Author: ssegraves

Alaska Airlines purchases Virgin America

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The Wall Street Journal reports that Alaska Airlines has reached a deal to purchase Virgin America. The big news is the price paid.

Alaska Air Group Inc. said Monday morning that it had reached a deal to buy Virgin America Inc., winning a frenzied bidding war with rival JetBlue Airways Corp. The parent company of Alaska Airlines said it would pay $57 a share for Virgin, a 47% premium to Friday’s closing price, representing a total equity value of $2.6 billion. The Wall Street Journal had reported Sunday that Alaska won the bidding contest for Virgin, whose shares have risen lately on takeover speculation.

And investors are responding with a little bit of disapproval as well, with Alaska Airlines stock down around 5.5% at 10am Pacific.
Alaska Stock Price After Purchase Announcement of Virgin America

I am a little concerned that Alaska is paying a significant premium simply to gain gate space and landing slots at a few different airports, namely San Francisco. They are making the purchase at a time when Delta is still trying to grow their new Seattle operation and encroach further into Alaska’s dominant hub, yet they seem unfazed. The Alaska premium product is definitely not cut out to go head to head with some of the other premium transcontinental products and Virgin’s product is showing its age. How does Alaska plan to compete with better products on some of the more lucrative transcon markets (SFO/LAX-NYC, SFO-BOS)?

And all of this without taking into account two very different customer loyalty groups. Virgin is considered sleek and hip, while Alaska Airlines has a loyal following in the Pacific Northwest and Alaska. Merging those two cultures together while not losing customers will be key for Alaska to succeed. I wonder if the Alaska Airlines management team has a plan in place for doing just that or if they are going to call in the consultants to try and sort it out.

Lastly is the two very different airplane fleets. Virgin America operates an all Airbus A320 and A319 fleet while Alaska Airlines is Boeing 737s for their mainline operations. During the analyst call this morning it was mentioned that the Virgin America Airbus leases start expiring in 2020, so for the next few years, there will be a mixed fleet. The one possibility is that Alaska will use the Airbus fleet up and down the west coast since their capacity is a little less than what the 737s can hold and Alaska could run more frequencies to make up for that.

My general sentiment is that I had thought JetBlue would win the bidding war and build a larger west coast presence. This seems like a generally risky move for Alaska who up until this point has not needed financing to operate and they have grown very organically through the years. I worry that biting off more than they can chew could come back to haunt them in the next few years. I hope I am wrong, but the true test will be whether or not they are able to stay entrenched at Seattle-Tacoma International.

Quick Thoughts on the Starbucks Rewards Changes

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I am probably not the customer Starbucks wants using their rewards program. When I am in a city where there are not a lot of local coffee options, Starbucks is my backup. The blonde roast is drinkable and if it is not being brewed they are happy to make a pour-over of it. All of this to say, a lot of my recent work travel has not been close to local coffee shops, but Starbucks were readily available.

The recently announced changes to Starbuck’s rewards program are not going over well.

Under the new plan, the “stars” that are stockpiled to earn free drinks and other rewards are awarded at a rate of two stars for every $1 spent. Currently, customers earn one star per visit. But it will take 300 stars to get to the company’s Gold status, up from 30 stars, and it will take 125 stars for a reward, instead of 12.

Stars will now be earned based on spend instead of number of transactions, meaning people who buy the expensive Frappuccinos will earn more stars than someone like me who orders a grande coffee. I am sure this is specifically targeted at a customer like me who earns 12 stars by ordering coffees and then redeems (or has someone else redeem) an expensive drink. Or worse, the person who orders a coffee and a pastry but in separate transactions to earn two stars and then redeems for something expensive.

Are the Starbucks changes aggressive? Yes, but just like in the airline mileage earning and redemption world you have to remember: Pigs get fat and hogs get slaughtered. Starbucks could have probably made some rules changes that simply limited the number of transactions per day to something reasonable (2 per day maybe?) but they decided to go fully revenue based. The revenue based rewards are quickly becoming commonplace across tons of different industries as a way to “reward” someone for their spend rather than their loyalty. The thing to remember is that spending more to earn a reward usually is not beneficial to you mathematically. Well, unless you’re buying the office coffee on a corporate card; Then you’re making out like a bandit.

In the end, this probably will not change my habits when it comes to Starbucks. If there is no local option when I travel, I will visit Starbucks. And that’s probably exactly what Starbucks wants. Spending habits stay the same but the number of rewards will decrease.

Plane or Train?

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I have been wrestling with this decision for a few days now and figured maybe someone reading this has a logical point to make in one direction or the other.

My wife and I are headed to Prague in March but our final destination is Berlin. Basically, the cheap fares were to places outside of Germany, so I looked for one that had a decent train schedule to where we were headed. Anyway, the train to Berlin takes about four hours. It’s relatively inexpensive and we would leave the Prague airport, after a 2pm arrival, and head straight for the central train station, eventually arriving in Berlin around 8pm.

Unbeknownst to me, Air Berlin started a regional service with Etihad between Prague and Berlin. The price is nearly the same as the train if I buy a roundtrip, which is fine, because we have to come back to Prague for the return home, and it’s a 1 hour flight. The only catch is, the connection means four hours of sitting in the Prague airport. Seth brought up a good point that he would rather keep moving than potentially fall asleep and I am taking that into consideration.

But what would you do? The arrival time into Berlin is about the same with both options. I guess one upside of going by train is being able to take public transit on arrival to the hotel instead of a cab from the airport.

Alaska’s New Brand

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Alaska Airlines, arguably the hometown airline of Seattle, Portland, and Anchorage, unveiled a their new brand and livery at an event yesterday in Seattle.

new_alaska_livery
In a blog post, they give details on why they are refreshing the brand and a few insights into why they went the direction they did.

“We’ve added 90 new markets in the past five years. As we continue to grow, we are updating the outward expression of our brand so it shows up bolder wherever we fly.”

Essentially, we now fly Boston to San Diego non-stop and want to make our logo simpler for that market. I get it, it is not like they were going to change the name of the airline or anything. The first thing that stands out to me though is how close the new tail livery looks to some of the low cost carriers and how the entire livery looks a little Southwest-ish. The second thing is what I pointed out to Seth yesterday, the multicolored cheat lines look like the engines are spewing out the Northern Lights.

southwestlivery

Maybe that’s what Alaska was going for. The colors also match up pretty well to the Seattle Seahawks, the Mariners, and Sound Transit System. Coincidence?

I am no branding or livery expert but I just find the new look to be less Alaska and more Spirit/Southwest/Frontier. Maybe that is what they were going for. There is even a hint of Eurowings in there. There is a pretty great breakdown of the entire brand, livery, and other customer facing materials at Under Consideration. Their impression? Underwhelmed.

Overall, it’s not a highly inspiring redesign and rather than double-down on the quirkiness and ruggedness of the brand equity established they have moved away to safer territory.

Maybe Alaska should have gone to an all retro livery… (to be fair, some of the colors do match up)

old_alaska

— Updated at 12:30pm PST

I should add, if employees like the new look and it motivates them to better serve customers, then I am all for it. From the video of the unveiling of the new brand it does seem like the employees are excited about it and that’s a good thing.

Delta Threatens to Drop Portland-Tokyo Flight – Yawn

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Delta, amid the possibility of Tokyo-Haneda airport opening 10 more slots to U.S. carriers, is pitching a fit and threatening to kill their Portland-Narita non-stop flight. This is not the first threat they have made regarding their flights to Narita, just a few weeks ago, they said that their Minneapolis-St. Paul to Narita flight would need to end. That first threat came as a surprise, but the addition of other flights that would need to come to end has not ceased.

The crux of the matter is whether or not the opening up of more Haneda slots to U.S. carriers would be detrimental to Delta’s hub at Narita and their traffic throughout the region. As quoted in the Atlanta Journal-Constitution:

But Delta contends that, since United and American are partners with ANA and JAL, respectively, the deal tilts in their favor. That’s because United and American could also sell seats on the new ANA and JAL flights, enabling them to offer significantly more seats to Haneda and beyond.

I don’t doubt Delta would suffer a little due to the partnerships that American and United both have. However, is pitching a fit and essentially becoming the kid who quits the game when the score goes to the opposition really the best way to handle it? Delta seems to have a pretty good case to get a number of the slots at Haneda or special dispensation to create a mini hub there, but they would rather burn a bridge by threatening to remove a non-stop international route from cities that have few connections to Asia. Seems like bad business to me.

Haneda is a more convenient airport for travelers ending their journey in Tokyo or continuing on to other parts of Japan as there are a ton of domestic connections. With recent expansions, the number of options to other cities throughout Asia from Haneda has increased as well. The idea of Delta running a hub in Japan and expecting that to last, even without Haneda being opened up more, seems far fetched. I say call Delta’s bluff. Expand the Haneda slots and move forward. If Delta ends up getting rid of Portland-Narita, the Port of Portland should aggressively pursue ANA or Japan Airlines to fill their spot at PDX.

The Travel Booking Conundrum

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I have a trip coming up soon and I have been debating which routing I want to take to and from the destination for weeks. This always happens. I try to get the most out of the trip by choosing flights that have longer routes optimal for sleeping on the way to the destination and routes that work best for my schedule for the return. On this particular trip I could fly a new carrier, RyanAir, to Berlin’s Schonefeld airport, overnight there and fly Berlin-Tegel to Newark and then onward to Portland or I could fly to Amsterdam, overnight there and then fly to Houston on a Boeing 787-9 (a new type of plane for me) and then onward to Portland.

I ended up choosing the latter flight option because as a few people pointed out on Twitter, wouldn’t I want to avoid Newark at all costs? Well sure, but I love trying out a new carrier and I really enjoy Berlin. The Amsterdam flight will be fine and I am staying at the on-airport property Sheraton so it will be a quick 10 minute walk to get to the check-in counters in the morning, but I am still questioning my decision.

This is the one aspect of travel that I am terrible at, the actual planning. I question myself over and over and over and usually come to a conclusion only to continue questioning myself until I actually take the flight. Then who knows, I may question myself again later.

In any case, here’s to 2016 and seeing new places!

Iran’s blogfather: Facebook, Instagram, and Twitter are killing the web

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Iran’s blogfather: Facebook, Instagram, and Twitter are killing the web (The Guardian)

Even before I went to jail, though, the power of hyperlinks was being curbed. Its biggest enemy was a philosophy that combined two of the most dominant, and most overrated, values of our times: newness and popularity. (Isn’t this embodied these days by the real-world dominance of young celebrities?) That philosophy is the stream. The stream now dominates the way people receive information on the web. Fewer users are directly checking dedicated webpages, instead getting fed by a never-ending flow of information that’s picked for them by complex and secretive algorithms.

I miss when people took time to be exposed to opinions other than their own, and bothered to read more than a paragraph or 140 characters. I miss the days when I could write something on my own blog, publish on my own domain, without taking an equal time to promote it on numerous social networks; when nobody cared about likes and reshares, and best time to post.

The whole article is worth reading but that last paragraph is a truth I can’t agree with enough. It seems like it is harder and harder to just write something and have someone read it or take a picture and have people enjoy it. Instead everything has to be “curated” and cared for to catch as many views and likes as possible.

I am even guilty of it here. On Twitter I linked to my link post here rather than the article itself. I want people to read my thoughts on the article rather than the article alone…

What it feels like to be adopted at 17

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What it feels like to be adopted at 17

This beautiful and sad story of pain, suffering, and ultimately redemption and healing is worth reading.

Afterwards there was a moment when I hugged my mom, and all my siblings came around me and wrapped their slinky little arms around legs or purses or whatever they could get to. My dad even bumbled in on it, and he’s not one to get very emotional. I was shaking and I couldn’t let go of my mom — memories of the things they had done to fight for me over the years shot through me like fire. I closed my eyes and rested on her shoulder. I had found my way home. These people had always been my family.

A “Higher Call” in Battle

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Seeing as we are just a few days from Christmas, I thought this was a fitting story to share (even though the original is a couple of years old) since it took place around the same date in 1943. The story is that of a B-17 crew that was trying to make its way back to England after being heavily damaged during a bombing mission over mainland Europe. The crew was injured and the plane was flying lower and slower than usual, making them a giant target for German anti-aircraft gunners and fighter pilots. The German fighter pilot who rose to intercept them instead, incredibly spared them.

As Stigler’s fighter rose to meet the bomber, he decided to attack it from behind. He climbed behind the sputtering bomber, squinted into his gun sight and placed his hand on the trigger. He was about to fire when he hesitated. Stigler was baffled. No one in the bomber fired at him.

He looked closer at the tail gunner. He was still, his white fleece collar soaked with blood. Stigler craned his neck to examine the rest of the bomber. Its skin had been peeled away by shells, its guns knocked out. He could see men huddled inside the plane tending the wounds of other crewmen.

Then he nudged his plane alongside the bomber’s wings and locked eyes with the pilot whose eyes were wide with shock and horror.

Stigler pressed his hand over the rosary he kept in his flight jacket. He eased his index finger off the trigger. He couldn’t shoot. It would be murder.

You can read the full story on CNN or buy the book, A Higher Call, from Amazon (Referral link).

It’s a great story and a reminder of the grace and mercy that we can show each other everyday, even in the hardest of circumstances.