Last week we heard that Virgin America, based in San Francisco, was shopping itself around for an acquisition. There was lots of speculation on what company would be interested in the carrier. JetBlue was most people’s first bet — including mine.
Living on the West Coast, I often forget that JetBlue even exists. But I imagine that some East Coast residents could say the same about Virgin America, and the two have similar business models. Their loyalty programs are revenue based — for both earning and redeeming points — and they market themselves with unusually good service in economy class. Acquiring Virgin America would make it easy for JetBlue to expand its presence on both coasts.
Brendan shared a story from BusinessWeek that says, not surprisingly, that JetBlue has made a bid. What I didn’t expect was a bid from Alaska Airlines. Just to touch on a couple ideas:
- Alaska operates an exclusive fleet of Boeing 737 aircraft, along with a variety of smaller regional jets. Adopting Virgin America’s Airbus fleet would be a significant departure.
- Alaska already has hubs in Seattle, Portland, and Los Angeles. I don’t see a reason for it to add service in San Francisco (although it could always buy the fleet and move it elsewhere).
- Alternatively, Alaska may be more interested in Virgin’s slots in Los Angeles or Dallas. LAX may not be an issue, but plans to grow in Dallas would cause problems with Alaska’s partner, American Airlines. Besides, Dallas hasn’t been performing as hoped for Virgin America.
Both JetBlue and Alaska Airlines declined to comment to BusinessWeek, so we can’t read much into this yet. However, it could suggest some big changes ahead at my favorite airline.
