Virgin America CEO Tells Loyalty Members It Needed Acquisition to Compete

Trying to reassure frequent flyers about the Alaska Air Group acquisition, Virgin America CEO David Cush told Elevate members that his airline needed the merger “to compete in this consolidated environment,” which finds Delta, American, United, and Southwest controlling “more than 80 percent of the U.S. market.”

The communication to Elevate members, which Virgin America filed with the U.S. Securities and Exchange Commission, confirms that the Elevate program will merge into Alaska’s Mileage Plan loyalty scheme but argues that it will be beneficial to Elevate members because they will have access to a large network in North America and they will be able to take advantage of Alaska’s “robust international partner network.”

Cush noted that the transaction would take several months to close and the two airlines — and loyalty programs — will operate independently for some time.

“As the only airline headquartered in California, Virgin America has always been intent on shaking up the status quo in the airline industry,” Cush wrote. “Our goal has been to do no less than to reinvent the flying experience for the better — with innovative amenities and milestones like being the first airline to offer fleetwide WiFi and power outlets.

“We believe that by teaming up with Alaska Airlines — an airline also known for its stellar on-time performance, customer loyalty and guest-friendly brand — we will not only continue our mission to make flying enjoyable again, but we will do so on a much broader scale.”

Not So Enthusiastic

Not everyone, including Virgin Atlantic founder Richard Branson, who has a minority stake in Virgin America, was so bullish about the merger.

Branson’s blog post said there was nothing he could do to block the sale.

“I would be lying if I didn’t admit sadness that our wonderful airline is merging with another,” Branson wrote. “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.”

There will also be a lot of discussion over the next few months about whether further consolidation in the U.S. airline industry comes as another blow to consumers following the mergers of American and US Airways, United and Continental, Southwest and AirTran, and Delta and Northwest in recent years.