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Late last week rumblings were bubbling up about Virgin America being on the market, and now less than a week later, Alaska Airlines has emerged as the victor in purchasing the relatively small West Coast based airline for 2.6 billion dollars. I’ll spare you the details of the purchase amount details, deal analysis, and associated stock market reactions, though you can find plenty of that elsewhere if that is your area of interest.
Instead, there are things you need to know from a passenger/mileage collector standpoint, so I’ll break down some of those things.
No Immediate Changes to Alaska or Virgin America
First, these combinations of major airlines are never fast, and this one looks like it will be even slower than some with the projected date for obtaining a single operating certificate as one airline not occurring until some point in 2018. In other words, there will be no immediate changes, and all of 2016 is slated to be utilized for “integration planning”.
Remember Virgin America is Being Acquired
While there won’t be immediate changes for those flying Virgin America or Alaska, of course there will be changes at some point. While the companies will be merging together in some senses of the word, keep in mind that this is Alaska acquiring Virgin and not the other way around. Hopefully the airlines will take some of the best parts of each other to become stronger together. In reality, I imagine that the end result is less “cool” than Virgin America currently seems, but perhaps Alaska will end up integrating some of those sleek amenities and culture to improve their product, especially on the cross-country flights.
Big Increase for Alaska in California and Cross-Country
If you look at the combined route map you can quickly see that Alaska will be substantially increasing their routes from coast to coast with this merger, as well as obviously significantly increasing their presence in California.
New Opportunities for Miles, Points, and Perks Will Emerge
For those not super familiar with Virgin America, know that they fly to many desirable vacation and business destinations including: Kahului, Honolulu, Cancun, Cabo San Lucas, Puerto Vallarta, Orlando, Ft. Lauderdale, New York’s LaGuardia, Austin, Dallas Love, Washington Reagan, Boston, and more.
Some of those will be new destinations/airports for Alaska Airlines flyers, but moreover it will a represent substantial number of new routes. All of this may open up increased opportunities for using Alaska Airlines miles, the Companion Certificate for Alaska Airlines credit cardholders, and even for those who like to fly on Alaska using British Airways Avios. Of course, pretty much all of those things are subject to change over the next couple of years as the integration occurs.
Frequent Flyer Program Details
The Virgin America Elevate program works similarly to the JetBlue or Southwest program in that there are no blackout dates and the number of points required for an award flight is tied to the selling price of the ticket, though there is no exact value per point that remains constant. That said, many of my searches return a value of about 2.1 – 2.2 cents per point, which is pretty high for an airline mile/point.
Alaska MileagePlan has a more traditional frequent flyer program and award chart with 25,000 mile saver award flights and similar. I have no clue what the combined program will look like, but do know that the two frequent flyer programs operate in fundamentally different ways at this point, and will eventually both fall under the Alaska MileagePlan program.
The Virgin America co-branded credit cards are issued by Comenity Bank and one version comes with 15,000 points after $1,000 in spending. If you get 2.2 cents per point, this is about currently about $330 in value from that sign-up bonus, which clearly isn’t amazing compared to some other cards. However, it may be worth getting at some point before the merger as those points will likely translate into some number of Alaska miles, and after a certain point the card will close for new applicants forever. This is no rush to do this, but it is something to keep in mind as the months go by.
Alaska will become the 5th largest US airline after all is said and done, which is perhaps the reason for the purchase in the first place. If traditional small mom and pop shops can’t really compete in today’s world, then perhaps smaller airlines face the same problems. Grow or get eaten, or something like that.
What are your thoughts on this continued trend towards consolidation in the travel space?
Editorial Note: The opinions expressed here are mine and not provided, reviewed, by any bank, card issuer, or other company unless otherwise stated.