, say, SEA - IAD due to the better hardware and service on these select routes.

Basically, do run those as a separate service like UA does with ps or B6 does with Mint.
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Old Mar 28, 16, 4:26 pm
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Alaska is already moving closer to VX seating: the upgrade of F and the introduction of premium economy. Not as nice, but a move in that direction and perhaps more financially viable than VX.
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Old Mar 28, 16, 4:29 pm
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Originally Posted by kevincrumbs View Post
I don't think this is too hard to do in the long run, which would be to have VX's current F setup only on key routes (LAX/SFO - JFK or something like that) and make those ineligible for complimentary F upgrades. The remaining VX aircraft would end up with a product similar to the current AS F product. Obviously, the pricing for F on LAX/SFO - JFK would be quite a bit higher than, say, SEA - IAD due to the better hardware and service on these select routes.

Basically, do run those as a separate service like UA does with ps or B6 does with Mint.
It still could make people walk. On VX, you get their F hard product on EVERY VX flight. That goes away in your model; you're still taking things away from existing customers. It also means you have to run a subfleet (adds cost because you can't arbitrarily swap planes when you have subfleets).

Originally Posted by flytoeat View Post
Alaska is already moving closer to VX seating: the upgrade of F and the introduction of premium economy. Not as nice, but a move in that direction and perhaps more financially viable than VX.
True, but it's a big change to go to a "no more upgrades, you must pay cash to sit in F" model. And I seriously doubt there's much of a market for VX-style F on PDX-OAK, given that a lot of Bay Area service out of PDX is on no-F Q400s.
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Old Mar 28, 16, 4:33 pm
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On one hand, I want to say YAY, because this means Alaska is serious about growth and long term stability, especially as SEA-Tac continues to grow too big for its runways and gates.

Otoh though, I want to wail and grind my teeth, because this vastly increases the odds of the FFP being gutted, and takes away the (personal) confidence I took from their all Boeing fleet.
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Old Mar 28, 16, 4:41 pm
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Originally Posted by eponymous_coward View Post
I have to wonder how you'd integrate VX's model into AS's operations without infuriating one or the other set of customers.
I don't think that comes to mind. AirTran customers are still upset over the "loss" of "their" airline (for whatever reason).

I'd love to see the two tie up, although they'd probably have to cover the "Proudly All Boeing" logo on the AS jets.
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Old Mar 28, 16, 4:50 pm
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I question AS' need for one (or two) more West Coast hub(s). Also, DFW/DAL would be problematic, as would the route overlap with AA.

VX is also upgrading its F seat, but still won't be lie-flat.

A VX merger makes much more sense for B6.
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Old Mar 28, 16, 4:57 pm
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It makes sense for AS to do bid the price up so B6 can't get away with a cheap scoop. Just like the Chinese aren't letting Marriott take Sheraton for a song.
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