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What if Alaska Merged with JetBlue?

hey everyone i hope that you were doing

good today we're going to be taking an

inside a deep look at a potential merger

between alaska airlines and jetblue

airways we're going to see how it can

play out

and just as a reminder this is just an

idea it's not really happening

at this point let's face it both

airlines have several strategies

that are similar and can be easily

integrated

and it seems that if any merger were to

appear this would be

by far the most likely the last merger

we saw in the u.s

did actually see a connection between

alaska and

jetblue as both carriers sought to

absorb virgin america

in the end alaska airlines ended up

winning

and the deal to take over virgin

america's fleet and network

which were mostly concentrated at sfo or

san francisco airport

were taken over successfully by alaska

airlines i would just like to take a

second here and thank christopher

morningstar

for the excellent work for this video

this one was tough

but the research will go a long way

virgin america operated its last flight

on the eve of april 24th

the merger which was worth over 2.6

billion

in us dollars was completed at this

point as virgin america ceased

operations and was fully incorporated

by the alaska airlines brand the

takeover initially

was attractive for both carriers because

they both wanted to expand their

presence

on the west coast now two years later

comes this video a fun video

exploring the potential of these two

airlines

combining this merger would create a

much larger airline although not as

large

as the traditional legacy carriers of

american

delta and united fleet size wise it

would make it america's fifth largest

airline

behind southwest and really america's

fourth

legacy airline although there are still

different factors of this

idea and if the airlines were to join

forces at any point in the near future

then they would still have some

significant differences when compared to

these airlines

but despite the differences it's still

important to point out all of the

important similarities

that alaska and jetblue share when

alaska committed to taking over virgin

america

the first thing we learned was that they

were willing to sacrifice

their simple boeing-only mainline fleet

virgin america only had

airbus aircraft which included older

a319 teams and 20s

while also having recently received

their first four

a321 neos alaska committed themselves to

all 67

existing aircraft including the

remainder of the

10 a-21 neo and 38-20 neo order

as of august 29 2020 alaska has

318 aircraft in its mainline fleet

with 62 outstanding orders by comparison

jebel has a slightly smaller fleet with

268 aircraft

but they have a lot more orders with 144

this would make their fleet bigger in

the long term but not necessarily

as alaska may order more aircraft in the

future and

jetblue plans in retiring all of its 60

e190s in the next five years

or by 2025. they will replace them with

the a220 300

which is the largest variant of the a220

program which has an astonishing

40 more seats at 140

versus 100 on the e190 with both fleet

and orders combined

the fleet would be a whopping 586

aircraft

with 206 orders don't forget that

jetblue is looking to go across the

transatlantic

as early as next year with their new

a321lrs

this is not even something that alaska

airlines has their intentions on

while multiple fleet types does

complicate the overall fleet strategy

the jetblue a220 could replace some

markets that alaska serves on the west

coast

with aircraft such as the e-175 they can

also offer new service

transcontinentally i don't even know if

that's a word

with the a220 or replace other aircraft

like the 737

as the a220 may better suit to the real

demand the same thing applies with

alaska 737s

on service on the east coast to and from

florida

to new york and boston and other cities

that's because

jetblue's 8-21 mint product can replace

alaska's

737 flights transcontinentally i said it

again

this would definitely make them have a

strong competitive edge

against the legacy airlines the mints

project is popular and

people like it and it's truly unique to

jetblue with their low-cost model

although in my opinion jetblue kind of

has a model of their own

another aspect is how it will impact the

employees

of both airlines once a merger comes

into play

alaska airlines employees are

represented by afa

or the association of flight attendants

while the jetblue flight attendants

voted recently in 2018

to become represented by the transport

workers union

jetblue flight attendants would have to

merge their union over to alaska

while ground personnel gay agents and

clerical employees

on the ground are represented with the

international machinists and aerospace

workers

many of jetblue's ground personnel minus

above the wing

are contracted if this remains then they

will still

not be represented but this can change

for those who

are i went through all of this because

it's important to think about

who will be taking over who one airline

in a given airline merger will not

survive such as the virgin america

merger or with delta and

northwest when that was all said and

done by january of 2010

both airlines have a combined market

capitalization value

of 7.75 billion dollars of this amount

4.662 billion belongs to alaska

airlines wildly smaller 3.097 billion

is applied to jetblue airways so this

clearly shows

that fleet size or available seat

capacity is not the only metric used

to compare when one airline takes over

another

this can get quite complex but if you

were to assume the airline with a higher

value

should take over the other one this

would mean that alaska airlines would be

taking over

jetblue here we're just making

assumptions of course

this is not always the case for example

the 2010 merger between united airlines

and continental

airlines formally created a company

known as

united and continental airline holdings

incorporated today it's simply known as

united airlines holdings for our basic

example with alaska airlines

a marketing problem can occur that's

because of the alaska airlines name

this name may not be best suited across

the country

for marketing purposes at least not in

the continental united states

for domestic flights in alaska and

perhaps also in the western coast

of the united states as alaska is

already well established there it could

work

but let's say you're going on a flight

from boston into orlando

it may not make a lot of sense if you're

saying that you're flying with alaska

airlines of course

this is just my own opinion but i think

that there's a strong perspective

that could come into play here another

big problem with this merger however is

something called the barbell effect

this occurs when an airline incorporates

another airline

that has hubs and or focus cities on the

opposite side of the country

with no hubs in the middle for smaller

countries like germany

this is far less of an issue but this is

a major concern

for the united states where the

population concentration is

more spread out and just the current

condition of airline economics with

connection opportunities

in general favor having one or more

established hubs further away from the

major cities on the coast

delta southwest american and united

practice this

and have for many years part of the

reason why

u.s airways had to merge with american

airlines is because of the barbell

effect

as they only had hubs in phoenix

philadelphia charlotte and washington

national

following the america west airlines

merger in 2005.

jetblue is strong on the east coast with

focus cities in new york city

boston fort lauderdale and orlando while

alaska has its main hub in seattle

followed by portland san francisco los

angeles and anchorage they also have

focus cities in san jose and

san diego don't forget that jetblue

airways is also interested in expanding

los angeles even further

as they have big expansion plans already

this year this effect can be alleviated

however with a co-chair with american

airlines and this is already present at

both airlines

alaska airlines already has a co-chair

agreement with american airlines

that has been in place for years while

jetblue announced just this summer in

2020

that they are re-establishing links with

american airlines with the primary focus

being on the northeastern

united states this makes it a lot more

sense for these airlines to merge

american airlines has a great role to

play here the co-chair agreement

alleviates

the barbell effect through americans

hubs in chicago and dallas

and to less of a degree charlotte which

is a little closer of course to the

eastern coast on the atlantic ocean

these hubs where american dominates yes

i know that united has a hub in chicago

can incorporate the strategies of these

airlines

much better if they were to combine it

also means that alaska airlines one

world membership will be even more

valued they aren't a part of one world

yet

that's gonna happen it's expected to

happen before the end of 2020. even

though american delta and united are all

a part of separate alliances

it wouldn't make sense for this new

merger deal

to not have the same access to one of

the alliances

from a carrier such as american it will

also give them access to the joint

business agreement

that american has with the iag group

alaska could become a fully enclosed

member

of this lucrative group as well but they

would need governmental approval

american can also benefit from this

merger by focusing more again

on rebuilding its jfk hub this is

already happening

as they announced that they would fly

into tel aviv and often in

greece next year in 2021 although no

dates or flights or schedules

are confirmed when i was producing this

video while

american rebuilds jfk or potentially

rebuilds jfk

alaska airlines the surviving airline

can still fly transatlantic routes

through jetblue's original intent

with the age of 21lrs from point to

point

routes or from boston and the focus here

would be on those types of routes as

well as more leisure markets

while american tackles really the

business demand and the larger

markets with their bigger planes one

final frontier to consider

is not for flights across the atlantic

but the pacific

of course this might be a pipe dream

actually it was an idea considered by

christopher morningstar who gave an

impressive overview of

this scenario the prospects of opening

an international hub at anchorage

of course has disadvantages as well as

advantages

one advantage is how flight times are

split more evenly the former wow hub in

iceland for example

split the european flying into two more

equal

segments this can certainly be an

advantage and

anchored northern geographical location

is how it works

that's also because the a321lr or

a321xlr

has the ability to fly from anchorage to

asian markets you know such as beijing

hong kong or tokyo or at least it's

expected to

and the a321lr or xlr makes

a lot more sense because let's face it

it's not going to work with a large

aircraft such as the triple 7 or perhaps

even

a 787 there's just not going to be

enough demand for that the main

disadvantage here is that it really

solely relies on connecting traffic only

but it provides travelers

with another option that perhaps can be

cheaper

than flights such as detroit to shanghai

those flights can get crazy expensive

from the legacy airlines otherwise

passengers have to connect in either

seattle san francisco or los angeles

on the west coast to go to these major

asian markets

and with this idea of the a321 they can

even open up

perhaps some smaller markets as well as

long as

these markets develop one final note is

that don't forget anchorage airport

already

has an 8-gate international concourse

it's been used by international airlines

in the past

such as icelander and condor they've

been using it for years

and actually the last time that i looked

on google maps

to confirm how many gates that they have

i saw an icelander 757 there

so i hope that this video gave you some

good insight on what a potential merger

between

alaska airlines and general airways

could look like leave your thoughts and

comments below on what you think about

this

and otherwise take care of each other

and

that's goodbye for me