Alaska Air, Virgin America fly familiar skies
Passengers used to opulent interiors of Virgin America planes with their recessed mood lighting and white leather seats up front might feel a bit let down to wind up on a less lavish Alaska Airlines plane
Nine-year-old Virgin America, a stylish San Francisco-based startup, and 84-year-old Alaska Airlines, a highly profitable Seattle-based carrier, actually aren't all that different.
Both go after affluent leisure passengers, offer low fares, have similarly low costs, win awards for their customer service and run popular loyalty plans. Together, they will have broader range of destinations.
The US$2.6 billion offer by Alaska, a unit of Alaska Air Group Inc., will need to be approved by Virgin's shareholders and receive regulatory approval from the Justice Department.
The union would create the No. 5 U.S. airline by traffic, eclipsing JetBlue Airways Corp., and have 1,200 daily departures.
Some customers certainly hope Virgin's unique vibe carries over.
Airline takeovers are never easy, requiring employees, procedures, aircraft and information-technology systems to be integrated.
When larger airlines merged in recent years, their quality ratings dropped, said Brent Bowen, dean of aviation college at Embry-Riddle Aeronautical University, which ranks customer perceptions. Such combinations usually entail a "period of chaos," he said.
The Alaska-Virgin integration could be different.
"This is probably the first time we have seen two higher-performing airlines combine," Mr. Bowen said.
Henry Harteveldt, a travel industry analyst for Atmosphere Research Group, said Alaska specializes in travel technology to make the airport experience less stressful, while Virgin puts its emphasis on the onboard experience, adding that this could create better experience for travelers.
The biggest distinction between the two airlines is that "Alaska has figured out how to have a sterling customer relationship and still make a lot of money," according to Jay Sorensen, whose IdeaWorks Co. provides consulting to airlines on loyalty programs and marketing.
Virgin, he said, "never figured out the money part."
Virgin, which carried 7 million passengers last year, has a devoted following in Silicon Valley, but only turned profitable in 2013.
Alaska estimates that the deal, which is expected to close in early 2017, could boost its annual revenue by 27% and add to its earnings in the first year.
The two have only a handful of routes that overlap and their costs are similar. Mr. Harteveldt's research indicates there is very little overlap between the two airlines in terms of customers: fewer than 20% or 25% of passengers have traveled on the other.
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