Virgin America lowered airfare. Here's to hoping it stays that way.
Alaska Airlines announced Monday that it's buying Virgin America — pending federal regulator approval — and the reactions are mixed.
While some travelers see potential in the joining of two of America's favorite airlines, others see only more airline consolidation.
You May Also Like
Fewer airlines mean less competition, and less competition typically means higher airfares. Virgin America's history of entering different routes proves the point: Where Virgin went, lower prices followed. But that doesn't necessarily mean travelers will see those same prices after this merger.
Fewer airlines mean less competition, and less competition typically means higher airfares.
In the past 10 years, Virgin America's entrance in top markets "has helped decrease airfare significantly," said Rick Seaney, CEO of airfare comparison website FareCompare.
In light of the acquisition news, FareCompare did a quick analysis of some of Virgin America's routes.
"For several years, fares from Dallas to West Coast cities like Los Angeles and San Fransisco hovered around $400 round-trip," he said. "Once Virgin America began flying these routes' prices dropped anywhere from 20 to 40 percent."
Prices dropped even more when Southwest Airlines also launched service on routes.
For Dallas to San Francisco, prices averaged in the high $400s, dropped to mid $200s when Virgin America started service, and then dropped to the low $200s when Southwest started on the route.
For Los Angeles to Washington, D.C, prices dropped from the high $400s to the low $300s with Virgin America, and then the mid $200s with Southwest.
Dallas to New York City? From the mid $400s to the low $200s.
An Alaska-Virgin merger does not greatly decrease competition on the aforementioned routes. However, it does further consolidate an industry that has shrunk at a rapid pace in the past decade.
If Virgin's shareholders and the U.S. Justice Department approve the deal, the combined airline will be the fifth largest in the country after the big four (American, Delta, Southwest and United).
That's good news for Alaska's ability to compete with the big players, but not necessarily good news for travelers.
“By joining forces with Alaska Airlines — an airline that is also known for its leading operational performance and guest-focus — we are creating the best airline in North America and one with the size and market share necessary to compete in this consolidated environment,” Virgin America CEO David Cush wrote in an email to customers on Monday.
Have something to add to this story? Share it in the comments.
