It’s been a bit more than 6 months since Alaska Airlines announced their agreement to merge with Virgin America. Where we thought that approval would come swiftly from the government, it’s stretched out a bit longer than expected.
Today we know that the DOJ has negotiated an agreement with Alaska to allow the merger to move forward. I first saw this reported by Ben at One Mile at a Time. The concessions seem to be centered around reducing their codeshare agreement with American Airlines.
As View From The Wing points out, this is certainly a better outcome than being forced to give up gates at certain airports.
The text of the DOJ release detail what Alaska needs to restrict going forward:
To address the transaction’s likely competitive harm, the proposed settlement requires Alaska to significantly reduce the scope of the codeshare agreement. Specifically, in order to reduce Alaska’s overall dependence on the codeshare and limit Alaska’s incentives to cooperate with American, the proposed settlement prohibits Alaska and American from codesharing on routes where Virgin and American compete today and on routes where Alaska would otherwise be likely to launch new service in competition with American following the merger.
In plain English, American and Alaska can’t codeshare on routes like Washington Dulles-Los Angeles, a route Virgin American competes heavily with American on now. It’s unclear how DOJ feels about a city like Dallas. American Airlines obviously has a major hub at DFW. Virgin American serves the market, but out of Love Field (DAL). Are routes that originate out of DAL competitive to American? I’d bet the DOJ thinks so, since there’s no downside for them to say so.
American and Alaska codeshare on routes like LAX-SEA right now, where American also flies the route themselves a few times a day. I assume that relationship is immune from this settlement, but we won’t be 100% sure for a while.
Codeshare arrangements are important to business and leisure travelers alike for 2 important reasons. A business traveler that needs to travel from Albuquerque to Seattle on American Airlines can choose to connect in LAX. By virtue of the codeshare relationship with Alaska, they open up an additional 8-10 departure options a day to match up with their schedule. Business and leisure travelers alike can earn miles on Alaska flights because of the codeshare agreement (though less than you used to be able to earn).
If You’re An American Airlines Frequent Flier
There’s not much in the final agreement between Alaska Airlines and DOJ for American Airlines travelers to be worried about. We might lose a few opportunities to fly an Alaska codeshare here or there. But we can expect it to be minimal.
If You’re An Alaska or Virgin America Customer
You lose some opportunities to fly American Airlines and earn miles in the newly combined brands. But, as with American Airlines folks, it’s a relatively small concession. The important thing is not having to give up gates at major airports. That’s a big reason Alaska struck the deal in the first place.
This should not affect the ability to redeem miles for award flights as can be done today between American and Alaska.
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