Brand loyalty for West Coast flyers may be in for a shift with Monday’s major announcement that Alaska Air Group is acquiring Virgin America for $57 cash per share. The merger has a total value of about $4 billion, underlining the significance of both brands and the magnitude of the acquisition.
The deal makes perfect sense for the Alaska Airlines’ plan for expansion; while the company has continue to build upon its presence in the Pacific Northwest and Alaska, the Virgin America merge will allow them to expand further south into the San Francisco and Los Angeles markets.
Both airlines are among the most respected in the industry, as evidenced by their placements in The Wall Street Journal’s ranking of overall operational performance (Alaska Airlines placed first, while Virgin America took the number two spot).
In terms of loyalty programs—Virgin’s Elevate and Alaska Airlines Mileage Plan—both will remain intact in the short-term, with Elevate being absorbed into the Mileage Plan upon closing of the deal. In a release put out by the airline, Alaska Airlines notes that they are “committed to ensuring that loyalty members of both airlines maintain the same high-value rewards they've come to enjoy in both programs – with access to an even larger network.”
“Our employees have worked hard to earn the deep loyalty of customers in the Pacific Northwest and Alaska, while the Virgin America team has done the same in California. Together we will continue to deliver what customers tell us they want: low fares, unmatched reliability and outstanding customer service,” said Brad Tilden, chairman and CEO of Alaska Air Group. “With our expanded network and strong presence in California, we'll offer customers more attractive flight options for nonstop travel. We look forward to bringing together two incredible groups of employees to build on the successes they have achieved as standalone companies to make us an even stronger competitor nationally.”
Virgin Airlines President and CEO David Cush also commented on the deal, assuring customers that the airline will maintain its unique and highly acclaimed customer experience.
“Our mission has always been to create an airline that people love – and we accomplished that while changing the industry for the better,” said Cush. “Joining forces with Alaska Airlines will ensure that our mission lives on, and that the stronger, combined company will continue to be a great place to work and an airline that focuses on an outstanding travel experience.”