Alaska Buys Virgin America
Alaska Buys Virgin America – A High Level Analysis
Hawaii travel professionals are abuzz with the last round of airline takeover and are pondering what it will all mean for airfare to Hawaii. On April 4, 2016, Seattle-based Alaska Airlines announced its intention to purchase San Francisco-based Virgin America. In buying Virgin America, Alaska beat out JetBlue which was also interested in bidding for this airline. This purchase makes Alaska Airlines the largest US west coast based airline. It also makes them the fifth largest carrier in America.
US laws restrict non-citizens from owning controlling interests in US based airlines. As a result, the founder of Virgin America, Sir Richard Branson, was powerless to stop this purchase.
Some industry experts says this is not an ideal match. This is not so much in terms of overlapping routes, but more in terms of company culture and aircraft. Virgin America has differentiated itself in the market as a more modern, high quality, low price company. Whereas, Alaska is more of your bread and butter carrier that has focused on regional presence and operating efficiencies. Virgin America uses the Airbus A319 and A320. While Alaska operates an all Boeing 737 fleet. As such, many are wondering how smooth this merger has been.
Impact on Hawaii Travel
From a Hawaii market perspective, this acquisition would probably not increase overall competition and lower prices. This is because both carriers currently fly to and from the Aloha State. But it certainly does strengthen Alaska’s presence in California. This represents single largest geographical market for visitors to Hawaii. This would probably enhance Alaska’s ability to compete against United, American and Delta from the US west coast. The same would apply to its fellow regional carrier, Hawaiian Airlines.
Here’s one factor that would be of interests to residents of the Aloha State. Virgin America flies to Las Vegas out of their San Francisco and Los Angeles hubs. As many are aware, Las Vegas is one of the most popular travel destinations for Hawaii residents. So with the carriers’ combined assets, it could make travel to Hawaii’s “Ninth Island” more affordable over time.