After East Coast-focused JetBlue (B6) submitted a bid to acquire Virgin America (VX), rumors had been circulating that West Coast carrier Alaska Airlines (AS) would also compete with JetBlue for Virgin America. Today, Alaska Airlines and Virgin America jointly announced their merger plan.
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Acquisition Terms
Alaska Airlines will acquire Virgin America shares in an all-cash deal at $57 per share, valuing the transaction at approximately $2.6 billion.
Frequent Flyer Programs
Naturally, what most of us care about here is miles and points. Alaska Mileage Plan miles are extremely valuable. Virgin America’s program was not bad either, but it still did not match Alaska’s. The two airlines share some partner airlines, and Alaska also partners with both American Airlines (AA) and Delta Air Lines (DL). Combining the frequent flyer programs will be a time-consuming process and will likely take at least half a year. According to the official statement, the two programs will be merged into Alaska’s Mileage Plan frequent flyer program. Since the value of the two currencies is not too far apart, a 1:1 conversion ratio seems likely. So if you are holding Mileage Plan miles, they should still be relatively safe for now. That said, there is always the possibility of future devaluation. If you have Virgin America miles, it may make sense to move your attention to Alaska’s program, since Alaska miles are more valuable overall. Virgin America is also a transfer partner of AMEX and Citi credit card points (Membership Rewards and ThankYou Points), but both transfer at a very poor 2:1 ratio, so there is not much upside in transferring now. Because the new Alaska Airlines will have a much broader domestic route network, redeeming international award tickets should also become easier once the merger is complete. Alaska currently allows only its own flights plus one partner airline on a single award ticket, so having access to more U.S. hub airports through Alaska will create many more options for international segments. For example, instead of being limited to starting from JFK, you may eventually be able to first fly Alaska to SFO and then connect to another airline’s international flight.
Co-Branded Credit Cards
Virgin America has two co-branded credit cards. The official FAQ says that Virgin credit cards will be converted into Alaska credit cards, and the miles will of course be transferred as well. Since the Virgin credit cards have relatively small sign-up bonuses, we would not recommend applying for them now.
The New Airline
Alaska Airlines’ main hubs are in Seattle (SEA), Los Angeles (LAX), and Anchorage (ANC). Virgin America’s hubs, meanwhile, are in Los Angeles (LAX) and San Francisco (SFO). After the merger, the combined airline will be more competitive on the West Coast. Alaska will gain Virgin America’s better-equipped fleet and route network, especially Virgin America’s transcontinental routes between the West Coast and East Coast (LAX/SFO-JFK). The post-merger Alaska Airlines will compete more aggressively with American and Delta, though it is not yet clear whether that will affect Mileage Plan’s partnerships with those two airlines.
Conclusion
These two airlines have significant overlap in their West Coast operations, and the merged route network will be much more complete. Mileage Plan just became even more attractive. With American about to switch to revenue-based mileage earning, Alaska may become the only major U.S. airline still awarding miles based on flight distance. Mileage Plan may be worth moving from your backup option to your primary program. What do you think? Share your thoughts below.