What's going on?

Alaska Air is buying Virgin America for more than $2 billion – It�s a fairly expensive gamble for Alaska as they seek to significantly expand their presence in the Californian skies. (By the way, Virgin America is a different airline than Virgin Atlantic).

What does this mean?

Alaska Air is headquartered in Seattle and mainly serves the Pacific Northwest and Alaska. Virgin America has its main presence in California (mainly San Francisco and Los Angeles). You don�t have to be a geography whizz to realize that these two airlines could probably benefit from some cooperation. You�might need to be a financial whizz to figure out if Alaska Air paid too much for Virgin America. It�s notoriously challenging to integrate two different airlines (just ask United�), but Alaska and Virgin have quite complementary routes and each have strong brands. They, therefore, could be very well suited to each other.

Why should I care?

The bigger picture: This deal was the result of a good �ole fashioned bidding war. Reportedly, rival airline JetBlue repeatedly tried to strike a deal, but Alaska kept coming back with a higher price. The final price was 40% above where Virgin�s stock closed on Friday. Sir Richard Branson and Virgin�s other shareholders just may have been popping some Champagne last night!

For you personally: Airline consolidation can lead to higher ticket prices. If there are fewer airlines flying a particular route, it becomes easier for the airlines that remain to raise prices. This deal might be less concerning than others because there aren�t many routes where these two airlines overlap. But it�s still one less competitor in the skies � and if more consolidation in the industry occurs, there�s a fair chance you will pay more for your next flight.