| Carrier: | Virgin America
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| Headquarters: | USA
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| Founded: | 2004
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| Destinations: | 5
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| Bases: | San Francisco
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| Owners: | VAI Partners LLC (75%), Virgin Group (25%)
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| Listed: | Yes
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| Online Booking: | Yes
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| Website: | http://www.virginamerica.com/
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| Fleet | A319 10
| Overview - Virgin America Virgin America, the newest US domestic airline, operated its inaugural services from New York JFK and Los Angeles airports to its home base at San Francisco International Airport on 08-Aug-07. Within the first few months of operations, Virgin America will operate a network covering five destinations: San Francisco, New York, Los Angeles, Washington DC and Las Vegas.
Virgin America intends to serve as many as ten cities within the first 12 months of operations and up to 30 cities with 33 A319/A320 aircraft, eventually increasing to 100 aircraft, within five years.
Additional cities under Virgin America’s consideration include: Atlanta, Austin, Baltimore, Boston, Charlotte, Chicago, Cincinnati, Cleveland, Dallas, Denver, Detroit, Fort Lauderdale, Fort Myers, Hartford, Houston, Indianapolis, Jacksonville, Kansas City, Miami, Milwaukee, Minneapolis, Nashville, Newark, New Orleans, Orlando, Philadelphia, Phoenix, Pittsburgh, Providence, Portland, Raleigh-Durham, Sacramento, Salt Lake City, San Antonio, San Jose, Sarasota, Seattle, St Louis, Tampa and West Palm Beach. This expansion comes as other US domestic carriers scale back growth to reduce the over capacity in the market, in order to improve yields and profitability.
Next-generation, hybrid model
Virgin America characterises its operations as a “next-generation, hybrid carrier”, offering a “more luxurious experience at affordable prices”. The carrier plans to attract the corporate market with lower-than-legacy fares, a two-class configuration featuring numerous IFE options and global distribution system participation.
Virgin America expects a “lower mix of business travellers at the outset,” but plans to see the mix “grow toward the business traveller”. To attract the business market, the airline plans to reduce first class fares and sell first class fares up to 50% below the walk up economy fares on legacy carriers. Upon launch, the airline’s focal point of distribution will be its Website. The airline will also have a GDS and online partner, using Galileo and Orbitz, which includes Orbitz for Business, as the “exclusive launch customers."
Operational…at last
Virgin America faced numerous difficulties in the approval process, due to its ties with Virgin Group’s Richard Branson. Virgin Group is among Virgin America's primary financial backers, raising concerns that too much foreign control would be exerted over the US airline. Virgin Group’s initial application to the DoT was tentatively blocked, as the DoT believed the airline would contravene US laws limiting foreign ownership of the nation's airlines to 25%.
After Virgin America made a series of changes to its corporate structure to distance itself from foreign control and minimise Branson's influence, regulators reversed its decision, approving the airline's revised structure in May-07. As part of these changes, CEO, Fred Reid, is required to step down by Nov-07, as, according to the DOT, Reid may be "beholden" to foreign interests. No replacement has yet been announced. The airline’s ownership is currently 25% Virgin Group and 75% VAI Partners. Virgin America will still have a branding and marketing relationship with the Virgin Group.
Enters crowded US domestic market
Virgin America enters a crowded market in which US carriers have faced rising pricing pressure, high fuel prices, softening demand and excess capacity. The airline is the third LCC to launch or announce plans to operate at San Francisco in recent months. JetBlue Airways commenced services to New York and Boston in May-07 and Southwest Airlines announced plans to return to San Francisco in Aug-07.
Virgin America’s operation hinges on two of the most delay-prone US airports: JFK and San Francisco. In the first six months of 2007, New York JFK ranked 31st among the 32 busiest airports in the US in on-time departures, according to Government data. In Jul-07, one in five JFK flights were "excessively late," or at least 45 minutes later than scheduled, according to FlightStats. San Francisco International, Virgin America's home base, ranked 12th among the 32 busiest airports for on-time departures, an improvement from a year earlier, when it ranked 28.
In a USD3 million marketing campaign leading up to Virgin America's inaugural service, print and Internet ads strongly feature and promote the airline’s on-board amenities, indicating that Virgin America is launching a service-war, as much as its launching a price-war, playing on US consumer dissatisfaction with the aviation industry. Richard Branson called the US airline industry "abysmal" and promised better service aboard Virgin America.
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