NEW YORK — Alaska Airlines CEO Brad Tilden said Wednesday that he might keep the Virgin America brand, running it and Alaska as two different products within the same airline group.
In April, Alaska announced plans to buy Virgin America for $2.6 billion, a deal which would make it a West Coast powerhouse. Both airlines have very loyal — but different — followings and almost immediately both groups expressed fears that the combination would kill off what they love about their own airline.
A decision hasn’t yet been made but Tilden noted that European carriers have kept their own identity following mergers.
“We are looking at that because we do believe in the power of the Virgin America brand and we don’t want to lose all that loyalty and revenue that exists today,” Tilden said in a speech at The Wings Club, an aviation group.
Past aviation mergers in the U.S. have meant the death of the acquired brand. But Tilden noted that in Europe both names and cultures tend to live on. He cited the Lufthansa Group, which includes its namesake German airline, along with Swiss and Austrian Airlines. Air France and Dutch carrier KLM operate as two separate carriers despite common ownership. And International Airlines Group runs several individual brands including British Airways, Spanish carrier Iberia and Ireland’s Aer Lingus.
In an interview with The Associated Press, Tilden said he is “taking a good look at running two brands for some period of time, perhaps forever.” He also said the airline is looking to have regulatory approval for the merger by late summer or early fall.
Alaska is loved in its hometown of Seattle and the Pacific Northwest. It has one of the best on-time performances, the industry’s lowest complaint rate and tries to balance between making a profit and keeping passengers happy. For instance, like most airlines, it charges a fee for checked luggage. However, Alaska was the first to add a guarantee — if a bag isn’t at the pickup area within 20 minutes, fliers get $25 off a trip or 2,500 bonus miles.
Virgin America, which is based near San Francisco airport, has its own following. The airline started flying in 2007. It quickly won over fliers with its mood lighting, internet and individual TVs. Passengers can order meals or drinks from the screens and can send a drink to others.
J.P. Morgan analyst Jamie Baker noted that this is the first merger he’s seen with different corporate and passenger cultures.
“Maintaining two distinct brands adds complexity and expense and potentially confuses passengers and employees.” Baker said.
