Alaska Airlines Reveals Timeline for the End of Virgin America — and the Elevate Program

Edward Russell did a fantastic job tweeting real time information being shared on Alaska Airlines plans as they integrate Virgin America at the airline’s investor day.

They expect to end Virgin America Elevate at the close of 2017. They project a ‘single operating certificate’ to fly as one airline at the beginning of 2018. They’re working towards mid-year 2018 labor agreements and a move to a single reservation system at the end of 2018 (with a trickle of final merger-related activities running through 2020).

While many will miss Virgin America Elevate’s partner awards, Alaska has banked on its Mileage Plan frequent flyer program which still awards miles based on distance flown rather than revenue as a differentiator. And the airline expects to be ‘generous’ with upgrades and use that to attract tech workers who can’t buy lie flat premium cabin seats across the country.

Richard Branson has been making noise that the Virgin America contract runs through 2040, so he wants his percentage off the top even though there’s been a change in control of the airline and Alaska plans to retire the brand. However Alaska says that there are numerous options for them to terminate the deal.

(I’ve noted elsewhere that Branson’s claims that the Virgin America deal continues into the future is completely inconsistent with his claim that he’s going to start a new Virgin airline in the U.S. Both cannot be true.)

While Alaska Airlines has been an all-Boeing 737 airline, they’re inheriting Airbus narrowbodies with the Virgin America acquisition. And those won’t go away for awhile. The majority of leases expire between 2019 and 2024, and Alaska will announce whether they plan to continue operating an Airbus fleet into the future by the end of 2017. In the meantime Alaska will be adding seats to Virgin America planes.

Virgin America is going to move to concourse C in Portland to consolidate operations, and according to Russell Alaska expects “increased gate utilisation will save carrier ~$700,000 annually.”

They’re going to redeploy Alaska Airlines Boeing 737-900s to cross country routes and legacy Virgin America Airbus A320s to West Coast routes.

A ton of new routes have been announced, and they’re all about connecting markets that the airline says wouldn’t have made sense pre-merger.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I like how half of those dots on the map are not where they should be. The best is either Philly being somewhere near Harlem or Kansas City being a suburb of St. Louis.

  2. This will turn out to be great for both AS flyers and UA flyers. AS gets a lot more routes, while it keeps UA focused on being competitive at SFO instead of sitting on their laurels (let’s not pretend WN at OAK was all that meaningful).

    The one group pissed will be those used to the “hip and cool” VX experience but not willing to pay a premium for it.

  3. @henry LAX —> in re: “The one group pissed will be those used to the “hip and cool” VX experience but not willing to pay a premium for it.”

    How/why do you expect/anticipate those VX customers to be “pissed,” and what sort of premium do you expect them to pay? Seriously, I don’t understand what you were trying to say with that last comment . . . while I *do* agree with you that it will help to keep UA on its proverbial toes.

  4. I am a VX flyer and I am really happy about the plan, honestly. I hope they just go to a single fleet again soon though. I’m surprised they’re not just trying to get out of the Airbus leases pronto.

  5. @Gary —> random thoughts . . .

    1) “While many will miss Virgin America Elevate’s partner awards . . .” The only partner award(s) I have taken advantage of — that I’ll miss — were award flights on VS to LHR. Since the take-over of VX by AA still gives me options to fly to Europe — indeed, *more* options than before — I’ll miss VS, but I won’t miss the partner awards.

    2) I flew two legs on VX yesterday, and without exception — among VX employees and passengers alike — the biggest complaint about the announcements by Alaska as to the future of the Virgin brand and the changes to come was the loss of “RED,” the IFE system of live TV, dozens of movies, and its food-and-drink ordering menu. There was no anger, but rather a sense of disappointment and loss — like losing laptops and USB drives, and having to return to the days of desktops and floppy discs.

    3) Since the merger/take-over was announced, I have made it a point to ask VX employees how Alaska is treating them. Without exception — from the ticket counter to the gate crew; the flight attendants to the cockpit — the response has been genuine and positive, sometimes even enthusiastic that the AS “corporate-powers-that-be” (my words) have done a great job in welcoming the VX personnel. That said, however, yesterday I experienced my first negative comment, but that was about the AS ground employees at one airport just being rude and grumpy with the VX employees at the same airport. Hopefully it’s just an isolated incident.

    4) As I was de-planing yesterday at SFO, the captain was standing in the doorway leading to the flight deck saying goodbye to the passengers. I jokingly said, “Good luck getting certified on a Boeing,” and this look of both surprise and relief washed across her face as she replied, “They told us we won’t have to do that for at least five years!”

    5) Finally, I think it’s important to remember that any fan of any airline would be sad to see it disappear and/or sold. (And not just airlines: people mourned the loss of Saturn, of McDonnell-Douglas, even Hostess!) I’ve flown VX 120+ times since they started, and the one thing I can say for them is they *did* make flying fun again. It was the only airline that I didn’t face boarding the plane with a mixture of boredom and dread. Somehow, I think that AS is going to have a difficult time keeping that sense (and sensibility) alive in the future. I am sure that the “powers-that-be” over at Alaska *do* understand the loyalty and — yes, passion — VX customers have for their airline. If Alaska gets rid of too much of what made VX worth flying, it won’t be too difficult for those customers to switch to AA, DL, UA, or WN going forward.

  6. As a public company, I’d guess Alaska owes its shareholders a full explanation of why Sir Richard thinks they’re on the hook for royalties even after Alaska retires the brand.

    Sir Richard has not acquitted himself well here. He should be gracious, because he and his Virgin America shareholders got WAY more money than they probably should have given Virgin’s notable lack of success in the US airline industry. When somebody gives you lots of money you probably don’t deserve, you just say “thank you.”

  7. @Jason Brandt Lewis : go read other forums and see the scores of angry comments from VX loyalists showing their faux-outrage vowing to ditch AS because they’re making the experience more business-like and less unique. The whole notion of VX from the get go was that in prime markets, on top of LCCs and legacies, there’s supposedly a niche market for millenials willing to buy into such a product. Seriously, do you even know what VX is/was ?

  8. Personally will mourn the loss of VX First Class, as it stands now.
    What a great product .. AS will just make it another barely improved experience over Y. Increasing seats and pitch. also lowering quality of service, (i.e. food) will be very sad.

  9. Henry, why is it “faux”? AS is downgrading the flying experience, especially in F. I’d switch to JetBlue in a second if it were a viable choice from SFO.

  10. @henry LAX —> do you bother to read any post not specifically addressed to you? After all, 30 minutes *before* your condescending reply, I posted the following: a) “I flew two legs on VX yesterday….”, b) “I’ve flown VX 120+ times since they started….”, and so on and so on . . .

    To be specific, I signed up for VX’s Elevate program three days after it opened. I’ve held Elevate Silver status for several years, and Gold status for 2016-2017; I will qualify for Gold again this year, and so that will carry over to MVP Gold on AS.

    So to answer your question, yes, I *do* know what VX is. It’s too early to say “was,” though certainly the handwriting is on the wall. But no one that I know *personally* is ready to “ditch AS,” as you put it — but EVERYONE with whom I’ve discussed the merger (really a take-over) is concerned. No one has jumped ship (“jumped plane”?) YET. All the people I know are all taking a wait-and-see attitude.

    This is precisely why, as I said above, “Since the merger/take-over was announced, I have made it a point to ask VX employees how Alaska is treating them.” I *am* concerned, and I want to know what’s going on — perhaps more than what we are being told in press releases and emails.

    To be sure, there are some people on various websites expressing concerns. I have seen some of the comments; indeed, I have made some of them. But “expressing concerns” is a far cry from “scores of angry comments from VX loyalists showing their faux-outrage vowing to ditch AS” . . . And even if the comments were angry, “scores” means at least two score — I don’t recall seeing 40+ comments “vowing to ditch AS.”

    What I *do* know — fact, versus rumor or innuendo — is that AS has saved me a ton of points so far. I booked two VX first class SFO-JFK one-way earlier this year for a flight in September. It was 72,930 points for both tickets. Subsequently it became possible to book VX flights via the AS website. I saw that two one-way FC tickets were only 25,000 each on the same flight. So I cancelled my VX-booked tickets and had the 72,930 points returned to my account. Then, I transferred 40,000 VX points into my AS Mileage Plan account. Since they transfer at a rate of 1 Elevate point = 1.3 Mileage Plan miles, that 40,000 Elevate points became 52,000 AS miles — more than enough for the two tickets. Technically I only needed 38,462 Elevate points to get to 50k — that saved me the equivalent of 34,468 Elevate points. At 38,462 points, that’s a return of 6.2¢ per point. And — really — if you factor in the 10k miles Alaska gave all the VX Elevate members . . . and the 30k bonus I got for the Alaska Visa Signature card . . . the two one-way tickets only cost me a total of 7,692 Elevate points (instead of 72,930), meaning a redemption value of 31¢/point. (OK, that’s pushing it. Personally, I think of the cost as being at the 38,462/50k level . . . )

    The truth is no one knows what the final “new version” of AS will be, post-assimilation. I intend to fly AS at least one round-trip after VX disappears to actually see what it’s like once the take-over is complete and the dust has settled. Perhaps even twice. Only then will I be in a position to decide if my loyalty (and my flight dollars) continue to remain with AS + what used to be VX.

  11. @shza —> We’ll see. I *do* expect there to be some downgrading, to be sure, but whether or not I switch to another carrier depends upon how far down the downgrading ends up being. That said, if you read my post above to @henry LAX, you might be wondering why I was booking one-way tickets on VX. Truth is, my flight back from JFK will be in JetBlue’s Mint service¹.

    In re: your comment that, “I’d switch to JetBlue in a second if it were a viable choice from SFO.” I have to say that I wouldn’t. At least not yet. Part of my thinking is that I really want to see how Alaska turns out before bailing, but even more importantly is that I haven’t been happy with my flights on JetBlue so far. (That’s the reason I’m checking out Mint . . . to see if my opinion can be changed.)

    So far, all my experience on B6 has been that OAK-LGB route, and I don’t like it. First of all, I understand why OAK and LGB are their West Coast hubs — far cheaper and easier in-and-out than SFO and LAX, respectively — but OAK is *much* more convenient to SF and the whole Bay Area than LGB is to LA. (I grew up in LA, and LGB is convenient to Long Beach, Signal Hill, and Seal Beach; Lakewood, Bellflower, and Compton. That’s about it.) Secondly, the planes on that route feel old and somewhat dingy. The bulkhead seats have LESS legroom than regular seats, but they’re premium seats(?!?). And third, the in-flight crew is nowhere near as friendly or engaging as the crew on VX.

    I live in the East Bay. OAK is convenient for me if I’m driving; SFO is a bit farther/longer to drive, but far easier on BART. But I’m not yet willing to hop on the JetBlue wagon . . .
    _______________
    ¹ FWIW, I booked two Mint seats on B6 also using points. If you recall, they were offering a points match early last year for VX customers — they would “match” the points in your VX account as long as you flew one round-trip with JetBlue prior to . . . was it Memorial Day? (I don’t remember.) Anyway, my wife and I flew OAK-LGB and received approximately 75,000 points. I picked up the rest by crediting some Hawaiian Airlines flights to B6, and some other things, and ended up with the 100,000 points I needed to book two Mint seats *back* to SFO. (Only a 1.7¢ actual return, but if you subtract out the 75k I got for free, it turns into a 6.8¢ redemption per point.)

  12. @Jason: Thank you for your thorough and informative comments regarding Virgin. Your passion and knowledge are a testament to the airline. 🙂

    I also am passionate about Virgin America and have held Gold status for years (and Silver before that). To summarize my post from another thread, the negatives I see to this merger for a Virgin Gold are many, and they are significant. They are:

    1. Worse first class seats (less pitch)
    2. Worse premium economy seats (less pitch) and inferior service (no free food, just free alcohol and movies)
    3. No more unlimited free lounge access at LAX after 2017
    4. Worse credit card (no ability to spend toward status)
    5. Worse partnership redemptions (I redeemed 240,000 Virgin points for four roundtrip premium economy tickets on Virgin Australia last year. That was a phenomenal deal and would have cost exponentially more with Alaska if it were even possible. Truly, the partnership redemption levels with Virgin are abnormally generous).
    6. No more on-demand food ordering in Main Cabin and Main Cabin select
    7. Loss of Red IFE

    Here are what I see as the advantages of the merger:

    1. Better frequent flyer program for earnings — I like earning points based on miles rather than revenue
    2. Sometimes better redemption possibilities, especially for first class. I did exactly what you described above as well and booked Virgin first with Alaska because it was a better deal. However Virgin Main Cabin is typically a better deal using Virgin points versus Alaska miles.
    3. More airports and service. I’m particularly happy about greater service to my home airport of SNA where Virgin doesn’t fly at all (had to drive to LAX).
    4. Better lounges (Alaska has more and better food offerings and more lounges than Virgin)
    5. More first and premium economy seats (although inferior product as noted above)

    I also agree with you that Alaska has been decent to Virgin. The 10,000 point bonus was nice, the 1 to 1.3 conversion ratio is fair (although I wish that you could transfer points both ways, not just to Alaska), and the ability to choose which program I want to redeem and earn in during 2017 has been very helpful.

    Most poignantly however, I agree with your comment regarding the sense of loss. Virgin made flying fun and downright luxurious again. I genuinely will miss that.

    Further, because obtaining status will be more difficult, I will miss all the perks of status. I intend to continue with Alaska for a trial period as well, but also may end up shifting to Jet Blue (which has free wifi, excellent coach legroom, borderline first class legroom in its Even More Space seats, and Mint, the best domestic first class). Unfortunately Jet Blue has a very limited route network in CA.

  13. @Bob —> Clearly you and I are *basically* on the same page and of similar mind when it comes to this transition. I think where we differ isn’t really so much of a difference per se, but rather of perspective borne out of our “home bases” of SFO and LAX, respectively.

    As I mentioned in passing above, I became an Elevate member on August 8, 2007. Virgin America began its flight operations August 6th of that year, so I lied: I joined two days after they started, not three. ;^) Prior to that, I was typically flying Southwest out of OAK or SJC, based upon whether I was living in Berkeley (since 2002) or Santa Cruz.

    From my place in Berkeley, it’s approx. 40 minutes to OAK no matter how you go (but it varies between 18 and 21 miles). SFO is roughly an hour to 1.5 hours (if traffic is really bad), but very quickly after VX began flying, driving to SFO was well worth it — to me — in order to fly Virgin . . . not unlike, I would imagine, driving up to LAX from Orange Co., rather than SNA (or LGB for that matter). [FWIW, I grew up in LA.] Indeed, I’m now so used to flying out of SFO that it hadn’t even crossed my mind what the “new” Alaska will be doing at OAK. Expanding? Contracting? Staying the same?

    Thank you for making me take a wider look at this . . .

    One final thought in re: JetBlue. Despite OAK being a hub, they only fly non-stop between OAK and JFK, BOS, and LGB. However, NONE of these flights offer Mint service. For that, I still have to travel to SFO. From SFO — which may have to be considered their hub, rather than OAK — they have non-stops to the same three destinations, plus LAS and FLL. JFL and BOS offer Mint service, and FLL is supposed to have Mint service later this year, but not at the moment. Meanwhile, out of LGB — the real hub of JetBlue — they fly nonstop to 13 destinations (versus the 3 for OAK or 5 for SFO). But out of LAX, they only have 5 non-stops and none of the destinations are within California.

    Considering approximately 66% of my travel is up and down California and the West Coast, and the remainder is to the East Coast or abroad, JetBlue remains an occasional option for me, but it’s impractical for me to make them my “go-to” carrier.

  14. I never understood why VX offered a ridiculously generous seat pitch in FC. It seems like wasted revenue to me, especially for a seat that wasn’t lie-flat. With AS, there will be much higher probability for those with status to snag a FC seat…today with VX that isn’t even a possibility. AS tends to put out two FC seats initially for mileage redemption when flights become bookable but upgrades are fairly easy on top of that for mid to top tier ff’ers.

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