Virgin America Deconstructed

It’s a curious thing to watch one airline acquire another. Here in the United States we’ve watched eight large airlines combine into four over the last ten years. Delta with Northwest, United with Continental, Southwest with AirTran and finally American with US Air. All of them were different in nature, and all four of these combinations created four modern behemoth carriers.

Most recently we watched as Alaska Airlines acquired Virgin America. While not creating another behemoth like the previous mergers, Alaska does want to establish themselves as a dominate west coast carrier. With size, Alaska Airlines will be better able to determine their future when competing against other larger carriers. They will also be the larger party if another merger discussion were to take place in the future.

The surviving airlines of the large 3 legacy carriers (American, Delta and United) included elements of both the previous airlines. It was not this way with Southwest and AirTran, where AirTran was truly absorbed and assimilated into the Southwest Airlines business and culture. Alaska Airlines is following this path, and has so far indicated that very little of the original Virgin America will remain in the new combined airline.

We are in the middle of this process, and now are starting to watch the existence of Virgin America fade away. Regardless of your option about the merger, from a marketing and business perspective it is interesting to watch Alaska Airlines take over Virgin America. From the events of last year, and Alaska Airlines corporate communications, we can speculate on how much time Virgin America has left.

Disclaimer

The future dates beyond July 2017 are speculative and guesses at best. We’ve been given a fair amount schedules and estimated dates for upcoming changes from Alaska Airlines. Some of these guesses are more educated than others, and your mileage may vary as Alaska Airlines integrates these two airlines.

Another part of this story surrounds Sir Richard Branson and his desire to “restart” Virgin America at some point in the future. That could add more drama to this story, but that subject matter won’t be covered in this post.

2016 – The Acquisition is Announced and Closed

Alaska Airlines has announced that it will be the surviving single brand going forward, and that the Virgin America brand will be retired in 2019. The new Alaska Airlines must complete an overwhelming check list to complete their acquisition. Last year in April of 2016 this story started with the bid war between Jet Blue and Alaska Airlines for Virgin America, with Alaska paying up to secure the deal. After that the DOJ and Alaska Airlines negotiated back and forth for nine months and finally came to an agreement for deal approval. Immediately after that in December Alaska Airlines settled a passenger filled lawsuit and started to integrate with Virgin America.

April 4th, 2016 – Alaska Airlines wins bid to purchase Virgin America
July 26th, 2016 – Virgin America shareholders OK Alaska Air merger
September 8th, 2016 – Passengers File Suit To Block $2.6B Alaska-Virgin Merger
October 20th, 2016 – DOJ delays Alaska Airline’s acquisition of Virgin America
November 13th, 2016 – Virgin Atlantic dropping partner Virgin America
December 6th, 2016 – DOJ approves Alaska Airlines’ acquisition of Virgin America
December 7th, 2016 – Alaska Airlines Settles Passenger Suit to Block Merger
December 14th, 2016 – Alaska Air Group closes acquisition of Virgin America
December 19th, 2016 – Alaska Airlines and Virgin America start cross earning points
December 19th, 2016 – Alaska Airlines and Virgin America flyers receive reciprocal benefits
December 19th, 2016 – Virgin America tickets can be purchased on Alaska Airlines website

2017 – The Two Airlines Start Working Together and the Virgin America Brand Will Be Discontinued

Alaska Airlines started this year with a lot of activity. Virgin America Elevate members were granted status with Alaska Airlines Mileage Plan. You could use Alaska Airlines Mileage Plan miles to redeem Virgin America flights and Virgin America Elevate points could be transferred to Alaska Airlines Mileage Plan (and not the other way around).

Then in March Alaska Airlines publicly stated what many people were waiting for; Alaska Airlines would stop using the Virgin America brand in 2019. They also laid out the basic timeline for becoming one airline. Richard Branson wrote a heartfelt letter and without notice Virgin America and Comenity Bank stopped accepting new applications for Virgin America Visa Signature Cards. In May the LAX Loft (Virgin America’s one and only lounge) closed, and Virgin America was kicked out of Los Angeles LAX Terminal 3 and moved in with its new big brother Alaska Airlines at Terminal 6.

January 9th, 2017 – Virgin America Elevate points start transferring to Alaska Airlines Mileage Plan
January 9th, 2017 – Virgin America Elevate members matched to Alaska Airlines Mileage Plan levels
January 9th, 2017 – Alaska Airline offers redemptions for Virgin America flights with Mileage Plan
March 6th, 2017 – Alaska Airlines Mileage Plan elites get free bags with Virgin America
March 9th, 2017 – Virgin America and Alaska Airlines expands west coast flights
March 16th, 2017 – Alaska Airlines companion pass expanded to Virgin America flights
March 23rd, 2017 – Alaska Airlines announces eventual discontinuation of Virgin America brand
April 27th, 2017 – New applications for the Virgin America credit card discontinued
May 10th, 2017 – The Loft closing at LAX
May 12th, 2017 – Virgin America website booking now includes Alaska Airline destinations
May 13th, 2017 – Virgin America moves to T6 at LAX
May 31st, 2017 – Virgin America begins using Airbus Neo 321 aircraft
June 28th, 2017 – Alaska Airline opens new C lounge in Seattle

The Future of 2017 and the Last Year of Elevate

Alaska Airlines will continue to be busy integrating Virgin America for the rest of 2017. Alaska Airlines needs to put in place the much-anticipated Virgin America benefits to Alaska Airlines elites including preferred seating, Main Cabin Select upgrade eligibility, and advanced access to purchased first class upgrades. These were existing benefits to Virgin America elites that haven’t been copied over to Alaska Airline elites. Alaska says this summer for these integration items.

There is also a major move at JFK New York when Alaska Airlines relocates from Terminal 8 and Virgin America from Terminal 4; both moving to Terminal 7. The move also includes a large investment in Terminal 7 itself, and a new lounge. The JFK changes are scheduled to take place in October 2017.

Virgin America has announced that starting September 30th, 2017 earning and redemption on all Elevate partners will effectively cease. This includes all airline partners Emirates, Hawaiian Airlines, Singapore Airlines and Virgin Australia.

The Virgin America Elevate program is scheduled to be decommissioned after December 31st, 2017. This is really a 2018 item, but note 2017 is the last year to utilize the Elevate program and Elevate points.

August 15th, 2017 – Alaska Airline elites have access to Preferred Main Cabin Seating with Virgin America
August 15th, 2017 – Alaska Airlines elites to have Main Cabin Select upgrade eligibility with Virgin America
August 15th, 2017 – Alaska Airlines elites to have advanced access to first class upgrades with Virgin America
September 30th, 2017 – Virgin America ends partner airline redemptions
November 1st, 2017 – Alaska Airline and Virgin America combine operations in New York Terminal 7
December 31st, 2017 – Virgin America Elevate program formally is ended by Alaska Airlines

In part 2 of “Virgin America Deconstructed” we’ll discuss the final decommissioning of Virgin America while looking at 2018, 2019, and beyond.