Today’s not a normal posting day, but with news like this, I couldn’t wait. It’s been a couple weeks since we found out that Virgin America might be for sale. Though most of the rumors have centered on Alaska and JetBlue, it looks like a dark horse has come in and beaten both of them. Republic is buying Virgin America, and even more surprising, it’s renaming it Chautauqua America. I did not see that coming.
You’d think Republic would have learned from its last foray into the branded airline space that this was a bad plan. Republic, remember, bought both Frontier and Midwest and merged them undre the Frontier name. The airline brought nothing but problems to Republic. Sure it lost money, but it also caused a huge issue when pilots at Republic felt they should be merged in with the Frontier pilots. The team at Frontier ended up pushing forward with the beginnings of an ultra low cost carrier strategy, but just as they were getting traction, Republic walked away and sold the airline for nothing. So, uh, why the heck would Republic try this again?
After all, things for Republic are worse today. It struggled to keep enough pilots on the payroll and ran into operational issues. Delta sued the airline as it desperately tried to restructure. In the end, it went into bankruptcy to try to fix things. Throughout the bankruptcy process, Republic’s mantra has been “simplicity.” It is shedding its motley fleet types and focusing only on the Embraer 170/175. It’s also going down to a single operating certificate. So again… why, Republic, why?
It sounds like Republic CEO Bryan Bedford has just been drinking too much industry Kool-Aid. “It seems like merging in bankruptcy has worked pretty well for others, so we figured we’d give it a shot as well.”
Sure it adds complexity, but Bryan sees a big opportunity here that can’t be passed up. It starts with renaming the airline Chautauqua America, one of Republic’s former subsidiary names.
Bryan explained, “it’s pretty expensive to pay for that licensing fee from Virgin Group, so we thought we could save money by rebranding. It was a gift from god that nobody took the Chautauqua trademark when we stopped using it, so we’re bringing it back along with that trademark blank, blue tail.”
The name is changing, but it doesn’t sound like basic premise of the airline is going to be any different. Bryan said, “we’re definitely keeping the mood-lighting. I mean, that is why people fly Virgin America today, right?”
My big question isn’t about what happens today, but what happens in the future. Bryan admitted that the Republic pilots would try for single-carrier status again, and he was ok with that, saying they needed to start paying their people more anyway.
Most importantly for Republic, they finally have somewhere to put the C-Series aircraft he previously ordered for Frontier. Apparently the bankruptcy hearing about shedding those obligations didn’t go very well, so the airline felt it needed to make a move. Those are expected to start flying in Dallas as soon as they’re delivered so they can stop losing a silly amount of money in that market. Instead, Chautauqua America expects to lose only a “moderately silly” amount of money.
Future deliveries will be used to establish hubs in other cities with too much competition and limited prospects for success.
Bryan was asked at the press conference why he was trying this again after the Frontier strategy failed. He said to look at Frontier now. The airline is doing so well that “he’d be crazy not to try it again with Virgin America.” So does that mean Chautauqua America is going to follow in Frontier’s footsteps and turn into an ultra low cost carrier? Bryan said it might, again pointing to the mood-lighting as a key differentiator above all.
And if you believe this, you should stop drinking so early in the day. Happy April Fools Day to all!
[Original Virgin America photo via Flickr user InSapphoWeTrust/CC-BY-SA 2.0]
