I can’t recall anyone outside of the federal government thinking that the Alaska/Virgin America merger was in any way anti-competitive, but all you need to do is look at the new routes being rolled out to see proof that it’s the opposite. Last week, Alaska announced its next round of growth, and it is a markedly different strategy compared to what Virgin America has done previously. This, by the way, is not a bad thing.
Take a look at this map via the Great Circle Mapper.
As you can tell, San Francisco is seeing a whole lot of new destinations being added to the route map, and these aren’t markets you would have expected from Virgin America as a standalone airline.
Virgin America was always focused on serving the big markets with its hip-and-cool product. New York, LA, Chicago, Miami(ish, via Ft Lauderdale), etc. Eventually, as the airplanes kept coming, it had to find other places to expand. The airline looked at leisure markets (Mexico first, then eventually Hawai’i) and smaller markets with a hip vibe (Austin, Portland, Palm Springs). For me, the question was always… where are they going to go next? Some higher profile markets failed, like Orlando and Philadelphia. Hawai’i may be doing well, but it always made me nervous that flying to the islands was the next best use of an airplane.
Virgin America had paused deliveries for awhile, but aircraft have been coming into the fleet again, and the Virgin America strategy didn’t leave me seeing many options. Enter, Alaska.
Alaska has been wildly successful by adding mid-size markets from Seattle with low frequency. Right after the merger, we saw a glimpse of that strategy coming to San Francisco with the easy adds of Minneapolis and Orlando. (Orange County came back on the map too.) But last week, the big announcement of many new routes was more interesting.
First, Philly is back. This is just one of those gaping holes that Virgin America couldn’t make work very well. Add in the ability to codeshare with American on connections beyond that hub and you have a winner. But look at the rest of what’s coming. We have single daily flights to New Orleans, Indianapolis, Raleigh/Durham, and Baltimore. All of these look like they were ripped out of a page in the Alaska Seattle playbook. They’re also markets Virgin America doesn’t seem likely to have touched on its own.
These are all being operated with A320s. John Kirby, who runs network planning for Alaska, had this to say about the plan.
The 2017 Fall schedule is our first real opportunity to begin optimizing where we deploy our expanded fleet, including Airbus equipment. Virgin America has five A321 deliveries coming this year that we will deploy to high demand markets, freeing up existing Virgin America aircraft to take on other missions. In addition, some of these new markets are red-eyes, which don’t require additional Airbus units. For this initial announcement, we feel the Airbus fleet is best suited for this expansion, especially from SFO, where Virgin America has such a strong presence. We will continue to look at the schedule in the months to come and match capacity to demand as we continue to move forward on our commitment to provide West Coast guests the most nonstop options of any carrier.
But this just scratches the surface. Virgin America had nothing smaller than an A319 (and it doesn’t have many of those). Now with Alaska’s Embraer 175 regionals, it can go deeper into smaller markets. In this round of announcements, Albuquerque and Kansas City were added.
The other thing Alaska is doing is using those Embraer 175s to beef up service at surrounding airports, something Virgin America never could do successfully on its own. This announcement included flights from San Jose to Tucson, Austin, and Los Angeles.
There’s no question that when you add up the pieces, you have a powerful airline in the Bay Area.
- Core Virgin America SFO hub to big cities
- Alaska presence at other Bay Area airports (San Jose, Oakland, Santa Rosa)
- Smaller aircraft serving thinner markets
- American partnership to provide utility to tiny cities
- International partners (both Virgin America and Alaska)
This has a better chance of becoming a true competitor to United at San Francisco than Virgin America ever could have been. People in the Bay Area should be thrilled to have the extra competition. Now will it actually be a profitable strategy? Alaska is betting what worked in Seattle will work in the Bay Area. I’m naturally more skeptical, as always. But it does seem like this is something the airline could pull off, especially in the booming Bay Area economy where there’s room for growth.
