
Alaska Airlines to Buy Virgin America for $2.6B - icinnamon
https://www.virgin.com/richard-branson/virgin-america
======
dazbradbury
"Because I'm not American, the US Department of Transportation stipulated I
take some of my shares in Virgin America as non-voting shares, reducing my
influence over any takeover. So there was sadly nothing I could do to stop
it."

\- Sir Richard Branson, Virgin founder.

~~~
jvm
Can we do away with these absurd foreign ownership laws yet? Why would we want
to discourage people from investing in our country?

~~~
alistairSH
I wonder what makes USDOT think a foreign national is any more or less likely
to follow the rules than an enormous multi-national corporation like United or
Delta?

These foreign-ownership rules do strike me as counter-productive
protectionism.

~~~
JamilD
The airline industry is extremely protectionist. I'd rather fly on Qantas JFK-
LAX (they _do_ fly that route) but cabotage rules prevent them from selling
tickets on it.

Because evidently if any competition comes to the domestic aviation industry,
US airlines are doomed.

~~~
Spooky23
History has pretty much established that competition in the space is
destructive.

Allowing international carriers transiting the US to do intra-city flights
soaks up demand and lowers route profitability for busy routes.

Past practices were to balance demand across city pairs so as to avoid local
monopolies (ie. Minneapolis and Delta/Northwest) and ensure universal service.
Deregulation broke all of that, so we have price competitions at the cost of a
race to the bottom in service and industry cycles of bankruptcy and
consolidation. Long term, that means monopoly levels of service and pricing.

~~~
getpost
Huh? Airline deregulation since 1978 is one of the poster children for
improved service to consumers. Any transportation business is inherently
subject to the flux of fuel prices and demand as it varies with overall
economic activity. If anything, difficulties airlines now face are compounded
by the degree of regulation that is still in force.

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mabbo
If anyone is taking over or merging with Virgin America, I'm glad it's
Alaskan. I've never been unhappy with flying with them.

A couple examples of little things they do that are clever and should be
copied by everyone else: check your bag at the gate 30 minutes before boarding
and you can board early; a guarantee that your checked luggage will be in your
hands 20 minutes after landing, or you get $20.

They are an airline that are trying things, experimenting.

~~~
bogomipz
So this will likely be one of the first things that Virgin gets rid of along
with 1 free checked bag.

It never ceases to amaze me that the airlines refuse to abandon this absurd
policy of charging for a piece of checked luggage. When you look at when this
practice was introduced of charging for checked luggage, the time it takes to
board and un-board a plane has increased by about 20 minutes due to everyone
trying to shove as much as possible into overhead bins. Perhaps this time axis
doens't carry much weight for carrier? Although that would be hard to imagine.
It seems like false economy to say charging $25 per luggage checked make sense
when you have now added 40 minutes to each flight. I can count the number of
times on one hand that my flight has left at its scheduled time even though it
boarded on time.

~~~
Turing_Machine
"It never ceases to amaze me that the airlines refuse to abandon this absurd
policy of charging for a piece of checked luggage."

They do it because it works, and the reason that it works is that passengers
(and flight-booking web sites) tend to sort the list of available flights by
base price. Only.

It would be nice if the travel sites let you enter preferences: "How important
is a decent meal to you?" "How important is a free checked bag to you?" and so
on, but I haven't seen any sites like that. There's an opportunity for
someone. :-)

~~~
JamilD
Passengers almost always choose price over anything else. RouteHappy [0] does
most of what you ask, and Google Flights has partnered with them - but I don't
think the average customer really cares. Profits at the ultra low cost
carriers like Spirit and Frontier are extraordinarily high for a reason.

[0] [https://www.routehappy.com](https://www.routehappy.com)

~~~
TillE
People always make this claim, but the differentiating features are
extraordinarily difficult to find. Nobody has heard of RouteHappy. There is no
easy transparency of information required to draw conclusions about a free
market acting in a certain way.

It's only when I go directly to carriers like Air France or Lufthansa that
they specifically flag - for example - flights on an A380, which I am
absolutely willing to pay a bit more for.

~~~
freehunter
Holy cow as a frequent flier, I wish I knew which plane I would be getting
when I book the ticket. There is a difference between an MD-88 and a Boeing
717 and when I'm flying three times a month, that difference really does
matter. Milwaukee to Chicago, I'll put up with whatever plane you give me, but
Chicago to Atlanta, I would pay a bit more for the newer plane.

~~~
JamilD
You can see what aircraft is operating the flight you're booking on most
airline's websites. Makes a huge difference in what flight I book.

For example, I just booked ORD-SFO on UA in business, which is a completely
different experience on the upper deck of a 747 (UA1213) than the usual 737 :)

~~~
freehunter
Huh, I've always booked on my company's booking tool, which AFAIK does not
list the plane. Maybe I should start comparing to other sites to see what
plane the route will be running.

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btgeekboy
I still think JetBlue was a better fit. Alaska's a west coast, all 737 fleet.
Now they own another west coast airline (i.e. they overlap) with a ton of
Airbus. Alaska's probably getting something good for their $2.6b, but I
haven't figured out what exactly.

~~~
JamilD
According to the investor slide deck [0], it's to get into the California
market, which they're not dominant in. This acquisition will mean that Alaska
will be #2 at SFO, and a major player at LAX.

Virgin America's aircraft are almost all leased, so they'll be easy to get rid
of and consolidate into Boeing aircraft.

[0] [http://phx.corporate-
ir.net/External.File?t=1&item=VHlwZT0yf...](http://phx.corporate-
ir.net/External.File?t=1&item=VHlwZT0yfFBhcmVudElEPTUyMjI1MjV8Q2hpbGRJRD02MjgzODc=)

~~~
capkutay
That's too bad. I always thought flights on Airbus's are a lot smoother during
take off.

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perezdev
It blows my mind that Minecraft was purchased for $2.5B and Virgin America was
purchased for $2.6B.

~~~
tamana
What you are seeing is that, even though Virgin is huge and expensive and
provides a lot of value, the industry is competitive and very little of that
value is profit to the owner. Whereas Minecraft has a niche and is very
profitable.

~~~
oh_sigh
Why do investors ever park their money in airlines?

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trsohmers
"If you want to be a Millionaire, start with a billion dollars and launch a
new airline." \--Richard Branson (on starting Virgin Atlantic)

~~~
maxwell
"Here a durable competitive advantage has proven elusive ever since the days
of the Wright Brothers. Indeed, if a farsighted capitalist had been present at
Kitty Hawk, he would have done his successors a huge favor by shooting Orville
down." – Warren Buffet, who invested in US Airways in the early '90s, on
airlines in 2008

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darkclarity
As far as I know, Virgin is pretty much a franchised brand. Their trains are
run by other transport companies, their cable TV is run by another telecoms
operator, their banks are run by another institution etc.

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tlrobinson
Any else notice every photo in this post is either Richard Branson, 6
attractive women, or Richard Branson with 6 attractive women?

~~~
swampthinker
By God, I see 6 Bransons in this picture: [https://res.cloudinary.com/www-
virgin-com/f_auto,q_80/virgin...](https://res.cloudinary.com/www-virgin-
com/f_auto,q_80/virgin-com-prod/sites/virgin.com/files/vx_safety_video.jpg)

~~~
maxblackwood
I only see 5.

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jdamon96
Wow the stock shoots up 40%. Weren't there rumors for weeks of this occurring?

~~~
sjm-lbm
I follow the airline industry, and this offer is $600 million more than the
most recent rumors ($2 billion even). I'd assume this accounts for a lot of
the bump (and simple "the deal is further along than it was last week"
progression accounts for the rest).

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bbarn
Sad, but not surprising. It seems like good customer service just doesn't
scale for airlines. Back to being stuck with being treated like crap by your
airline, or paying less to be treated slightly crappier by your airline.

~~~
potatolicious
Ehh, I wouldn't despair just yet - Alaska itself is not a particularly big
airline. I've flown with them lots and they are heads and shoulders above the
legacy turdbucket of United/Delta/American.

If VX had to be sold to anyone, I'm glad it's to Alaska.

~~~
vinay427
I wouldn't group United/Delta/American together. From my experiences and those
of most travelers I talk to, Delta is certainly a step above the other two,
and American is probably second. United completely mishandled the Continental
merger, and has had a host of reliability and service issues. My main gripe
with Delta is their continually devaluing (without warning) miles program.
Alaska, meanwhile, has one of the most widely useable miles with their many
airline partners for earning and redeeming.

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dmritard96
Just a few days ago there was a fantastic article on the lack of competition
in the economist. It pointed to the recent consolidation of the airline
industry. Kind of amazed that there will be one less player.

[http://www.economist.com/news/briefing/21695385-profits-
are-...](http://www.economist.com/news/briefing/21695385-profits-are-too-high-
america-needs-giant-dose-competition-too-much-good-thing)

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gulpahum
Richard Branson is one of my favourite entrepreneurs. Virgin Atlantic and
Virgin Australia are still his, right?

~~~
JamilD
Virgin Atlantic is 49% owned by Delta, and for all intents and purposes is
essentially "Delta UK"

~~~
jen20
It is 51% owned by Branson (or an interest over which he has control),
however. As a _very_ frequent Virgin Atlantic and Delta flyer, I can assure
you there is nothing about Virgin Atlantic which approaches the terribleness
that "Delta UK" implies.

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personlurking
Might want to fix the link to show this:

[https://www.virgin.com/news/alaska-air-group-acquire-
virgin-...](https://www.virgin.com/news/alaska-air-group-acquire-virgin-
america)

~~~
bbarn
Why? The direct from the founder's mouth article is a Hacker News tradition,
practically. It's also a much more honest sounding piece than the PR approved
version above.

~~~
jlees
Agree, I think the tone of this piece is really interesting. It's sadness,
laced with evangelism; a hope that the new acquirers will recognise what makes
Virgin great, and absorb those qualities rather than replace them. But mostly
sadness. Not what you would necessarily expect.

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goodJobWalrus
I wonder what will happen with that letter of intent for the investment in
that boom sonic plane startup. Was that investment announcement somwthing
legally binding? (I didn't follow that closely)

~~~
Trisell
The deal with Boom appears to be with Virgin Atlantic, which it a different
company from Virgin America, due to the ownership laws that are causing
Branson to bail on Virgin America.

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tdburn
I wonder how this will effect the Boom investment from Virgin?

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sf_rob
This is Virgin America which is an entirely different entity created due to US
domestic airline laws.

~~~
tdburn
Gotcha. Thanks for the clarification

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wiseleo
There goes my favorite airline. Given choice, I choose to fly VA. Just booked
a couple more tickets yesterday for a quick trip. It's just painless.

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throwaway_xx9
Anybody know if Alaska Airlines's maintenance procedures have improved over
the years?

They had an ugly crash involving failure to do Mx on jack screws in the past.

