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Survival Of New Airlines  
User currently offlinePIT From United States of America, joined Jul 2006, 188 posts, RR: 0
Posted (7 years 2 months 1 week 6 days 8 hours ago) and read 2223 times:

Hello all, I just wanted to hear your opion on all these new airlines. With xJet skybus Virgin America and how many other airlines are starting up, do you think that all or any off them will survive? Or will they pull an independence Air and go belly up?

I think that xjet will be very profitable. I don't think that skybus will survive. Virgin America I think will have a bit of a rocky start but will take off eventually.

14 replies: All unread, jump to last
 
User currently offlinePanAm747 From United States of America, joined Feb 2004, 4242 posts, RR: 8
Reply 1, posted (7 years 2 months 1 week 6 days 8 hours ago) and read 2178 times:

Interesting question.

Of all the variables that would go into starting a new airline, I think the most important is "what market are you going after?". I'm still not sure who Virgin America is targetting, but there's a lot of United and Southwest FF's who aren't going to switch because of a $5 cheaper flight. Yes, I'm simplifying matters, but you get my drift.

As for Independence Air, my thought is that they looked good on paper - ownership or long-term leases on a large number of aircraft, employees already in place, gates and airport services already negotiated - but in the end their finances did them in. In my opinion, it was the RJ's that did them - small, yes, but not the most fuel efficient.

But then again, who would have believed thirty years ago that both Pan Am AND TWA would be gone, and that intra-state Texas carrier "Southwest" would have expanded to a national level?

Only time will tell how Virgin America does.



Pan Am:The World's Most Experienced Airline - P(oor) S(ailor's) A(irline): San Diego's Hometown Airline-Catch Our Smile!
User currently offlinePacifica From Canada, joined May 2006, 149 posts, RR: 0
Reply 2, posted (7 years 2 months 1 week 6 days 8 hours ago) and read 2143 times:

Quoting PanAm747 (Reply 1):
I'm still not sure who Virgin America is targetting, but there's a lot of United and Southwest FF's who aren't going to switch because of a $5 cheaper flight.

Actually I was under the impression from their website that Virgin America's selling point isnt lower prices, it's better service (ex. free snacks and drinks, personal tvs, comfortable seats, etc). If this is the case, I think they might do quite well out of San Francisco because it is a higher class area.

As for the rest, all I KNOW is that there isn't room for everybody. Somebody will go down eventually, the only real question is who. It's all up to successful business models and consumer choice now I guess...


User currently offlineJumbojettim From United States of America, joined Jan 2001, 193 posts, RR: 0
Reply 3, posted (7 years 2 months 1 week 6 days 7 hours ago) and read 2092 times:

What did Indepence in, wasn't so much the RJ as that they had a hub and spoke system out of IAD, competing against United and Jetblue. Also, they had all of their "eggs in 1 basket."

User currently offlineSilentbob From United States of America, joined Aug 2006, 2054 posts, RR: 1
Reply 4, posted (7 years 2 months 1 week 6 days 7 hours ago) and read 2078 times:

Most likely they are going to cause everyone in the industry to lose money, including themselves. Overcapacity is going to be a serious problem if the predictions of softening demand come true.

User currently offlinePanAm747 From United States of America, joined Feb 2004, 4242 posts, RR: 8
Reply 5, posted (7 years 2 months 1 week 6 days 7 hours ago) and read 2036 times:

Quote:
Actually I was under the impression from their website that Virgin America's selling point isnt lower prices, it's better service (ex. free snacks and drinks, personal tvs, comfortable seats, etc). If this is the case, I think they might do quite well out of San Francisco because it is a higher class area.

I've heard that too, and I think for a while Virgin America will have their 15 minutes of fame, much like JetBlue has right now.

It's amazing to listen to people rave about JetBlue who have never flown them - "Oh, I've heard it's SO much better than all the other airlines - why can't they all be like that?" Well, you can't be the new kid on the block forever - and sooner or later your costs are going to rise, and someone else will come along and steal your thunder.

If Virgin America decides it wants to be the JetBlue of the west coast, that's fine - but for long term survival, they're going to need to do more than just a few amenities like free snacks and drinks, PTV's, and the like. SFO is a notoriously difficult market to operate from (much less center your operations!!), and UA is pretty dominant there. Toss in JetBlue and Southwest, and I just don't see how Virgin America can last long term.



Pan Am:The World's Most Experienced Airline - P(oor) S(ailor's) A(irline): San Diego's Hometown Airline-Catch Our Smile!
User currently offlineATLAaron From United States of America, joined Apr 2006, 1023 posts, RR: 3
Reply 6, posted (7 years 2 months 1 week 6 days 7 hours ago) and read 2027 times:
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Have any of the Virgin airlines failed?

User currently offlineSrbmod From , joined Dec 1969, posts, RR:
Reply 7, posted (7 years 2 months 1 week 6 days 7 hours ago) and read 2016 times:

ExpressJet: Has the benefit of still having contract flying (with CO and a new contract they have flying for DL) in addition to their recently launched independent. The biggest mistake ACA did by becoming Independence Air is that they ended up shooting themselves in the foot by losing their contract with DL as a result of the airline acquiring non-regional jet a/c.

Skybus: This airline has "coin flip" written all over it, as it could go either way. While some aspects of their product have potential to be successful (Personally, I like the idea of buying a pillow and blanket and getting to keep it, especially since on other airlines these days you have to spend $$$ on a first class ticket to that sort of stuff domestically.) and potentially imitated by other airlines, others have the potential for disaster (especially in regards to booking and ticketing). There is potentially a demand for ultra-low cost flying, but I have a feeling that Skybus may have to abandon the ULCC concept in order to be viable. I just see them having trouble keeping cabin crew due to them having to depend on commission from inflight sales to supplement their lower wages (in comparison to the rest of the industry). This could lead to crew shortages that could snowball into a major meltdown that garners them negative media attention.

Virgin America. They have the potential to be a player in the industry, but they have one thing that may stifle their planned growth. At a number of the airports they talk of serving have little if any available gate space (especially at certain times of the day). They'll definitely blow most of their competition away in terms of service and the product they offer, but whether they can poach passengers from the legacy and low-cost carriers is another thing. JetBlue managed to be successful because they started up out of an airport that lacked LCC service (The LCCs were flying into LGA, EWR, and ISP), something SFO doesn't have a lack of.


User currently offlineMCOflyer From United States of America, joined Jun 2006, 8664 posts, RR: 15
Reply 8, posted (7 years 2 months 1 week 6 days 6 hours ago) and read 1974 times:

With the right management, a/c, cities, etc; I can see it working. Xjet I can see working not because of CO contract but because of DL and their own flying. Virgin, we'll find out soon enough.

Hunter



Never be afraid to stand up for who you are.
User currently offlineCloudboy From United States of America, joined Jan 2004, 807 posts, RR: 0
Reply 9, posted (7 years 2 months 1 week 6 days 6 hours ago) and read 1973 times:

I wouldn't count SkyBus out yet, but I don't think they have a strong chance as they stand now. No matter how low they place their fares, someone, whether a big airline or another small guy, is going to try and match them. I don't think their idea of charging for every service is going to fly, either - many passengers will simply refuse, and in the US passengers are a lot more demanding than in Europe. The whole you can't bring your own food or drink on board is a lawsuit just waiting to happen, not to mention the bad publicity it will generate. Now, I do see the potential for them to move to a more advertising-oriented model, which may make them quite viable.

I think Virgin America will do well, because they are offering a different product - a reason why someone would choose to fly them over someone else. That alone should help them - but I also sense a willingness to try something new, which is desperately needed in this industry. And while I do agree they are moving into tough markets, the number of travelers is not set in stone - Virgin America with their "hip" product and better comforts stands a chance to entice at least few travelers into a trip when they otherwise would not or would choose to drive. I think they are really going to be drawing their customers from the economy classes of the more traditional airlines, so long as they dontt try too hard to simply mimic Jet Blue's routes.



"Six becoming three doesn't create more Americans that want to fly." -Adam Pilarski
User currently offlineSkyyMaster From , joined Dec 1969, posts, RR:
Reply 10, posted (7 years 2 months 1 week 6 days 5 hours ago) and read 1915 times:

Quoting Pacifica (Reply 2):
As for the rest, all I KNOW is that there isn't room for everybody.

Agreed. There's bound to be a shakeout of the new kids on the block, and I would be so bold as to say one or two of the more established carriers may disappear, either through the well discussed mergers or outright collapse.

Xjet could work, I'd just like to see them with some bigger aircraft. They do have the contract business to fall back on, but they can't fly the independent route as a money loser forever (if it does). A few Ejets would make them much more of a player.

I really can't decide on Virgin. The name will get them some clout among experienced FF's. Just depends on where they decide to fly and if they can avoid butting heads with B6 and WN at every turn. I've mentioned this elsewhere, but by autumn, there's going to be five airlines flying SFO-JFK, plus two SFO-EWR. I can't see there being enough business to go around. Since it's not likely the legacies are going to drop the route, who blinks first? Virgin or JetBlue? Stay tuned.

Skybus. Sorry, I am just not at all convinced. No offense to our European friends, but I don't think many American people are going to warm up to the Ryanairesque idea of flying into an airport 50-100 miles from their intended destination, regardless of the fares. Remember, those $10 fares are limited per flight. By the time you add up all the various charges and folks realize, for example, BLI is an hour and a half from Seattle (yes, some schmuck will book it and not know), I'm not convinced they are going to be the great new wonder some see them to be.,


User currently offlineSrbmod From , joined Dec 1969, posts, RR:
Reply 11, posted (7 years 2 months 1 week 6 days 4 hours ago) and read 1861 times:

Quoting SkyyMaster (Reply 10):

Xjet could work, I'd just like to see them with some bigger aircraft. They do have the contract business to fall back on, but they can't fly the independent route as a money loser forever (if it does). A few Ejets would make them much more of a player.

That risks them falling into the same trap that befell Independence Air. I'm not sure whether they could operate the E-Jets and not risk their contracts with CO and DL, but when Indy Air got those Airbuses, they were in breach of contract with DL and were summarily dumped by DL.

Quoting SkyyMaster (Reply 10):
Skybus. Sorry, I am just not at all convinced. No offense to our European friends, but I don't think many American people are going to warm up to the Ryanairesque idea of flying into an airport 50-100 miles from their intended destination, regardless of the fares. Remember, those $10 fares are limited per flight. By the time you add up all the various charges and folks realize, for example, BLI is an hour and a half from Seattle (yes, some schmuck will book it and not know), I'm not convinced they are going to be the great new wonder some see them to be.,

While a few things Skybus is doing come straight out of Donald Burr's playbook for PeoplExpress, others are ideas untested in the US and it remains to be seen if the American traveler wants to be nickel and dimed to death in order to hopefully snag a $10 fare. In a way, I'm kinda glad to see that Skybus will be doing logojets, which is something that hasn't been done to an entire fleet in the US since the heyday of WestPac.


User currently offlineSpencerII From , joined Dec 1969, posts, RR:
Reply 12, posted (7 years 2 months 1 week 6 days 4 hours ago) and read 1845 times:

Quoting Jumbojettim (Reply 3):
What did Indepence in, wasn't so much the RJ as that they had a hub and spoke system out of IAD, competing against United and Jetblue. Also, they had all of their "eggs in 1 basket."

Independence was destined to fail from the beginning. It was formed in retribution to UAL for lowering
their offer on pay for departure fees that they were paying to ACA.. The mantra at Independence was "we will just show you United Airlines how the cow actually eats the cabbage."

Had they kept the business model of being a contract carrier and sought out other airlines
to contract for, along with forming their own brand in some markets they would probably still be around today.
Even taking 100% risk on their CRJ's by carrying another airlines code in thin markets would have been
a better alternative to the route they chose. Again they thought thye would bring UAL to their knees in DC, and
it was kind of the other way around.


User currently offlineS5FA170 From United States of America, joined Sep 2005, 534 posts, RR: 4
Reply 13, posted (7 years 2 months 1 week 6 days 3 hours ago) and read 1823 times:

Quoting Srbmod (Reply 11):
That risks them falling into the same trap that befell Independence Air. I'm not sure whether they could operate the E-Jets and not risk their contracts with CO and DL, but when Indy Air got those Airbuses, they were in breach of contract with DL and were summarily dumped by DL.

I assume XJet's contract would be similar to my airline's with DL - and its my understanding that as long as the aircraft isn't over either 76, 78, or 86 seats (its one of those ... I forget which) - the contract isn't being violated. It might even be 100 seats. The Airbus definitely went way over that limit. The smaller Embraer E-Jets would not (The -170/175 family). However it might violate their contract with CO.



Prepare doors for departure and cross-check.
User currently offline1stfl94 From United Kingdom, joined May 2006, 1455 posts, RR: 0
Reply 14, posted (7 years 2 months 1 week 6 days 3 hours ago) and read 1789 times:

Quoting ATLAaron (Reply 6):
Have any of the Virgin airlines failed?

Virgin Sun was shut down not long after 9/11 and Virgin Express is now Brussels Airlines


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