Alaska nears $2B bid for Virgin America

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Old Apr 3, 16, 5:23 pm
  #91  
 
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Originally Posted by MVF Trekker View Post
They still are, at least kind of although they are not at the bottom of the barrel like NK. If I had a choice, I wouldn't fly WN. People do because they usually offer lower prices and value. They are more at the same level as B6 which is why I said they are good match for each other.
There's really odd cohorts that fly Southworst. I've heard conversations where some people like it because it has no business/first on the planes. They don't like the feelings that some people are economically better than they are. Some like the flexibility of the domestic awards which really is a big waste of money when you could fly anywhere.

There's definitely a cost element to it but they get a lot of different types who like their service.
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Old Apr 3, 16, 5:56 pm
  #92  
 
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AS is already strong on the West Coast and many believe that they can organically grow in all the markets VX has a presence for a fraction of the price of this merger and without all the complexities.
B6 and VX may have more synergies when combined than AS with VX. This deal, however, may be about keeping B6 out of the West Coast and AS territory than it is about VX. After the merger AS will be able to surpass B6 in traffic:



They will also be able to strengthen their market share in the West Coast while adding 2 hubs in SFO and LAX:


As for the VX aircraft, they are mostly leases, which I think they can either terminate at a cost or allow to expire. I think in the long run, they will probably continue to use aircraft from only one provider to minimize operational costs like WN does.

The DAL slots may be sold as they are likely unprofitable. B6 has been operating them at a loss in order to compete in price with AA which is one of AS main partners. AS may not want to antagonize AA or go in direct competition with them in DFW/DAL. Besides, it would be hard to compete with AA at one of their main hubs.
I actually read an article recently stating that AA stands to benefit a lot from this deal without incurring any risk as they will be able to access AS network in the West Coast and AK where they are weak:

An Alaska-Virgin America Deal Is A Big Win For American Airlines

Together AA and AS will control a combined market share greater than #2 DL. That is bad for DL and B6.

Last edited by MVF Trekker; Apr 3, 16 at 6:12 pm
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Old Apr 3, 16, 6:02 pm
  #93  
 
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Originally Posted by airplanegod View Post
This would also be a case where I would support a hostile Delta takeover of AS.
Highly unlikely IMO due to anti-trust concerns. The top big 4 are already too big for the government's taste (unless Republicans end up filling the White House). DL, UA and AA are also unlikely to be allowed to buy another low-cost competitor as that will be probably reduce competition further (see the table above).

Originally Posted by ou81two View Post
There's really odd cohorts that fly Southworst. I've heard conversations where some people like it because it has no business/first on the planes. They don't like the feelings that some people are economically better than they are. Some like the flexibility of the domestic awards which really is a big waste of money when you could fly anywhere.

There's definitely a cost element to it but they get a lot of different types who like their service.
WN does have business class now but whenever people think of WN, they associate low cost and value. That's just how it is. WN has never tried to sell a premium product like the legacy airlines do. The way they operate including boarding is very cost-conscious like a low cost airline. Never flown business with them (why would I?) but I don't think you even you get a meal. I think you get a drink and that't it.

Last edited by MVF Trekker; Apr 3, 16 at 6:08 pm
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Old Apr 3, 16, 6:12 pm
  #94  
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Originally Posted by MVF Trekker View Post
WN does have business class now but whenever people think of WN, they associate low cost and value. That's just how it is. WN has never tried to sell a premium product like the legacy airlines do. The way they operate including boarding is very cost-conscious like a low cost airline. Never flown business with them (why would I?) but I don't think you even you get a meal. I think you get a drink and that't it.
"Business Select" is not "business class". Yes, they both have "business" in their name, but I suspect even WN would not try to make that equivalence.
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Old Apr 3, 16, 6:16 pm
  #95  
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Originally Posted by MVF Trekker View Post
AS may not want to antagonize AA or go in direct competition with them in DFW/DAL. Besides, it would be hard to compete with AA at one of their main hubs.
The VX presence at DAL is going to be capped at two gates, even if AS takes it over. Not really competition for AA at DFW. But what it DOES do is keep a thorn in WN's side at DAL and keeps THEM from getting those two gates, which AA surely likes. Arguably if AS switched their SEA/PDX service there it's a win-win for AA; they could codeshare out of DAL if they wanted, and AS isn't doing a lot of connecting service out of DFW, it's all point-to-point for AS passengers (and AA could hoover up any DFW connections).

I think AS going to 11% share in LAX would be more annoying to AA (service that includes AA's big domestic moneymaker, premium service out of JFK, as well as ORD, FLL, BOS, IAD, DCA, Hawaii service) than a small two gate operation in DAL...
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Old Apr 3, 16, 6:42 pm
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Originally Posted by eponymous_coward View Post
The VX presence at DAL is going to be capped at two gates, even if AS takes it over. Not really competition for AA at DFW. But what it DOES do is keep a thorn in WN's side at DAL and keeps THEM from getting those two gates, which AA surely likes. Arguably if AS switched their SEA/PDX service there it's a win-win for AA; they could codeshare out of DAL if they wanted, and AS isn't doing a lot of connecting service out of DFW, it's all point-to-point for AS passengers (and AA could hoover up any DFW connections).

I think AS going to 11% share in LAX would be more annoying to AA (service that includes AA's big domestic moneymaker, premium service out of JFK, as well as ORD, FLL, BOS, IAD, DCA, Hawaii service) than a small two gate operation in DAL...
Yeah, I agree. My initial reaction was that AA wouldn't be wild about people flying DAL-LGA or ORD on AS and earning AA miles. However, someone will have those gates at DAL, and it won't be AA. AA'd rather it be a weak player like VX, but they'd probably prefer AS to WN or DL. And AS may not try as hard as VX to drive fares out of DAL down, assuming AS doesn't sell the gates.

I agree that AS being a larger player at LAX and a competitor in the premium JFK-LAX/SFO transcon market (with the VX product, which customers already know and like) probably concerns AA more, but AA probably stands as much to gain from a partner that provides decent SFO service (not really challenging UA there, but at least keeping them honest) as they do to lose in Dallas and LAX.
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Old Apr 3, 16, 7:05 pm
  #97  
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Old Apr 3, 16, 7:28 pm
  #98  
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http://www.alaskavirgin.com

http://flyingbettertogether.com/

http://onemileatatime.boardingarea.c...merger-slogan/
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Old Apr 3, 16, 8:58 pm
  #99  
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WSJ is reporting it's a done deal at $2.5B.

Neil
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Old Apr 3, 16, 8:59 pm
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Interesting about the Alaska Virgin link. I'm hoping AS sticks with the straight 'Alaska' branding, which I imagine they'll do given the recent brand refresh and new livery? Is there any scenario where AS could become 'Alaska Virgin'?
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Old Apr 3, 16, 9:00 pm
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Originally Posted by ashill View Post
Yeah, I agree. My initial reaction was that AA wouldn't be wild about people flying DAL-LGA or ORD on AS and earning AA miles. However, someone will have those gates at DAL, and it won't be AA. AA'd rather it be a weak player like VX, but they'd probably prefer AS to WN or DL. And AS may not try as hard as VX to drive fares out of DAL down, assuming AS doesn't sell the gates.

I agree that AS being a larger player at LAX and a competitor in the premium JFK-LAX/SFO transcon market (with the VX product, which customers already know and like) probably concerns AA more, but AA probably stands as much to gain from a partner that provides decent SFO service (not really challenging UA there, but at least keeping them honest) as they do to lose in Dallas and LAX.
The VX product is already a dud in the JFK-LAX/SFO transcon market, as measured by average fare. Every other player in the market essentially offers a longhaul premium cabin experience on those routes; VX's failure to match costs the airline serious $$$.
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Old Apr 3, 16, 9:13 pm
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Originally Posted by WesternCDN View Post
Is there any scenario where AS could become 'Alaska Virgin'?
Very unlikely. This isn't a merger, it's a buyout.

Also, licensing the Virgin brand is expensive.
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Old Apr 3, 16, 9:20 pm
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Originally Posted by WesternCDN View Post
Interesting about the Alaska Virgin link. I'm hoping AS sticks with the straight 'Alaska' branding, which I imagine they'll do given the recent brand refresh and new livery? Is there any scenario where AS could become 'Alaska Virgin'?
Although I'd prefer to just keep it "Alaska", the "Virgin Alaska" name has a nice ring to it that I could live with....
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Old Apr 3, 16, 9:29 pm
  #104  
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Originally Posted by ashill View Post
I agree that AS being a larger player at LAX and a competitor in the premium JFK-LAX/SFO transcon market (with the VX product, which customers already know and like) probably concerns AA more, but AA probably stands as much to gain from a partner that provides decent SFO service (not really challenging UA there, but at least keeping them honest) as they do to lose in Dallas and LAX.
I think AS would gut a lot of the VX service out of LAX. Why would they still need to fly to places like LAS, MCO, FLL, or IAD? Or even JFK? VX is only making money when oil is trading below $40 a barrel. So I doubt that AS would want to incorporate that into their business model. AS is better off focusing on SFO and building up operations there. Moreover, shedding a lot of the VX routes from LAX allows then to also get rid of more 320s while they still have a good lease/resale value. And probably not have to have split terminal operations (T3/T6). Plus, they can still put their AS code on those same AA flights out of LAX.

Having a large operation set up at SEA/SFO/LAX (in addition to the operations at PDX and SAN) is somewhat duplicitous. And could lead to one station inadvertently "cannibalizing" from one (or more) of the other stations.

Last edited by Fanjet; Apr 3, 16 at 9:40 pm
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Old Apr 3, 16, 9:42 pm
  #105  
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Originally Posted by WesternCDN View Post
Is there any scenario where AS could become 'Alaska Virgin'?
Extremely hard to imagine. But there's certainly a scenario where Virgin could be maintained as a premium sub-brand with its own products and image, cf. Lexus :: Toyota or Lincoln :: Ford.
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