Alaska Airlines is planning to close its New York pilot base

Matt Clinch, Michael Fiorentino
Key Points
  • Alaska struck a $2.6 billion deal to acquire Virgin America in April 2016.
  • Alaska became the fifth largest airline in the U.S., serving over 44 million passengers in 2017.
  • Pilots that fly routes from JFK, Newark and LaGuardia, will relocate and deploy from West Coast hubs this fall, although the airline will still serve that market.
Ingrid Barrentine | Alaska Airlines

Alaska Airlines plans to close its New York pilot base in September to reinforce its West Coast fleet, asking more than 100 pilots to relocate to California in a matter of months.

Alaska struck a $2.6 billion deal to acquire Virgin America in April 2016 and grew Alaska into the fifth largest airline in the U.S., serving over 44 million passengers in 2017.

Pilots that fly routes from New York area airports, John F. Kennedy International Airport, Newark Liberty International Airport and LaGuardia Airport, will relocate and deploy from West Coast hubs this fall. The company's aircraft will still serve New York.

Prior to the merger, Virgin America competed with established airlines on this transcontinental route for over a decade, by advertising as the cool, alternative airline of Silicon Valley.

"This was a difficult decision — but a necessary one — based on the need to match our pilot staffing with the geographic areas on the West Coast where we deploy our aircraft every day. All of our JFK-based pilots are being offered the opportunity to transfer to either Los Angeles or San Francisco," a spokesperson for the airline told CNBC via email. Alaska offers 14 flights a day to JFK and the company says it will add another in July.

Mid-continental and East Coast routes accounted for 4 percent of the Alaska's flight composition back in 2013, but it climbed to 10 percent after the merger. In that same timeframe, Alaska's California presence has climbed from 15 percent to 25 percent in network composition, which could increase after the transition.

Alaska now serves 115-plus destinations from seven hubs along the West Coast. The airline leads domestic seat share in Seattle, Portland and Anchorage. It ranks second in San Francisco and fifth at Los Angeles International Airport.

United Airlines still accounts for more than 40,000 seats per day at SFO, nearly four times more than Alaska. At Seattle-Tacoma International Airport, Delta has increased its stake by offering 50-plus destinations including eight foreign countries. Alaska will also face tough competition down the road in Hawaii, as Southwest Airlines is launching a low-cost service from four California cities, including inter-island routes.

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Many destinations in Mexico and Alaska that are already served by Alaska Airlines from West Coast hubs are not oversaturated with direct flights from New York-area airports. Popular Mexican vacations spots such as Puerto Vallarta and Los Cabos, have little or no direct flights from New York.

There are also no domestic airlines offering direct service to Anchorage, Alaska from JFK or Newark. Only a seven-and-half-hour flight, a summer seasonal direct option to Alaska's largest city could tap into the multibillion dollar tourism sector, which continues to grow in the Frontier State.

Alaska Airlines says its growth model consists of three parts, flying customers to desired locations for affordable fares, building loyalty through benefit programs and adding network depth and frequency. Alaska has promised the integration of Virgin America is ahead of industry standards and would be 85 percent complete by June of this year. However, pilots who are now Alaska employees are still wearing Virgin uniforms, wings and flying Virgin-branded aircraft.

Correction: This story has been updated to reflect that Alaska currently operates 14 flights a day to JFK. It has also been updated to show that Alaska reached a deal to acquire Virgin America for $2.6 billion in April 2016. It also clarifies that Alaska will close its New York pilot base in September, but will still serve the market.