Over the past decade we've seen the "big six" US carriers turn into the "big three," though that hasn't been the extent of consolidation in the US airline industry. It has gone beyond that, as we've seen mergers between low cost carriers as well, including between Southwest and AirTran. It looks like the consolidation in…
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I don't know about VX not being able to command a price premium.
I just bought a UA F ticket for $299 between SFO-DEN and the VX F product in Main Cabin Select was $299 and the F product was $399. If they can get that money, they are doing more than fine. However, that was too rich for my blood. I booked the UA ticket. (fares were one way).
They are priced high in the market Most carriers beat their prices. They are a quirky campy carrier. I would be surprised if they were bought unless aircraft a bargain.
live in LA area, their prices are always on the top of other airlines. Fly to Vegas frequently, I always want to try VX, but their price is just twice higher than SW, and sometimes UA/AA/DL.
Maybe AA or DL, to establish SFO as a hub?
I really hope JetBlue would be interested, because they are the two airlines I love, and their routes don't overlap. They can position themselves as the "bicoastal" airline. Their brands, planes, and frequent flyer programs match up well.
I wonder if Alaska would maybe be a good merger target.
Looking at the route map in the post, I imagine the 2 route networks would be complimentary.
Also reading Lucky's articles about Alaska's fights/battle/war with Delta and considering Virgin's past with British Airways, both Virgin and Alaska seem to have the fighting underdog mentality!
As a VX flyer, I would like to see B6 buy them. I think it would complement their route nicely and make them (almost) a major carrier.
Otherwise, more competition would be better for consumers so I wouldn't mind if they didn't merge with anyone.
I have flown Virgin America a couple of times and like the product but they're too expensive and the flight times are just weird. I would pay more to fly them if their flight times weren't so wonky.
I don't see AA, UA, DL, or WN being approved to buy VX. JetBlue seems the best merger partner for Virgin America.
Would JetBlue make any sense? They both operate on different coasts but they have a pretty loyal following nonetheless.
WN probably wants nothing to do with VX's business model or Airbus planes. AS also flies mostly 737s. B6 isn't doing as well as other airlines, but maybe they'd be interested. Or F9, maybe?
SFO based, I've always wanted to try VX but they never priced it lower than the majors or WN. I usually ended up with someone else.
Could one of the 3 Middle Eastern airlines buy it to have access to the US domestic market? That would be AMAZING to put people like Mr. Anderson from Delta in his appropriate place.
I think they'll probably just be bought by an investment firm, like Frontier was. I don't necessarily think they'll be bought by another airline, as they really don't have anything that valuable (no hard-to-get slots, etc) that another airline couldn't get if they wanted to.
Three to Five years ago, VX was by far the cheapest airline for Transcon travlel (American was a close second). It was easy to get $240 r/t tickets. Nowadays I never see them at the top of the list on my kayak searches.
I've long thought JetBlue would be a good pick to acquire VX. Living out west, I often forget JetBlue exists, but this would give them the presence they need and it does, as you point out, have a similar business model.
Alaska wouldn't want them. American has too much shit to deal with. Delta is a reasonable idea but would prefer to move the planes and network to Seattle, where there isn't a lot of space at the moment.
Why would it necessarily be an acquisition by another airline? Why not a buyout from an investment firm?
While either a JetBlue or investment fund acquisition seem like the most likely outcome, I wouldn't be especially shocked if Etihad was looking to continue their strategy of purchasing an equity stake in an oftentimes non-traditional airline, and then adding it to their codeshare network.
Emirates would probably be more keen to add to their outright brand (which I'm sure would be met with immense uproar from the legacy carriers), whereas Etihad has no qualms about simply acting as an investor to leverage codeshare opportunities.
I've always wondered why B6 and AS never partnered up (but not necessarily merged). Those two together would have a strong coast to coast network and strong latin america/caribbean routes and not much overlap. They both seem to be the strong quirky carrier on their respective coasts and together could compete with the legacies and WN. I could see VX partnering with F9 (if they can ever figure out their business model). But truth be told, I am SFO based and have only flown VX on one roundtrip during the carrier's entire existence. I don't think they have a single exclusive route.
United, Emirates, Ethihad make sense.
If it's a foreign carrier or entity they can only "own" 49.9%
VX might be looking for an investment partner……with frequent flier partnerships on the horizon. In this regard my bet is a Middle Eastern carrier.
If I were Jetblue, I would want Alaska, but Alaska already has tie-ups with AA and DL. If Jetblue were to try to pickup anyone, it should be Hawaiian. Existing codeshare and complementary route network with no overlap, with international expansion west as everything else is south. Also mainly Airbus fleet.
Branson has a history of selling/reducing his stakes in Virgin businesses. He's (Virgin Group) likely looking to cash out ownership %. Probably a minority owner switch.
I don't know if you can rule out Frontier. If you overlapped Frontier, JetBlue, and VX route maps and thought of them as a new single airline, they could easily compete with the big 3. I'd fly "FrontBlue America"!
The problem is their frequent flyer program sucks
The airline is attractive enough to fly but their business model for a small airline is deeply flawed
The food is not good enough the first class I don't find it comfortable though I love the style and white leather seat
Who would earn it that program who actually flies alot?
I credit to Virgin Atlantic and then one cant even redeem for one way flights on partners and some routes are not allowed for redemption at all
To many fatal flaws in the program the partnerships and lack of routes they fly
Otherwise the brand is pretty cool!
VX is already owned by Virgin Group (25% equity stake). I'm pretty sure the US DOT won't allow a different foreign carrier to increase their stake from what is there now. SO at best if it was Emirates/Etihad/Qatar it would be a swap of equity stakes.
My guess would be Delta. Delta's fleet and routes fit in combination with the Virgin Atlantic and Sky Team international routes that serve San Francisco. It could be an easy way for them to explosively capture market share on west coast. Possibly also increase their share of flights to Hawaii.
it wont be an airline. it'll be an investment firm. I don't think VX has anything of value to offer anybody.
I have first hand knowledge of one of the middle eastern carrier's exploits in acquiring equity stakes - let's just say it's not all it's cracked up to be. And their hands are FULL with the disasters they've taken on.
@Erik Nordheim
And so what happens with the slots VX has at DAL/LGA/DCA?
If you said "they transfer over..." nope, the DOT can snatch them up (AS got their first slot at DCA because the DOT didn't let TW transfer their DCA-LAX slot to AA after that merger). And given that the DOT basically gave the finger to DL and said "go away, you're a dominant legacy carrier, we want actual competition and LCCs" when they tried for DAL slots, I don't see them rolling over for a DL/VX merger. Losing the DAL/LGA/DCA slots VX has appreciably reduces the value of the airline.
Also, trying to expand international operations at LAX AND SFO AND SEA doesn't make a whole lot of sense. There's a reason why UA went "kthxbye" on their SEA longhaul operations. Flowing connecting traffic to THREE Pacific hubs (LAX, SFO, SEA) is not bloody likely to work.
So I guess you're saying DL would pull the plug on SEA and go into a shooting war at SFO with UA, after dumping a lot of cash on the carcass of VX? That's... interesting. I bet AS would pop champagne, though.
Oh, and anyone who thinks DL is going to win at SFO by just using VX's domestic route network and flowing anyone on longhaul to SEA/LAX needs to pass what they are smoking. It must be good stuff.
"Yeah, I'll TOTALLY fly SFO-SEA-HKG on DL instead of SFO-HKG on UA."
Riiiiiiight....
My money is on Etihad. They did a similiar move a number of years ago with Virgin Australia. They will use it for its codesharing to enter the US market and feed traffic onto Etihads "alliance".
Most likely, assuming Etihad throws some money at them rather than just buying a stake off of the like of Richard, they will try to expand them to compete more effectively in the US market against some of the bigger carriers but not the likes of AA/UA/DL.
In saying that, AA already takes on EY codesharing so Etihad might not do it.
Foreigners are not allowed to own American airliners by law, hence the 25% ownership by Virgin Group(although IIRC, they can own 49%, if 24% is non-voting shares).
Virgin America was sued several times over the ownership % of Richard Branson by Delta.
So it must be AA, DL, UA, or, my pick JetBlue.
We need more industry consolidation amongst the LCC's. Frontier and Virgin A need to go and be taken over by someone good like B6.
Allegiant needs to gobble up Spirit once old Bobbie gets their ops running.
JetBlue needs to diversify - they're too focused on the northeast (although their single largest city is apparently Ft. Lauderdale?) and buying Virgin America would make them a major player in SF.
That said, I'm not so sure antitrust would prevent DL or AA from acquiring them, other than perhaps giving up a few slots in NYC or possibly gates at DAL. The big payoff in acquiring VX would be SFO, and AA or DL wouldn't even be half the size of UA at SFO if they acquired VX.
I still think B6 would be the best choice.
This is something Etihad might be interested in. They already have a 25% stake in Virgin Australia, and something like this would greatly develop their code-share network within the USA.
I really don't want to see the elevate program gutted to another model though. Might be self serving but how I fly makes it easier to earn 50k points to redeem on Virgin atlantic for example than trying to earn 120k+ on delta et all.