Seattle-based Alaska Airlines has closed the deal to take over West Coast rival Virgin America. Airline executives, workers and journalists are flying down to San Francisco Wednesday morning on a specially-painted plane for an announcement and rally at Virgin America's main hub. Alaska Airlines had kept the celebratory Boeing 737 under wraps at considerable expense for months. That, while its $2.6 billion takeover languished under extended government antitrust review.
The merged airlines will take the Alaska Airlines name and retain a headquarters near Seattle's airport. The combined carrier will become the nation's fifth largest airline.
Alaska Air Group's acquisition received scrutiny from the U.S. Justice Department's antitrust division because it eliminates a competitor on heavily traveled West Coast and transcontinental routes. In the end, the federal government demanded what Alaska Air characterized as relatively "limited" concessions to clear the merger. To preserve low-fare competition, Alaska Airlines will have to trim back its ticket-selling partnership with American Airlines and seek government approval before selling or trading gates at three of the nation's most constrained airports.
Alaska Air on Wednesday reiterated its position that the merger would be pro-consumer because it would emerge in a stronger position to take on the big four airlines; American, United, Delta and Southwest all grew larger themselves through mergers over the past decade.
In a statement on the Virgin America website, the acquired airline told its customers it will be business as usual for quite a while longer because of the time it will take to merge complex systems and work forces.
Still undetermined is how long to keep Virgin America as a separate brand. Fleet management also poses an integration challenge. Virgin exclusively flies Airbus 319 and A-320 jets in contrast to Alaska Airlines, which has long been loyal to home town plane maker Boeing.
The newly wedded airlines both get high marks from customers, but the on-board experiences for passengers are different. Virgin aims for a hip, sassy ambience on its jets with mood lighting, boarding music, video at every seat and touch screen drink ordering. Alaska offers a more traditional experience and less fancy first-class cabin, but scores higher on punctuality.
