Running on empty: big airlines in big trouble

by Andrew McKay

 

http://energybulletin.net/stories/2012-08-18/running-empty-big-airlines-big-trouble

 

"This is all bad news for airlines that are already combatting high fuel

prices. I expect to see a number of big name airlines fold or amalgamate

in the next two years as financiers can no longer afford to prop up an

industry that is hemorrhaging with no relief in sight. This could mean a

reduced number of flights, less options of places to travel and

skyrocketing ticket prices. While mother nature might thank us for the

reduction in emissions the airline industry is running on empty. "

A very interesting read, but I'd be more willing to share it if came from an industry insider.

^ I think the industry is in denial.

^^ I think I would trust an airline insider about as much as I would trust an oil insider, pharmaceutical insider, or a wall street insider...

But I still like reading articles that start of with something like: "I've enjoyed a X-decade career in this industry and worked as a consultant since my retirement. So I hope my words mean something when I say, 'we're in trouble.' Let me tell you why...."

^Sometimes it takes an outsider to raise an issue like this. 

 

Great tweet I saw this morning....

 

Airports on the day before Thanksgiving are like bars on New Year's Eve. Complete amateur hour.

Great tweet I saw this morning....

 

Airports on the day before Thanksgiving are like bars on New Year's Eve. Complete amateur hour.

That only if you're in economy class!

OP-ED CONTRIBUTOR

A Free Market in the Sky

By CLIFFORD WINSTON

Published: November 20, 2012

 

AS the holiday season approaches, the major airlines are signaling to some passengers to take a hike. At least that’s what travelers might infer from the smaller number of flights being scheduled at many of the nation’s airports.

 

Between 2007 and 2012, airlines cut the number of domestic passenger flights by 14 percent, according to the Department of Transportation — with the biggest drops occurring at midsize and smaller regional airports. The five heartland hubs of Cincinnati, Cleveland, Memphis, Pittsburgh and St. Louis have lost a stunning 40 percent of their scheduled flights.

 

The reason is simple: airlines have decided that the best way to earn a healthy return on their investment is to maintain tight discipline on capacity. That’s a fancy way of saying they want their planes to fly as full as sardine cans. And the way they’ve been accomplishing this is by concentrating service on the big domestic and international markets and by cutting flights in smaller, less traveled ones.

 

Read more at:  http://www.nytimes.com/2012/11/21/opinion/a-remedy-for-air-travel-woes.html?_r=1&

I was debating where to post that article! It ties in nicely with the press release we issued last week......

 

http://allaboardohio.org/2012/11/20/many-americans-are-taking-the-train-more-flying-and-driving-less/

 

Many Americans are taking the train more, flying and driving less

November 20, 2012 | Author: admin

FOR IMMEDIATE RELEASE                                Contact: Ken Prendergast,

Nov 20, 2012                                                  Executive Director (216) 288-4883

 

CLEVELAND – Times are changing. Remember when Thanksgiving meant piling the kids into the family car for a trip on crowded, icy roads over the river and through the woods to grandma’s house? Or maybe you waited in long security lines at airports so you could overpay for cramped seats aboard noisy puddle-jumpers?

 

Most Americans still do that. But an interesting trend may have started, especially if the next dozen years in the travel industry are anything like the last dozen.

 

Consider these stunning changes since 2000:

 

* America’s population grew 12 percent (from 281.4 million to 314.6 million).

 

* Ridership on Amtrak passenger trains increased 49 percent 2000-2012. At Amtrak’s Chicago hub, Midwest ridership is up 60 percent. Ridership on Amtrak’s busy Northeast Corridor ridership is at an all-time high.

 

* Amtrak’s Chicago-Toledo-Cleveland-New York City-Boston “Lake Shore Limited” saw its ridership grow 33 percent 2000-2012. A record 403,700 trips were made on this daily eastbound/westbound train service in Amtrak’s fiscal year ending Sept. 30. Other Amtrak trains traveling on more than 100 miles of the Lake Shore’s route carried an additional 1.2 million passengers in 2012.

 

* Meanwhile, passenger (not freight) miles traveled in all vehicles on U.S. highways fell 6.7 percent 2000-2010 (the most recent data available from the U.S. Bureau of Transportation Statistics).

 

* While the recession was a factor, so were sharply higher costs of driving (fuel, vehicle financing, etc). The costs of driving rose 54 percent from 32.5 cents per mile in 2000 to 50 cents in 2010. It climbed higher in 2012, to 55.5 cents per mile.

 

* While domestic enplanements on regularly scheduled commercial flights rose 3 percent overall at U.S. airports 2000-2011, enplanments fell sharply 2000-2011 at many medium and large hub airports in between Chicago and the East Coast despite serving stable populations:

 

Akron-Canton, OH: +107 percent

Huntington, WV: +96 percent

Elmira-Corning, NY: +35 percent

Latrobe-Arnold Palmer, PA: +29 percent

Buffalo-Niagara, NY: +24 percent

Ithaca-Thompkins County, NY: +22 percent

Youngstown-Warren, OH: +17 percent

State College-University Park, PA: +15 percent

Dayton, OH: +7 percent

Wilkes-Barre/Scranton, PA: +4 percent

Charleston, WV: +2 percent

Harrisburg, PA: +2 percent

Indianapolis, IN: -4 percent

Syracuse, NY: -7 percent

Albany, NY: -7 percent

Columbus, OH: -9 percent

Detroit Metro, MI: -9 percent

Allentown-Lehigh Valley, PA: -13 percent

Binghamton-Link, NY: -16 percent

Fort Wayne, IN: -22 percent

Newburgh-Stewart, NY: -23 percent

Rochester, NY: -26 percent

Erie, PA: -28 percent

South Bend, IN: -29 percent

Cleveland, OH: -31 percent

Williamsport, PA: -41 percent

Kalamazoo/Battle Creek -43 percent

Lancaster, PA: -52 percent

Pittsburgh, PA: -59 percent

Du Bois-Jefferson County, PA: -61 percent

Johnstown-Cambria County, PA: -63 percent

Parkersburg-Wood County, WV: -66 percent

Cincinnati, OH: -70 percent

Toledo, OH: -71 percent

Altoona-Blair County, PA: -74 percent

Bradford, PA: -78 percent

Jamestown-Chautauqua County, NY: -81 percent

Detroit City, MI: -100 percent

Gary-Chicago, IN: -100 percent*

Port Clinton-Keller, OH: -100 percent

Put-In-Bay, OH: -100 percent

Reading, PA: -100 percent

 

*Allegiant Air began serving Gary-Chicago in 2012 with 7,567 enplanements as of Aug. 2012, according to USDOT BTS.

AIRPORTS SHOWN IN BOLD: had 400,000 or more enplanements on regularly scheduled commercial flights in 2011, making those airports an FAA-rated medium hub or larger.

 

DATA SOURCES

2011 enplanements source data http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger/media/cy11_primary_enplanements.pdf

2000 enplanements source data http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger/media/cy00_primary_rankorder.pdf

 

With commercial aviation in overall decline in the region, expanded passenger rail can do more than fill the void with affordable travel options during the holidays. High performance trains can be year-round economic engines that swiftly link small- and medium-sized markets to the international business centers of Chicago and New York City. When developed, trains provide fast, affordable and comfortable transportation aboard which business travelers can be more productive than in cars or planes.

 

END

The decline in say PIT, CVG, DTWand CLE was due to a reduction in hub activity.  A connecting pax is considered an emplanement.  The increase at CAK was in large part due to the build-up of service that siphoned some of the CLE loss to CAK.  Most of the other decreases occurred early in the century after september 11, 2001 when airlines cut back on service.  I wouldn't necessarily consider this an "airline woe" catagory especially if the derease is low yield pax that better off served by rail anyway. 

Yeah, but we don't have a Low Yield Passengers discussion thread for airlines. :)

 

EDIT: Btw, that NYT reader-contributed opinion piece was in response to news coverage of this.....

http://www.usatoday.com/story/todayinthesky/2012/10/01/transportationdepartment-airlines-mergers/1605511/

Those -100 percent drops look suspicious, particularly Bradford. Every time I'm at CLE I see a flight on the board to Bradford, PA. Not sure how it could have dropped 100 percent.

The percentage changes are between 2000-2011. It's possible that some cities may have regained flights since 2011 and Bradford, owing to the natgas biz in that area, may have picked up a new flight. I vaguely recall this from 2010, that a new route between Cleveland and Bradford had started due to EAS subsidies, but I thought my memory was fooling me since it didn't show up in the 2011 data.

 

But all the 100 percent drops are suspicious? You do realize that many small airports lost all air service after 9/11, right?

The percentage changes are between 2000-2011. It's possible that some cities may have regained flights since 2011 and Bradford, owing to the natgas biz in that area, may have picked up a new flight. I vaguely recall this from 2010, that a new route between Cleveland and Bradford had started due to EAS subsidies, but I thought my memory was fooling me since it didn't show up in the 2011 data.

 

But all the 100 percent drops are suspicious? You do realize that many small airports lost all air service after 9/11, right?

 

I think they look suspicious, perhaps not the Erie Islands service, but the others do seem suspect.

 

Bradford and Jamestown are both served by United via Cleveland.

http://www.kayak.com/direct/BFD/2012-11

 

You can see the past 10 years worth of data here:

http://www.transtats.bts.gov/airports.asp?pn=1&Airport=BFD&carrier=FACTS

 

Parkersburg still has flights to CLE as well:

http://www.kayak.com/direct/PKB/2012-11

Stats:

http://www.transtats.bts.gov/airports.asp?pn=1&Airport=PKB&carrier=FACTS

 

Lancaster is served by Dulles:

http://www.kayak.com/direct/LNS/2012-11

 

Stats:

http://www.transtats.bts.gov/airports.asp?pn=1&Airport=LNS&carrier=FACTS

 

 

The FAA is not reporting any commercial passenger traffic at those cities.....

http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger/media/cy11_primary_enplanements.pdf

 

Any suggestions as to why?

The FAA is not reporting any commercial passenger traffic at those cities.....

http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger/media/cy11_primary_enplanements.pdf

 

Any suggestions as to why?

 

Those are all primary airports. You need 10,000 enplanements to be considered primary. Note how the list stops just at that threshold. So those -100% airports won't appear on that sheet because they have below 10,000 enplanements, not necessarily had zero traffic. http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/categories/

 

So as you can see here, this is the 10 year trend:

http://www.transtats.bts.gov/airports.asp?pn=1&Airport=BFD&carrier=FACTS

 

Just replace the airport code in the link to view other airports actual enplanements.

 

 

Autumn 2012

STEVEN MALANGA

Airfields of Dreams

If you build it, they won’t come.

 

But from St. Louis to the Florida Panhandle, this Field of Dreams approach—build it, and they will come—hasn’t worked. And taxpayers have been stuck with the bill.

 

...But it’s misguided to think that airport expansion itself will lure businesses to a region by offering them more flights. In fact, airport expansions often increase ticket prices, driving businesses away. After airports have built new facilities, they pass the expense on to passengers in the form of pricier tickets. If an airport has expanded to become a hub, moreover, passengers there may have to pay the “hub premium” that a dominant airline at a location often levies to make up for losses at other facilities.

 

You can see those extra charges reflected in the sky-high fares at Cincinnati/Northern Kentucky International Airport, a Delta hub and winner of the top spot in Forbes’s 2009 list of “rip-off airports.” Last year, an average ticket out of the airport cost $526, compared with $372 in nearby Dayton, Ohio, and $387 in Indianapolis. International flights averaged $1,408, 36 percent more than the national average. Is the airport really a reason to relocate to the area, as businesses often claim? The Cincinnati Business Courier found that three-quarters of the Cincinnati firms it surveyed were flying employees out of the Dayton airport, more than an hour away by car. “Unless you’re suffering from delusion, you realize that the Cincinnati airport is now really in Dayton,” aviation expert Darryl Jenkins told the Cincinnati Enquirer. Similarly, a 2006 study found that nearly one-fifth of local fliers drove to other airports to avoid the hub’s high prices. Delta is now reducing flights from Cincinnati/Northern Kentucky, and passenger traffic at the airport is down 65 percent since 2005.

 

READ MORE AT:

http://www.city-journal.com/2012/22_4_airports.html

Those are all primary airports. You need 10,000 enplanements to be considered primary. Note how the list stops just at that threshold. So those -100% airports won't appear on that sheet because they have below 10,000 enplanements, not necessarily had zero traffic. http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/categories/

 

So as you can see here, this is the 10 year trend:

http://www.transtats.bts.gov/airports.asp?pn=1&Airport=BFD&carrier=FACTS

 

Just replace the airport code in the link to view other airports actual enplanements.

 

 

 

In the second link, it shows Bradford as having about 3,000 enplanements per month in CY2011. Is that correct? If so, why is it not listed as a primary airport in the FAA stats for CY2011?

 

Also, I do not see 10-year trend data.

My recent inquiries into these traffic data resulted in someone in Chicago sending to me a 2010 presentation "Could the Domestic Air Travel Market Be Nearing Saturation?" by Michael Wells and Dan Murphy, both of the Federal Aviation Administration's Air Traffic Organization. Their presentation was made at the Transportation Research Board's 89th Annual Meeting in January 2010.

 

The researchers note that recent (2000, 2006, 2009) domestic air travel demands forecasts by the FAA are each revisions of exponential growth models, only delayed a few years to accommodate for "temporary" dips in travel. The authors say that exponential growth forecasts are wrong. Even straight-line models are wrong, although slightly more accurate description of past growth trends.

 

Instead, the S-Curve model is proving to the most accurate fit, including to post-2000 domestic air travel growth, which they note is slowing. If the S-Curve model is the right one, then domestic air travel by 2025 will not only be 10 percent less than what the FAA has been forecasting. It will also stop growing by 2025. Yet all of FAA's multi-billion-dollar capacity expansion plans are going forward as if the exponential growth model is the correct forecast.

 

Sadly, my source says very few airport administrators have even seen, let alone heard of this analysis. Here are a few pages from the presentation.......

 

 

 

 

^ They should be using a Bell-Curve model!

^ It looks like the cumulative distribution function of a bell curve.

American Airlines ends bereavement fares.

 

http://www.cnn.com/2014/02/27/travel/american-airlines-bereavement-fares/index.html?hpt=hp_t2

In other big news, Delta completely overhauled their frequent flyer program. Instead of earning miles based on how many, ahem, miles you have flown; you will now earn "miles" based on how much you paid for your tickets. It probably works out in Cincinnati's favor, having some of the highest fares in the nation.

In other big news, Delta completely overhauled their frequent flyer program. Instead of earning miles based on how many, ahem, miles you have flown; you will now earn "miles" based on how much you paid for your tickets. It probably works out in Cincinnati's favor, having some of the highest fares in the nation.

 

How is this a "Woe"?  Also did you read the entire statement?  They did not change their entire frequent flyer program, only how miles are calculated.  How you earn status has not changed.  Yet how you use your miles, more options have been added.

 

Earning miles is not solely based on miles flown, but elite status as well.

 

 

In other big news, Delta completely overhauled their frequent flyer program. Instead of earning miles based on how many, ahem, miles you have flown; you will now earn "miles" based on how much you paid for your tickets. It probably works out in Cincinnati's favor, having some of the highest fares in the nation.

 

How is this a "Woe"?  Also did you read the entire statement?  They did not change their entire frequent flyer program, only how miles are calculated.  How you earn status has not changed.  Yet how you use your miles, more options have been added.

 

Earning miles is not solely based on miles flown, but elite status as well.

 

 

 

Correct, they did not change how elite status is earned (except for the new "MQD" requirement that went into effect this year). But they did completely overhaul how SkyMiles ("frequent flyer miles") are earned. We won't really know if it's a good or bad deal until they reveal how they've changed the other side of the equation.

Remind me never to fly Spirit Airlines:

 

Dispirited: A business school professor studies the world's worst airline

 

"The contempt is mutual. A significant flight delay prevented a customer named James and his wife from attending a concert in Atlanta, the sole purpose of their trip. James emailed several of Spirit’s top executives to air his complaint. Baldanza [spirit's CEO] made the mistake of hitting reply all, which is how the exchange became public: “We owe him nothing as far as I’m concerned,” Baldanza wrote in response. “Let him tell the world how bad we are,” Baldanza offered. “He’s never flown before with us anyway and will be back when we save him a penny.”

 

Shamelessness has certain advantages. A more succinct expression of Spirit’s credo is truly hard to imagine."

 

http://www.newrepublic.com/article/121548/spirit-airlines-worst-airline-america?utm_source=Sailthru&utm_medium=email&utm_term=TNR%20Daily%20Newsletter&utm_campaign=Daily%20Newsletter%20-%204%2F17%2F15

I wish they would look at CVG too.

 

http://www.cnn.com/2015/07/01/politics/doj-subpoenas-airlines-unlawful-coordination/index.html

Did airlines collude to cut flights & raise fares to Cincinnati, Cleveland, elsewhere? http://t.co/V5cFrT87a0

^Note: Must be a WSJ subscriber to read

Did airlines collude to cut flights & raise fares to Cincinnati, Cleveland, elsewhere? http://t.co/V5cFrT87a0

 

I can't read the article, but aren't all airlines trying to cut capacity to increase revenue and seat miles?  If there is demand they will have flights. 

 

On a side note--it was cool to see 8-10 737's nudged up to concourse A the other morning when I was leaving town.  Haven't seen that in a while.  US Air, Spirit and Frontier all had mainline jets visible from the highway.

Thankfully, it was Alaska who bought Virgin America and not one of the Big 4 airlines (Delta, American, United, Southwest). Alaska has solid customer service, so I see it as a good fit. I love Virgin America, and am surprised this happened considering recent growth at Virgin. I have a lot of points with both airlines, so the merger shouldn't hurt me. I just hope they keep the nice cabins on the Virgin planes. That's more what Virgin America flyers are worried about. Both Alaska and Virgin have good customer service, but the planes on Virgin America are the best in the business. I got this email from Virgin America:

 

Virgin America merger with Alaska Airlines

Monday, 04/04/2016

 

On April 4 2016, Virgin America announced that it has agreed to be acquired by Alaska Airlines. We believe that by joining two West-Coast based airlines known for their focus on customer loyalty and operational excellence, we will create a stronger and more competitive airline – and one that offers even more destinations and flights for travelers.

 

How does the merger process work and what does that mean for Elevate members in the short or long term? 

 

An airline merger is a lengthy process that typically takes years – not months – to complete.  The transaction itself is subject to approval by regulators, Virgin America shareholders and other conditions – a process that typically takes upwards of six months or more.  Beyond that, the process to merge the two airlines into a single carrier typically takes an additional 1-2 years. 

 

Until the transaction closes there will be no immediate changes to our flight schedules, the Virgin America product and guest experience, Elevate Status levels or your ability to earn and redeem points.  We will continue to operate as entirely separate airlines – with separate frequent flyer programs.

 

Beyond that, at the point that the Virgin America Elevate program is merged into the Alaska Airlines Mileage Plan™ program, there will be no disruption to your rewards.  Both airlines will ensure that your Points balance and Status level will be reflected in Alaska Airline’s award-winning Mileage Plan.

 

This means that you can continue to fly on Virgin America and accrue Elevate Points now until the airlines are combined, and be assured that all of your Points – whether earned prior to or after the transaction announcement – will be reflected in the Alaska Airlines Mileage Plan™ program.  When the programs are combined, Elevate members will be able to use their Status levels and earned Points across a significantly expanded network – including 114 destinations in North America and 900 global destinations through Alaska’s Airlines’ robust network of international partners.  Virgin America and Alaska Airlines will keep you updated on the integration of the programs in the months ahead.

 

What happens to my Elevate Status level?

 

First, nothing will happen to your Status level in the short term. The transaction itself is subject to approval by regulators, Virgin America shareholders and other conditions – a process that typically takes upwards of six months.  So in short, during that time, there will be no changes to your Elevate Status levels, the award-winning product and guest experience you’ve come to expect from Virgin America or your ability to earn and redeem points.  During that time, the Elevate program will continue to operate independently.  Beyond that, the process to merge the airlines into one typically takes an additional 1-2 years.  At the point when the Virgin America Elevate program is merged into the Alaska Airlines Mileage Plan™ program, there will be no disruption to your rewards.  Alaska Airlines has assured us that your Points balance and Status level will be equitably mapped over and reflected into Alaska Airline’s award-winning Mileage Plan.  This means that you can continue to fly and accrue Points now until then.  And when the programs are combined, Elevate members will be able to use their Status levels and earned Points across a significantly expanded network – including 114 destinations in North America and 900 global destinations through Alaska’s Airlines’ robust network of international partners.

 

What happens on my next flight – should I expect an immediate change?

 

There will be no immediate changes to our flight schedules, the Virgin America product and guest experience, Elevate Status levels or your ability to earn and redeem points.  An airline merger is a lengthy process that typically takes years – not months – to complete.  First, the transaction itself is subject to approval by regulators, Virgin America shareholders and other conditions – a process that typically takes upwards of six months. Until the transaction is officially approved by shareholders and regulators, it will be business as usual and Virgin America and Alaska will continue to operate as independent airlines.

 

We will each maintain separate websites, separate guest service teams and distinct frequent flyer programs. If you book a Virgin America flight, you will fly on Virgin America.  In short, there will be no immediate changes in what you have come to expect from our award-winning booking or flight experience. Beyond that, the process to actually merge the two airlines into one is typically a process that takes an additional 1-2 years.  So you are not likely to see major changes to your flying experience for at least 18 months.

 

Why is Virgin America merging with Alaska Airlines?

 

Although we are proud to have built a successful airline with such a loyal guest following, the fact is we are operating in an increasingly consolidated industry, and we believe by joining forces with Alaska, we will create a stronger foundation for growth and competitiveness. 

 

Today, just four airlines control more than 80% of the U.S. market.  By combining with Alaska – an airline that, like us, has a strong position on the West Coast, a history of operational excellence, and a guest- and employee-focused culture – we are not only creating the best airline in North America, but one with the size and market share necessary to compete in this consolidated environment. 

 

Nearly nine years ago, we set out to build an airline from the ground up with guests like you in mind. Through this merger with Alaska we can continue to deliver on that brand promise.

 

The merger will significantly expand flying options across an expanded network of over +125 destinations in North America.

 

Why now?

 

The airline industry has changed dramatically in the past few years and just four airlines control more than 80% of the U.S. market – which increased pressure on smaller carriers, even successful ones like ours.

 

We believe that by joining forces with an airline that, like us, has a strong position on the West Coast, a history of operational excellence, and an employee and guest-focused culture, we will create a stronger and more competitive airline with a larger network and expanded flying options for our guests.

 

Merging these two strong companies now will allow the combined airline to enjoy a much stronger competitive position and an even better flying experience across a much larger combined network.

 

After the airlines are combined, what benefits will Elevate members have through the Alaska Airlines Mileage Plan?

 

At the point when the Virgin America Elevate program is merged into the Alaska Airlines Mileage Plan™ program, there will be no disruption to your rewards.  Alaska Airlines has assured us that your Points balance and Status level will be mapped over and reflected into Alaska Airline’s award-winning Mileage Plan.  This means that you can continue to fly and accrue Points now until then.  When the programs are combined, Elevate members will be able to use their Status levels and earned Points across a significantly expanded network – including 114 destinations in North America and 900 global destinations through Alaska’s Airlines’ robust network of international partners.  Some further benefits offered through Alaska Airline’s Mileage Plan include:

 

Alaska Airlines’ Mileage Plan has been ranked the #1 airline rewards program by U.S. News and World Report for the past two years (link to http://travel.usnews.com/rankings/travel-rewards/).

 

Alaska Mileage Plan members can earn and redeem miles on Alaska Airlines and with more than 16 partners to over 900 destinations worldwide.

 

Alaska Airlines’ Mileage Plan Miles don't expire for 24 months after last earn or burn activity.

 

https://www.virginamerica.com/cms/news/virgin-america-merger-with-alaska-airlines

ALASKA AIR GROUP TO ACQUIRE VIRGIN AMERICA, CREATING WEST COAST'S PREMIER CARRIER

Seattle-based carrier to become 5th largest U.S. airline

 

Highlights:

 

-Deal combines two leading airlines known for outstanding customer service and low fares.

-Alaska Airlines expands its California presence, while creating new opportunities for growth and competition.

-Expanded route network benefits customers, with 1,200 daily departures.

-Transaction is expected to be accretive to adjusted earnings per share in first full year, increases annual revenues 27 percent to more than $7 billion and offers $225 million total net synergies annually at full integration.

-Alaska Airlines Mileage Plan™ to welcome Virgin America Elevate® members.

-Company headquarters to remain in Seattle.

 

 

SEATTLE and SAN FRANCISCO – Alaska Air Group, Inc. (NYSE: ALK), parent company of Alaska Airlines, and Virgin America Inc. (NASDAQ: VA) today announced that their boards of directors have unanimously approved a definitive merger agreement, under which Alaska Air Group will acquire Virgin America for $57.00 per share in cash. Including existing Virgin America indebtedness and capitalized aircraft operating leases, the aggregate transaction value is approximately $4.0 billion. With an expanded West Coast presence, a larger customer base, and an enhanced platform for growth, Alaska Airlines will be positioned to provide more choices for customers, increase competition and deliver attractive returns to investors.

 

The combination expands Alaska Airlines’ existing footprint in California, bolsters its platform for growth and strengthens the company as a competitor to the four largest U.S. airlines. Combining Alaska Airlines’ well-established core markets in the Pacific Northwest and the state of Alaska with Virgin America’s strong foundation in California will make Alaska Airlines the go-to airline for the more than 175,000 daily fliers in and out of Golden State airports, including San Francisco and Los Angeles.

 

For Virgin America customers, service will expand in the thriving technology markets in Silicon Valley and Seattle. The combined airline will also offer more frequent connections to international airline partners departing Seattle, San Francisco and Los Angeles. In addition, this transaction will open up growth opportunities in important East Coast business markets by increasing Alaska Airlines’ access to slot-controlled airports like Ronald Reagan Washington National Airport and the two primary New York City-area airports, John F. Kennedy International Airport and LaGuardia Airport.

 

“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.”

 

David Cush, Virgin America president and CEO said, “Our mission has always been to create an airline that people love – and we accomplished that while changing the industry for the better. 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.”

 

“Today’s merger announcement of two great airlines coming together provides both pilot groups with an outstanding opportunity to benefit from the growth of the expanded Alaska Airlines’ route network,” said Captain Chris Notaro, chairman of the Alaska Airlines MEC of the Air Line Pilots Association. “We would like to welcome the professional pilots of Virgin America to the Alaska family and we look forward to a common goal of building a new joint pilot group that will benefit from a stronger and more prosperous airline that we have helped build.”

 

“Alaska Airlines and Virgin America are both known for providing an exceptional in-flight experience, thanks in large part to the dedication of our respective flight attendants,” said Jeffrey Peterson, president of the Association of Flight Attendants-CWA Master Executive Council at Alaska Airlines. “The combination of these two award-winning airlines provides an exciting opportunity for our members and for the Virgin America flight attendants, or Inflight Team Members. We look forward to joining together and building on our legacies of customer satisfaction to the benefit of both companies’ passengers.”

 

CONTINUED

https://www.virginamerica.com/cms/about-our-airline/press/2016/alaska-air-group-to-acquire-virgin-america-creating-west-coasts-premier-carrier.html

Exclusive: Richard Branson Says He Won't Let Virgin America Die

Written by Barbara Peterson  April 06, 2016

In an exclusive interview with Condé Nast Traveler, Virgin Group founder Sir Richard Branson said he will not allow the Virgin America brand to fade into aviation history.

 

Sir Richard Branson isn't giving up on his baby. “Virgin America will never disappear from the United States,” the Virgin Group founder told us yesterday, following the merger of his beloved U.S. airline with Alaska Airlines earlier this week.. In a phone interview from his home on Necker Island in the Caribbean, the billionaire added that he will back a new airline to carry on the Virgin name, if it comes to that. “People love Virgin with a passion that hasn’t existed since the early days of aviation, and I am certainly not going to let it go to waste, even if it means starting all over again” as a new domestic airline.

 

 

 

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http://www.cntraveler.com/stories/2016-04-06/richard-branson-says-he-wont-let-virgin-america-die

That's big news indeed.

Virgin America was just a poor aviation business model from the beginning. There's a way to offer a quality product without trying to be hip and having to limit yourself to catering to certain clientele and cities. VA ended up limiting it's revenue base and growth and was never going to be a real player in the US market. JetBlue does what VA did but caters to broader audience and operates on a much larger scale, so VA never really stood a chance. Odds are JetBlue and Alaska will strike a deal in the future.

 

Also, Branson coming out about this cracks me up. His entire Virgin aviation brand is feeling dated. Virgin Atlantic doesn't offer anything better than one could get Emirates, Etihad, Qatar, Cathay, ANA, Korean, Singapore...the list goes on. And many of those other airlines offer a better seat at a lower price.

United Airlines may be poised to drop one of its hubs.

 

No story about United is complete without a little jab at CLE!  :whip:

 

http://www.msn.com/en-us/money/companies/united-airlines-may-be-poised-to-drop-one-of-its-hubs/ar-BBuX8TN?li=BBnbfcL&ocid=msnbcrd

United Airlines may be poised to drop one of its hubs.

 

No story about United is complete without a little jab at CLE!  :whip:

 

http://www.msn.com/en-us/money/companies/united-airlines-may-be-poised-to-drop-one-of-its-hubs/ar-BBuX8TN?li=BBnbfcL&ocid=msnbcrd

 

This story was originally Motley Fool clickbait, and should be taken as such (as an opinion piece).  The MF has always had anti-United tendencies, and as usual, this op-ed piece demonstrates that, along with generally poor research.  I didn't put any credence to this article after reading it, and neither should anyone else.  Close down LAX?  That would be like United Airlines handing American Airlines it's resignation and intent to liquidate. 

United Airlines may be poised to drop one of its hubs.

 

No story about United is complete without a little jab at CLE!  :whip:

 

http://www.msn.com/en-us/money/companies/united-airlines-may-be-poised-to-drop-one-of-its-hubs/ar-BBuX8TN?li=BBnbfcL&ocid=msnbcrd

 

The industry lesson from UA dropping CLE is: the traffic didn't migrate to Chicago and Washington, as UA expected; it moved to other airlines.

Videos Show United Airlines Passenger Dragged Off Overbooked Flight

 

United Airlines is apologizing for overbooking a flight from Chicago to Louisville on Sunday night after a video posted on social media showed a passenger being pulled forcibly from his seat and dragged off the plane.

 

Watch the video here. This is truly unbelievable:

Videos Show United Airlines Passenger Dragged Off Overbooked Flight

 

United Airlines is apologizing for overbooking a flight from Chicago to Louisville on Sunday night after a video posted on social media showed a passenger being pulled forcibly from his seat and dragged off the plane.

 

Watch the video here. This is truly unbelievable:

 

I'd like to think of this as more kharma for pulling out of CLE....

 

They do drive me nuts with they way they treat their non-rev passengers.  I have been bumped from an upgrade to seat a commuting crew member.  Doesn't make sense.

Greyhound overbooks its buses.  This is all a symptom of deregulation. 

And the statement from United's CEO is shockingly tone-deaf: "I apologize for having to re-accommodate these customers."

 

They should be required to keep bumping up the dollar amount until four passengers volunteered to get off the flight. If people didn't volunteer at $800, they should've kept going. I'm sure that at $1000 or $1200, four passengers would've volunteered to get off the flight. And United paying out $4000 to $4800 would have been a much better outcome than having this video go viral.

Passengers who are bumped should uniformly receive $2000 in free travel. Business or First class. No matter what.

Passengers who are bumped should uniformly receive $2000 in free travel. Business or First class. No matter what.

 

Amen.

Passengers who are bumped should uniformly receive $2000 in free travel. Business or First class. No matter what.

 

I don't believe it should be a flat rate.

 

It's United's problem and they need to pay for it even if it makes the flight unprofitable. Delta recently paid a family siting in Economy $11k to get one of their crews repositioned.

 

You don't say $400 max or we call security. You up the price until you get 4 volunteers. If UA eats $10k to get there, so be it.

I agree with both of you guys...you keep sweetening the deal until people cant refuse.  That HAS to be the ONLY answer.  Dragging a guy off the plane because a computer picked him is absolutely unacceptable.  Although the guy  who got dragged and the lady in the video acted pretty ridiculous. If you are the guy who was picked, screaming like a little girl is not a good look.  And mind you, i dont think he is in the wrong at all for not getting off the plane.  I just think his reaction was silly. And he was a doctor?  hope his hands arent in charge of me if anything goes wrong on the table.  The whole situation is ridiculous. 

 

If i was traveling alone, i wouldve haggled United into a free first class international ticket. the passengers had all the leverage there, im surprised nobody took advantage of it.

Passengers who are bumped should uniformly receive $2000 in free travel. Business or First class. No matter what.

 

I don't believe it should be a flat rate.

 

It's United's problem and they need to pay for it even if it makes the flight unprofitable. Delta recently paid a family siting in Economy $11k to get one of their crews repositioned.

 

You don't say $400 max or we call security. You up the price until you get 4 volunteers. If UA eats $10k to get there, so be it.

 

exactly. mega fail by United.  they should be punished for their handling of it

Although the guy  who got dragged and the lady in the video acted pretty ridiculous. If you are the guy who was picked, screaming like a little girl is not a good look.  And mind you, i dont think he is in the wrong at all for not getting off the plane.  I just think his reaction was silly. And he was a doctor?  hope his hands arent in charge of me if anything goes wrong on the table.  The whole situation is ridiculous.

 

He said that he had appointments with patients in the morning and would have to miss them if he got booted from this flight.

 

Airlines love having doctors on board when there's some medical emergency in the air...maybe they should treat them with more respect on the ground.

Again, deregulation.  Trump could solve this by...regulating.