What You Need to Know about Alaska and Virgin America Merger

Please note this site has financial relationships with American Express and this post may contain affiliate links. Read my Advertiser Disclosure policy here to learn more about my partners.

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.

Alaska and Virgin America

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”.

Alaska Merger Network

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. Hopefull, 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.

Virgin America First Class

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.

Alaska Merger

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.

Comments

  1. I love both airlines and VA has the best domestic first class IMO.
    I’d love to see more VA flights out of PDX. Any thoughts on that?

  2. Summer, thanks for your blog. As a frequently flyer planning on expanding my family in the next few years, I’ve found your insight to be invaluable!

    But I’d like to push back against the idea that “Many of those will be new destinations for Alaska Airlines flyers…” There’s not a single city that Virgin serves that Alaska doesn’t, and I believe that LaGuardia and Love Field are the only new airports, both of which are in cities already well-served by Alaska. Of course, lots of the routes to those cities are different, and there certainly will be different (hopefully increased!) opportunities for using Alaska Airlines miles, but it seems that this really is about beefing up Alaska in California and at JFK. Like you said, “this is Alaska acquiring Virgin and not the other way around” in a big way

    • Sam, thank you and you are right – I poorly worded that sentence and have revised. It represents lots of new routes which essentially opens up new destination cities for some, but a much smaller number of brand new airports to the network as a whole.

      • With the merger, do you see Membership Rewards, and ThankYou gaining Alaska as a transfer option in place of Virgin Elevate, or losing a transfer partner? As an AMEX card holder, I’d have preferred JetBlue doing the buyout if a transfer partner is lost.

  3. Really hoping Alaska becomes an Amex transfer partner. Any chance that could happen. I don’t mind if the ratio isn’t 1:1.

    • No clue though my guess would be a loss of Amex as a transfer partner when Virgin America becomes a part of MileagePlan.

      • That would be a bummer :-(. Amex would do well to land another major carrier. I guess losing VA won’t be too bad. I do not find Delta to be very practical for my needs.

        • To be clear I am 100% guessing, but that is what has happened when Continental and United merged and Continental was originally a MR transfer partner and United wasn’t.

        • Also, do you ever see miles becoming worth so little that having a points card won’t make sense? I’ve recently gotten into the points game with an Amex Everyday Preferred, but am concerned that I should have went cash back. I’m trying not to get into the habit of opening/closing accounts.

          • James, it will all depend on your goals, most likely. I don’t forsee a world in the near to mid-term where cash back will across the board make more sense for travelers. I think the loyalty and mileage game is just too profitable for the airlines, too. However, I can forsee a world that using miles for premium cabins becomes pricier and the gap between whether it makes more sense to use cash back or points card narrows. I think those that know how to maximize miles will still come out ahead, but the easy wins may not always remain so easy beyond the sign-up bonus points.

  4. Thanks for your input. I got the AMEX EDP card to go on subsidized trips. Although it doesn’t have a good signup bonus, the earning potential was what sold me on it. I’m not a frequent traveler, as I’ve just started my career, but look forward to the trips this card will allow me to go on in the future.

  5. What I am curious is about how the new carrier will deal with multiple airpors in each area. For instance, in Dallas, will the airline serve DFW or Love field? In the Bay Area, will the carrier only serve San Francisco, Oakland, San Jose, of some combination of them? And in LA, will the airline move entirely to LAX, or create a fortress hub at some airport like Burbank, just like Jet Blue did in Long Beach?

  6. Thanks for this!

    I must admit I have very mixed feelings about the merger, going more towards the negative side. I went full in to VA after many, many, many, many, many bad experiences with United, and about 90% bad experiences with American.

    Potentially losing the service and culture that keeps me with VA has me very worried. That, and the fact that Richard Branson apparently would have voted against it if he could have.

Leave a Reply

Your email address will not be published. Required fields are marked *