Summary

  • Alaska Airlines lost a $160 million trademark dispute with Virgin Group, requiring $8 million in annual royalties till 2039.
  • Virgin America merged with Alaska Airlines in 2018 leading to the royalty dispute over brand usage.
  • ITA Airways, at the beginning of its operations, had to purchase the old Alitalia brand.

Alaska Airlines has lost a $160 million trademark dispute it has been engaged in for the past five years against the Virgin Group, which will see the carrier making royalty payments to Virgin till 2039.

The dispute

Since 2019, Seattle-based Alaska Airlines has been in a legal dispute with the Virgin Group over the royalties of using the Virgin Brand. While it might be difficult to see any obvious connections, the Alaska Airlines of today is the result of the airline acquiring Virgin America Airlines in 2016 and this deal included brand licensing agreements that lasted till 2039.

As reported by ch-aviation.com, Virgin America merged with Alaska Airlines in July 2018, thereby ceasing operations, with rights and assets being handed over to Alaska Airlines with an initial royalty payment shy of $8 million per year, that Alaska Airlines had to make for the continuous use of the Virgin Brand to Virgin Group.

The license was for a term of 25 years with the royalties to increase in line with the price index during that period.

Alaska Airlines Boeing 737 MAX 9

Photo: Vincenzo Pace | Simple Flying

However, when Alaska Airlines, in 2019, ceased the use of the Virgin brand altogether, the airline discontinued its royalty payments to the Virgin group and this is where the dispute began, as Virgin claimed that the royalties were due till 2039.

After a five-year-long dispute, on June 11th, it was ruled that, regardless of the use of the Virgin branding in operations, Alaska Airlines has to continue paying an $8 million annual royalty fee to the Virgin Group until 2039.

History of the acquisition

While the founder, Sir Richard Branson never wanted to sell Virgin America, there were other private investors involved with higher shares than Branson, which meant it was beyond his control. With the airline being too small to offer strong enough competition within the American aviation market and growing interest from Alaska, looking to eliminate competition and grow, the decision was made to merge with the larger carrier for a price of $2.6 billion.

Virgin America A320 flying

Photo: Eliyahu Yosef Parypa | Shutterstock

While this merger came with complications for Alaska due to Virgin’s A320 operations being incompatible with Alaska’s Boeing 737 operations, Alaska Airlines saw this as the easy way to protect and grow its market share to compete against Delta’s growing presence at Seattle-Tacoma International Airport (SEA).

With Virgin no longer a competition, Alaska Airlines could operate certain routes with better fares and make its operations profitable and sustainable. Additionally, by gaining Virgin’s slots, Alaska was able to become the fifth-largest airline within the US.

Related

Why Did Virgin America Merge With Alaska Airlines?

Virgin America Merges With Alaska Airlines

Other unusual brand usages

While airlines are always protective of their own coveted branding, there have been instances in the past where one carrier operates using brands of other carriers. Italy’s ITA Airways, in 2021, spent over $100 million to buy the Alitalia brand from its predecessors. This was because the new airline could not legally utilize Alitalia’s aircraft and other branding in its operations unless ITA owned it themselves.

Alitalia and ITA aircraft together

Photo: Davide Calabresi | Shutterstock

Brand loyalty being a massive part of airline recognition, it is reported that ITA, despite its new branding, will retain certain elements of the old Alitalia brand, as it is popular and loved by the people of Italy.

Related

Why ITA Airways Had To Buy The Alitalia Brand

At the time, the $100 million purchase was thought to be about preventing competition. The reality is far more straightforward.

Are there any old airline brands that you miss? Let us know in the comments below!


  • Alaska Airlines Tile

    Alaska Airlines

    IATA/ICAO Code:
    AS/ASA

    Airline Type:
    Full Service Carrier

    Hub(s):
    Anchorage International Airport, Los Angeles International Airport, Portland International Airport, San Francisco International Airport, Seattle-Tacoma International Airport

    Year Founded:
    1932

    Alliance:
    oneworld

    CEO:
    Ben Minicucci

    Country:
    United States

    Region:
    North America

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