It all comes down to cost and consistency of branding: That’s why Alaska Airlines announced today that it would retire the Virgin America name for the airline it acquired last year.
Seattle-based Alaska Air Group completed the $4 billion transaction (including debt and lease payments) to take over Virgin America’s operation and its routes late last year – but the question of what to do with the operation’s name had been hanging over the acquisition since it was announced last April.
“We spent the last 10 months conducting extensive research and listening carefully to what fliers on the West Coast want most,” Sangita Woerner, Alaska Airlines’ vice president of marketing, said in today’s announcement. “While the Virgin America name is beloved to many, we concluded that to be successful on the West Coast we had to do so under one name – for consistency and efficiency, and to allow us to continue to deliver low fares.”
Alaska said the Virgin America name and logo would be retired “likely sometime in 2019.” Alaska has to wait at least long enough to win certification from the Federal Aviation Administration for the two airlines to operate as a single carrier.
Even before the acquisition, Virgin America had an arms-length relationship with British-based Virgin Group due to U.S. regulatory requirements. Virgin owned less than 25 percent of Virgin America – and was paid 0.7 percent of the airline’s roughly $1.5 billion in annual revenue as a licensing fee for the name.
It’s not clear how much the licensing fee figured into Alaska Airlines’ decision. Potential brand confusion with Virgin Atlantic is a factor as well. In fact, Virgin Atlantic will raise its profile in Seattle next week by inaugurating nonstop flights to London (and bringing in Virgin’s billionaire founder, Richard Branson, for a celebration).
Virgin America’s brand has had special cachet for Silicon Valley fliers, and in an attempt to keep that clientele as well as Alaska’s traditional customers happy, Alaska announced several enhancements to the customer experience:
- Mood lighting, music and meals: In a nod to the red-and-purple mood lighting scheme on Virgin America’s Airbus jets, Alaska will be phasing in blue mood lighting on its Boeing jets. Alaska will also update its passenger cabin design, its uniforms, its musical repertoire and its West Coast-inspired menus. By June, Alaska first-class passengers will be able to pre-select meals before they fly, and by next year, main-cabin passengers will be able to pre-pay for meals.
- High-speed wireless: In 2018, Alaska will start retrofitting its Boeing jets with satellite Wi-Fi that should be speedy enough to accommodate streaming video services like Netflix. Free chat and online messaging, which has been a feature on Alaska’s Boeing jets since January, will be expanded to Virgin America’s Airbus jets this August. The satellite Wi-Fi upgrade should be complete for the entire fleet, Boeing as well as Airbus, by the end of 2019.
- Free movies and TV: Passengers will continue to have free access to movies and TV shows on their own devices on Alaska’s Boeing jets. Free movies and TV will be coming to the in-flight entertainment system on Virgin America’s Airbus jets in August, and early-release movies will continue to be available for purchase.
- Premium seating: Beginning in late 2018, Alaska will add 18 premium-class seats to the Airbus jets and rearrange the first-class layout to go from eight to 12 seats. Virgin America’s first-class riders won’t be able to stretch out as far as they used to, but more seats will be available for Alaska’s free upgrades. The Alaska Mileage Plan becomes the sole loyalty program in 2018.
- Airport lounges: Alaska plans to remodel and expand its airport lounges in Seattle, Portland and Los Angeles by early 2019. New lounges will be built in San Francisco and at New York’s John F. Kennedy International Airport.
— Virgin America (@VirginAmerica) March 22, 2017
Today’s announcement brought mixed reviews in the comments on Alaska Airlines’ website as well as on online forums such as Flyertalk.
“So basically I only have about a year and a half to enjoy Virgin before it disappears,” one comment read. “I knew this day would come. So sad.”
Another commenter was more upbeat.
“I was an early Virgin America adopter and have been at Gold level since 2011,” the commenter wrote. “We were all worried that the merger would ruin the Virgin America service, value and vibe we all live. It sounds like you’ve accepted the challenge to not only meet it but perhaps even go beyond!”