Virgin America / Alaska

[Mikeact]

Nothing to do with Virgin Flying Club but Virgin Group all the same.
I see that USA Today are reporting that Alaska Airlines are being sued by Virgin for $160 million for not using the Virgin branding since the takeover by Alaska in 2016.
Virgin are saying that whether or not the name is used, they’re owed the cash.
Alsaka say they never had any intention of using it, and the Virgin brand is ‘useless ‘
Interestingly, the case will be heard in the UK.

[AL]

Alaska’s reasoning for declaring the Virgin brand ‘useless’ will be that it detracted loyal travellers from Alaska’s brand. Both VX and AS had/have loyal followings, so it makes sense from the AS perspective to trash the VX brand. VX paid about 0.7%/yr to VML for the branding rights. Given it was once doing $1.5bn revenue, that’s a little over $1m/yr, which seems reasonable given the revenue run rate. I think, too, that the time that VX was being sold to AS was around the time we started to see VS offer SEA services. AS consider SEA a hub, so I can imagine that a strong VS/VX presence at SeaTac would quickly wipe out the OW-front of BA/AS there, in terms of visibility.

Some of this, and more, is discussed at https://simpleflying.com/why-did-alaska-airlines-remove-the-virgin-brand-so-fast/.

VX had a strong future ahead of it – I was sad to see it get bought by AS. In hindsight, it would have been a great purchase for DL, given their VS JV down the line. They could even have rebranded DL Connection as VX to get a huge number of local feeder routes to DL hubs quickly.

Ah well. I hope that VML leave with what they’re entitled to – $160m on AS profits from the VX routes alone, assuming a similar revenue run rate, seems perfectly reasoanble.