On April 4, Virgin America announced it reached a deal to be acquired by Alaska Airlines. For now, the two West Coast-based carriers will continue to operate as separate entities, with no changes to scheduled Virgin flights. Once the Alaska-Virgin merger is complete, the Virgin America brand will fold into Alaska Airlines.
The purchase of Virgin will catapult Alaska from the eighth-largest airline in the U.S. to the fifth largest. Find out what to expect in the coming months, and how Virgin chair and entrepreneur Sir Richard Branson feels about the merger.
Why Is Alaska Airlines and Virgin America Merging?
Virgin America airlines has remained mum on the reason for the sale, but it appears the choice was not made out of necessity. In 2015, the company achieved its highest net income yet and won a slew of awards, including its eighth consecutive nod as the Best U.S. Airline in the Condé Nast Traveler’s Readers’ Choice Awards.
Virgin Group Founder Sir Richard Branson expressed his displeasure with the sale of Virgin America airlines, which he helped start in 2007:
“I would be lying if I didn’t admit sadness that our wonderful airline is merging with another,” Branson said in a blog post on the Virgin website. “Because I’m not American, the U.S. Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it.”
How Virgin America Will Change With Merger
The Alaska-Virgin merger is bound to bring changes for travelers, but they might be more minimal than expected.
Virgin America customers will continue to use their frequent flier points until the deal closes and any unused miles will transition to the Alaska Airlines program. Customers of both airlines will also benefit from expanded North American destinations.
Airline experts don’t anticipate a spike in West Coast plane tickets, as the relatively light schedule followed by Virgin Airlines still has plenty of competition from other carriers.
One of the biggest obstacles of the merger is the tough decision faced by Alaska officials on whether to continue Virgin’s relationship with Airbus or slowly transition the fleet to its Boeing platform. Currently, the entire Alaska mainline fleet is composed of Boeing 737s. Conversely, Virgin runs on leased Airbus A320s, with a commitment to lease 10 new A321neo aircraft in 2017 and 2018.
As a way to control pilot training costs and maintenance expenses, most airlines prefer to limit the types of aircraft they use. On an investor call, Alaska Air Chief Financial Officer Brandon Pedersen noted the decision is “probably a couple years away,” but said the company has the capacity to slowly move back to a strictly Boeing fleet as Airbus leases expire in the 2020s.
Why Virgin Fans Shouldn’t Fear the Merger
Though Virgin America airlines has its staunch loyalists, its flyers shouldn’t worry about the recent acquisition.
While Virgin is known for its mood lighting, fleet-wide Wi-Fi service and on-demand food and drink ordering, Alaska has its fair share of innovation and has been recognized for its customer service.
Alaska has topped the J.D. Power Airline Satisfaction Survey for the past eight years. It was also the first major airline to sell tickets online and is in the process of buying planes with 50 percent more overhead space. Alaska is also trialing biometric access for frequent flyer lounges, in addition to a time- and energy-efficient GPS-based landing system.
FlightStats has named Alaska the most punctual airline in the U.S. for five consecutive years, with more than 85 percent of flights arriving no more than 15 minutes late in 2015.
Sir Richard Branson’s Net Worth: $5.4 Billion
Virgin Group chair and serial entrepreneur Sir Richard Branson has helped mastermind an estimated 500 companies, with approximately 200 to 300 currently falling under the umbrella of his brand.
After dropping out of high school at age 15, he founded his first business, Student magazine. Shortly after, he co-founded the Virgin record store, which evolved into the label Virgin Records in 1972. He later sold Virgin Records to Thorn EMI in 1992 for $1 billion.
Knighted by the Prince of Wales in 2000, the notoriously fun businessman started Virgin Atlantic Airlines in 1984 after becoming frustrated when his flight from Puerto Rico to the British Virgin Islands was cancelled due to a lack of customers. Branson ended up chartering his own plane, rounding up his fellow bumped passengers and charging them $39 each for the one-way flight. His company created its Virgin Australia counterpart in 2000, followed by Virgin America in 2007.
Branson also owns Virgin Galactic, the world’s first commercial spaceline. The company aims to develop commercial spacecraft and provide suborbital flights. In 2014, the company suffered a setback when a test vehicle suffered a breakup and crashed. The accident killed one pilot and injured another.
Sir Richard Branson’s net worth is $5.4 billion, according to Forbes. The acclaimed entrepreneur owns Necker Island, which he purchased for $180,000, reported Business Insider.