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Alaska Airlines Wants To Buy Virgin America, But Is It A Good Fit?


Alaska Airlines is attempting to buy the airline Virgin America.

Bloomberg News reported this week that Seattle-based Alaska Air Group, Inc. and JetBlue Airways Corp. have both submitted takeover bids to Virgin America, Inc.

An Alaska Airlines Boeing 737-800 painted with the airline's new tail logo and livery Tuesday, Jan. 26, 2016, at Seattle-Tacoma International Airport in Seattle.

An Alaska Airlines Boeing 737-800 painted with the airline's new tail logo and livery Tuesday, Jan. 26, 2016, at Seattle-Tacoma International Airport in Seattle.

Ingrid Barrentine/for Alaska Airlines

While all three airlines operate in the Pacific Northwest, Alaska dwarfs both Virgin America and JetBlue in both routes and passenger capacity.

Virgin America flies from Portland to San Francisco, and from Seattle to San Francisco and Los Angeles. Those are routes Alaska also flies, so a Virgin takeover will probably not affect air travelers in the Northwest much.

It’s the first time since 2008 — when Delta Air Lines bought Northwest Airlines — that a carrier with a substantial presence in the Pacific Northwest has been in a deal like this.

Airline industry analyst and writer Brett Snyder told OPB’s All Things Considered that Alaska might be interested in Virgin America not so much to absorb the Northwest routes, but to eliminate a competitor, especially in California.

“What we have seen from Alaska lately is a much greater expansion into some secondary airports in California,” Snyder said. “They’ve been growing San Jose. They’ve been growing San Diego. Virgin America has a large presence in both San Francisco and Los Angeles. This could help Alaska cement its position up and down the West Coast even further.”

Alaska Airlines declined to comment, and a timeline for a deal is unknown.

Alaska and Virgin America have some important differences, including in-flight experience and different fleets of planes.

“The airlines have very different corporate cultures,” said Ben Schlappig, who runs the airline industry blog, One Mile At A Time. “While they’re both good cultures, Alaska’s is more Pacific Northwest, while Virgin America is more hip and showy.”

Virgin America is well known for its flashy interior, complete with mood lighting and leather seats.  That contrasts pretty heavily with Alaska’s more conservative, earth-toned interior design. Alaska does have leather seats, especially in their newer planes, but they’re streamlined and basic, instead of plush and feature-rich like Virgin America.

The different interiors of Virgin America (left) and Alaska Airlines (right) are striking. A potential takeover of Virgin by Alaska would require Alaska to evaluate the different interiors, integrate any changes (or not), or come up with something new entirely.

The different interiors of Virgin America (left) and Alaska Airlines (right) are striking. A potential takeover of Virgin by Alaska would require Alaska to evaluate the different interiors, integrate any changes (or not), or come up with something new entirely.

Left: TGPRN Virgin America/PR NEWSWIRE; Right: Courtesy Alaska Airlines

“(Virgin America has) a first class cabin that, while small with only eight seats, is actually a much nicer seat than the traditional first class seat that Alaska Airlines has. So they’re different first class products,” Snyder said.

If Alaska does take over a Virgin fleet, Alaska would have to evaluate the in-flight product and decide what, if anything, to integrate into their existing product.

“People always think about the mood lighting,” Snyder said, “which doesn’t really mean much in the scheme of things.”

But, based on its routes, Virgin America serves more California customers than it does passengers from the Pacific Northwest, and the flashy interiors may be part of the sell to California travelers.

A merger with Virgin America may signal an in-flight experience change for Alaska.

“If they found that (the inflight product) was important to the San Francisco or L.A. markets, (Alaska) could bring that out, but it’s not clear that that’s the case,” Snyder said.

JetBlue is known for a trendiness similar to Virgin. Both have seat-back entertainment, are relatively new airlines and fly Airbuses.

“I can see the synergies between JetBlue and Virgin America,” Schlappig said, “though I don’t think Alaska and Virgin America would be a good fit.”

As for the planes themselves, Alaska is “Proudly All Boeing,” flying several variations of the 737. The airline even prints that slogan on the side of their aircraft.

A Virgin America Airbus A320

A Virgin America Airbus A320

TGPRN Virgin America/PR NEWSWIRE

Virgin America flies Airbus A320s exclusively. A fleet of the same planes allows an airline to run a streamlined operation because things like pilot skills, maintenance and parts are consistent.

“Alaska has been so successful as an airline because of what a lean operation they run,” Schlappig said.

“Chances are Alaska could operate both (aircraft) if they wanted to,” Snynder said. “But in the long run, you would probably expect to see that Alaska would want to get back to a more simple operation with a single 737 fleet.”  

However, Snyder said with a large enough fleet it’s not that difficult for an airline to operate planes from two different manufacturers.

Still, it may be awhile before any deal is announced. Bloomberg News reports that negotiations are ongoing.

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