oh, and why
 

would UA ever fly from BOS to MIA nonstop?


You do not want a stop on this journey. Full stop. This would be like, say, having to stop in IAD to get from BOS to MIA. Compared to a non-stop offering (which, does UA even do?), the one-stop option almost doubles the transit time. No thanks.

Do not get me started on coming from various regional cities.. that market was ceded to AS with the dropping of the skywest partnership throughout much of the west coast, and virtually forces a double connection now where a single connection was possible not too long ago.[/QUOTE]

assuming AS keeps the VX operations at SFO, i'd love to see AS add SNA-SFO so i can connect to them.

i've jumped over to AS this year to see how the mileage program is and so far i like it.

I'm hoping that AS augments their position in SNA as they already have some popular routes to SJD, PVR, STS, SJC, RNO and SEA. And, even in PSP, AS has the 1x/day PSP-SFO.

With a disclosure that I own a bunch of VX stock (so am a happy camper today. :D) I think this will have a major impact on United.

At this point, VX has roughly a 10% market share ex-SFO, AS has about a 5% share, ex-LAX both VX and AS have a 5% share, put them together and you get 15% ex-SFO, 10-11% ex-LAX, and the largest presence at PDX/SEA, and I think the largest (other than WN) at SAN. Before this SFO was a major hole in AS's route network, and LAX was a weakness, no more.

AS goes from being a two city airline, to having by far the best network on the West Coast other than WN (which many folks are reluctant to fly). At this point, if you want to chase status ex-SFO UA is really the only game, but for lots of people, a combo of AS+VX will be a good option. And the larger size allows the airline to fill in certain routes. For example, VX does not serve SFO-PHX. But expect the combined airline to add that route and probably reduce PDX/SEA frequencies.

Bottom line, if you don't need the flights to CTU ;) and do a lot of business on the west coast and/or in major tech hubs, a combined AS+VX is as good, if not better than UA is ex-SFO, and will be better in much of the west. For people like myself, a "jeffuge" paying 40+ cpm, giving most of my traffic to one airline that is NOT UA just got a lot easier. And IMHO, no one flying out of the bay area likes UA at this point.

Also don't underestimate how much having the bigger network will help out AS competing for traffic in the upper NW (eastern WA, ID, MT) and Alaska where they have a major feeder network.

This also strengthens AS vs. WN and DL.

How they pull off the integration will be interesting. Both airlines have good brand value, and they don't want to give that up.

+1. If I want to go to CTU or OKC then the UA adds have been good ex-SFO, but secondary cities have been dropped by UA as WN has expanded intra CA, and UA has cut back dramatically at SEA/PDX, and fallen behind at LAX. 10-15 years ago they had the only comprehensive West Coast network, but that has been dismantled in the last several years.

And you'd figured that, at least in part, was part of the rationale for the deal. I know DL has been trying to get more aggressive at both LAX and SEA but otherwise the west coast is more of a toss-up where perhaps AS sees an opportunity to become more of a peer in that region. Certainly I know plenty of UA ex-pats in the Bay Area who would love to direct their business elsewhere.

DL/UA/AA/B6 are probably happy to see that the transcon market will get less competitive.

Hard to see Alaska continuing the EWR/JFK dual transcons to SFO/LAX with the frequency Virgin does today.

Not sure that''s so great for passengers who have enjoyed the great low advance purchase fares in international configured seats.

And looking out to 2017-18, a combined VX+AS will be much better able to compete for the bay area traffic that hates UA (which is basically everyone) and would love some option that does not provide surly service on dark planes with horrible seats (that's you, UA) and is better placed to take on Delta on the West Coast. Its really a testament to how bad United has gotten that VX has been able to survive and grow. Had Jeff not destroyed United product wise and operationally, VX would have died in 2012. Jeff may not have made United stockholders wealthy, but he made VX's owners wealthier. :D

You have said before that VX provided little competition on the TCON market, and I don't see how this impacts the dynamic anti-competitively. VX is only a drop in the ocean of TCON flights, and its only really providing competition on a few flights all of which are against UA.

AS and VX do not overlap on ANY TCON routes. And for VX, the TCON routes are the most profitable in the system, and if you flew ex-SFO you would know that VX is almost always MORE expensive than is UA (or even DL or AA to JFK). I fly DeltaOne to JFK because its cheaper than VX First, basically every time I've ever checked. Same with Y+. The same pattern with flights to BOS and to DCA (vs UA).

And since these flights command high prices, its the last thing I expect AS (which has good management) will cut. Do I expect to see VX service levels on SFO-SEA/PDX? Probably not. What I expect we will see if AS become more like B6 and European airlines. They will have short haul product, and use it on some low margin (e.g. Mexico routes) longer flights, and deploy the better F product (VX's) on TCONS. If anything, I would expect them to think about putting more F seats on the 10 A321's that VX is getting 1Q 2017-2018, and using them like B6 does.

I get there is no AS/VX overlap on transcon.

But I also see Alaska's reinforcement of the idea of a 'single fleet' and telegraphing phasing out the Virgin fleet. They're not going to try to compete on SFO/LAX transcon to NYC with 38" first class pitch unless they break strategy and operate a subfleet when those Airbus planes go away.

Will this happen quickly? No - they will be distinct for a while given the leases don't come off until 2020. I'd love to see Alaska play in premium transcon and hope my outlook is wrong on this, but I don't see SFO/LAX - NYC premium transcon as a part of the Alaska plan. The dynamics changed considerably when JetBlue entered and marginalized Virgin America.

edit to add: Alaska noted on the call it can get out of the A321 deliveries without penalty.

Oh and until this morning I was also a Virgin America shareholder. :D

I don't see a huge impact on UA at SFO with this merger. They are both small players there. And even merged they would still be a relatively small player at SFO.

actually no
 

If you pull data from BTS, you'll see that VX average tcon fares are below those offered by UA and pretty much everybody else. They sell much more of their inventory through sales and through consolidators than other airlines, so you see average fares that are way lower, despite your anecdotal evidence from your trips.

UA, DL, AA all have corporate contracts that drive higher average fares to them than what VX gets.

That said, their TCON routes may be profitable, but clearly aren't enough to make it a consistently profitable airline in its 9 years of existence (what is it, maybe one or two years of full - year profitability, largely due to fuel prices, with strong quarters here and there, but mostly losses?)

I don't think UA is worried about this development in SFO, and I don't think that AA or DL are worried about these developments in LAX.

And wonder if AS wants to use those JFK and EWR slots to beef up the SEA and PDX transcon flying, at the expense of some of the LAX/SFO transcons which can be handled by AA.

Knowing Alaska, they may also try to compete on routes like SNA-EWR or JFK, or SAN-EWR/JFK with the configs they already have rather than use the slots for the saturated SFO/LAX-NYC premium market.

I think there is room for a more conventional domestic product in the LAX/SFO transcon market, particularly if the airline has lower costs. I wouldn't not be surprised to see some diversification into under-served transcon markets like SNA or SJC.

Forgot about the Norcal options. OAK, SJC, SMF to the EWR/JFK slots as alternatives.

More comments on the fleet here:

Alaska Air Deal Sets Up Face Off for Aircraft Makers - WSJ

Basically giving themselves 'a couple years' to make the decision, which is code for let's see what the manufacturers offer.

This is feeling like Southwest / Airtran, which stayed separate for a while as the fleet got sorted out, but ultimately standardized, though that one was also slowed by the lack of an international reservation system at Southwest.

Hmm... could AS sublease the A320's to UA? :D

+1 SFO is a UA hub for international destination.

Unless AS/VX starts flying international extensively, no impact at all.

(Note - there is a reason why many of us here are hub captive @SFO.)