LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 4:28 pm

Virgin America which operates 39-aircraft, this month celebrated its 4-year anniversary.
David Cush its President and CEO had a Q&A interview with Silicon Valley’s Mercury News. Questions about why a SF HQ, top route, customer service, and the environment were covered.

Article:
http://www.mercurynews.com/business/ci_18717348

One thing mentioned by the CEO peaked my interest - he states a lot of their client base is:
"business travelers and tech-savvy urban dwellers, and it skews toward people with higher disposable incomes."
I've long suspected VX as having one of the more affluent client bases amongst US domestic airlines.
From the desert to the sea, to all of Southern California
 
Cubsrule
Posts: 11432
Joined: Sat May 15, 2004 12:13 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 4:35 pm

Quoting LAXintl (Thread starter):
I've long suspected VX as having one of the more affluent client bases amongst US domestic airlines.

Given their route map, wouldn't it be more surprising if they didn't?
I can't decide whether I miss the tulip or the bowling shoe more
 
User avatar
ERJ170
Posts: 5478
Joined: Thu Apr 15, 2004 11:15 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 4:41 pm

Did Virgin America do like jetBlue did when they put out their list of cities they were interested in serving before their launch? Does anyone have that list? I would love to see what's on the list compared to where they are now..
Aiming High and going far..
 
ikramerica
Posts: 13763
Joined: Mon May 23, 2005 9:33 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 4:50 pm

Yet they don't sell their seats at a profitable rate. I'm looking to go to NYC in two months from la and while other airlines have sold out their low fare buckets on the peak flights, and UA CO on all flights, VX still has the $318 fares on offer for all flights. One would think that business and upscale pax would pay more, especially on Friday and Sunday.
Of all the things to worry about... the Wookie has no pants.
 
commavia
Posts: 9744
Joined: Mon Apr 25, 2005 2:30 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 4:51 pm

Quoting LAXintl (Thread starter):
One thing mentioned by the CEO peaked my interest - he states a lot of their client base is:
"business travelers and tech-savvy urban dwellers, and it skews toward people with higher disposable incomes."
I've long suspected VX as having one of the more affluent client bases amongst US domestic airlines.

Not surprising given VX's product and route network. The open question remains - at least in my mind - whether or not you can build an economically sustainable airline based largely on this niche market. Marketing to savvy urban dwellers with high incomes is definitely, on a per-person basis, economically attractive, but there aren't too many of those people in the U.S. (relative to the overall population), and those people are generally all concentrated in a very small group of markets.
 
LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 4:53 pm

Quoting cubsrule (Reply 1):
Given their route map, wouldn't it be more surprising if they didn't?

Not really - they fly tons of very competitive routes against carriers like JetBlue, SWA, and the legacies.

So I think its pretty good they have been able to coral a certain segment of desired demographic traveler towards them and not their competitors offerings.
Certainly the product helps, but their more niche and eclectic marketing seems to have worked in drawing seemingly more then their average share of upper income folks in.

Quoting ERJ170 (Reply 2):
Did Virgin America do like jetBlue did when they put out their list of cities they were interested in serving before their launch? Does anyone have that list? I would love to see what's on the list compared to where they are now..

Below is what they mentioned in their DOT filings back in 2007 as potential future destinations for consideration in addition to the initial 1st year launch cities of San Francisco, New York, Washington, DC, Los Angeles, San Diego and Las Vegas.

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, Ore
Raleigh-Durham
Sacramento
Salt Lake City
San Antonio
San Jose, Calif.
Sarasota
Seattle
St. Louis
Tampa
West Palm Beach.
From the desert to the sea, to all of Southern California
 
ScottB
Posts: 5447
Joined: Fri Jul 28, 2000 1:25 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 5:15 pm

Quoting LAXintl (Reply 5):
Not really - they fly tons of very competitive routes against carriers like JetBlue, SWA, and the legacies.

But in the very competitive short-haul routes, they are still unable to get their "people with higher disposable incomes" to pay more for their product -- or even as much as the competition can get.

Quote:
Part of it was the market: SFO was dominated by a high-cost legacy carrier (United), and in 2007 Southwest and JetBlue didn't have a lot of flights out of the airport.

Two key problems for VX: They likely believed that (1) Southwest would not return to SFO and (2) JetBlue would stay out of SFO & LAX, favoring OAK & LGB instead.

Quoting LAXintl (Thread starter):
David Cush its President and CEO had a Q&A interview with Silicon Valley’s Mercury News. Questions about why a SF HQ, top route, customer service, and the environment were covered.

Of course, nothing about when/if they'll ever make a profit.
 
MaverickM11
Posts: 15266
Joined: Thu Apr 06, 2000 1:59 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 5:22 pm

Quoting ScottB (Reply 6):
Of course, nothing about when/if they'll ever make a profit.

Details . Their passengers have iPads. What more do you want.
E pur si muove -Galileo
 
LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 5:34 pm

Quoting ScottB (Reply 6):
But in the very competitive short-haul routes, they are still unable to get their "people with higher disposable incomes" to pay more for their product -- or even as much as the competition can get.

Well if you define short-haul routes of about 1-hour, here is how they do on such flying based on their average fare collected compared to OALs.

SFO-LAS
VX - $133.52
UA - $124.08
WN - $119.98
US - $104.99

SFO-LAX
VX - $114.01
UA - $113.50
AA - $104.39
WN - $103.49
DL - $87.49

SFO-SAN
UA - $117.52
VX - $111.48
WN - $108.00

SFO-SEA
UA - $158.00
AS - $149.99
VX -$141.48

Not bad compared to peers. They actually lead in two of the markets!
From the desert to the sea, to all of Southern California
 
User avatar
EA CO AS
Posts: 13441
Joined: Wed Nov 14, 2001 8:54 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 5:37 pm

Quoting MaverickM11 (Reply 7):

Quoting ScottB (Reply 6):
Of course, nothing about when/if they'll ever make a profit.

Details . Their passengers have iPads. What more do you want.

LOL! What made me laugh even more is the photo on that page referring to David Cush's appointment to the BOD of a local non-profit organization. Especially because his own company appears to be one so far...  
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
ScottB
Posts: 5447
Joined: Fri Jul 28, 2000 1:25 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 5:43 pm

Quoting LAXintl (Reply 8):
SFO-LAS
VX - $133.52

Source? The Consumer Air Fare Report shows them as having the lowest average SFO-LAS fare for three out of four quarters in 2010.

Quoting LAXintl (Reply 8):
SFO-SAN
UA - $117.52
VX - $111.48

Again, source? Consumer Air Fare Report shows them as having the lowest fare on this route for all four quarters of 2010.

Quoting LAXintl (Reply 8):
They actually lead in two of the markets!

I don't buy it, unless this includes connections and they're allocating an unreasonably large portion of the connection to the short-haul flight.
 
User avatar
lightsaber
Crew
Posts: 11833
Joined: Wed Jan 19, 2005 10:55 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 5:51 pm

Quoting MaverickM11 (Reply 7):
Quoting ScottB (Reply 6):
Of course, nothing about when/if they'll ever make a profit.

Details . Their passengers have iPads. What more do you want.

   What about us with Kindles?  

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 5:53 pm

Quoting ScottB (Reply 10):
Source?

Reports available by

http://planestats.com/

Also regarding allocation of connecting revenues, is most often done as the square root of miles per segment, which will always weigh a higher percentage in favor of shorter segments rightfully as they have the higher cost to generate. System contribution yield is determined by subtracting the local segment revenue and distance from the total itinerary revenue and distance, and dividing the remaining revenue by the remaining miles.

[Edited 2011-08-24 11:02:12]
From the desert to the sea, to all of Southern California
 
ScottB
Posts: 5447
Joined: Fri Jul 28, 2000 1:25 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 7:32 pm

Quoting LAXintl (Reply 12):
most often done as the square root of miles per segment, which will always weigh a higher percentage in favor of shorter segments rightfully as they have the higher cost to generate.

I'll agree that this is a reasonable way to allocate cost per segment, but I do not agree that this is a logical way for allocating revenue. This methodology has the potential to bias segment revenue in favor in favor of low-yielding connections which in truth do not contribute anywhere near that amount of revenue, particularly in markets with highly competitive pricing.

If this is how VX is running their revenue models, then I'm not surprised they continue to lose money.
 
User avatar
enilria
Posts: 6362
Joined: Fri Feb 22, 2008 7:15 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 7:41 pm

Quoting LAXintl (Reply 5):
Below is what they mentioned in their DOT filings back in 2007 as potential future destinations for consideration in addition to the initial 1st year launch cities of San Francisco, New York, Washington, DC, Los Angeles, San Diego and Las Vegas.

I can't believe they will really take those 13 additional planes in the next year. I think they will scale it back.
 
UALFAson
Posts: 766
Joined: Sun Mar 14, 2004 2:41 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 8:33 pm

Wow, what a horribly written article. I mean, from a journalistic standpoint. As free publicity and PR for the airline, it was great!

All that BS about being "the airline of choice for eco-conscious fliers" and having planes that are "far more fuel efficient" than their competitors. Girl, please! I don't know what the reputation is of the Mercury News, but this article makes it look like a puff piece.
"We hope you've enjoyed flying with us as much as we've enjoyed taking you for a ride."
 
User avatar
RWA380
Posts: 4451
Joined: Fri Feb 18, 2005 10:51 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 8:47 pm

Why haven't they started PDX? It was on the list of originally intended cities to serve.
Next Flights: PDX-HNL-OGG-LIH-PDX On AS, WP & HA
 
SANFan
Posts: 3688
Joined: Sun Aug 06, 2006 10:10 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 9:29 pm

Quoting RWA380 (Reply 16):
Why haven't they started PDX? It was on the list of originally intended cities to serve.

Source please. I don't recall ever seeing PDX listed as you claim and I sure don't see it on this (correct) list of announced start-up cities...

Quoting LAXintl (Reply 5):
...the initial 1st year launch cities of San Francisco, New York, Washington, DC, Los Angeles, San Diego and Las Vegas.

bb
 
RamblinMan
Posts: 785
Joined: Sat Oct 09, 2010 3:57 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 9:34 pm

Quoting ScottB (Reply 6):
But in the very competitive short-haul routes, they are still unable to get their "people with higher disposable incomes" to pay more for their product -- or even as much as the competition can get.

Funny thing about the vast majority of high-income individuals is that they are the ones who most aggressively pursue a "bargain." It's how they stay wealthy.

Why do you think the Camry is the most popular car among $1million+ net worth households?
 
freakyrat
Posts: 865
Joined: Fri Aug 22, 2008 1:04 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 9:38 pm

I'm on board a Virgin America A320 (flight 854) enroute from SFO-DFW. This is my first experience flying Virgin and certainly will not be my last. It is a more civilized way to fly. I like the way they treat their customers as guests. I like the onboard look of their aircraft from the lighting to the RED entertainment system. The leather Recaro seats are very comfortable and I have plenty of leg room. All in all this is a very nice experience.
 
ikramerica
Posts: 13763
Joined: Mon May 23, 2005 9:33 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 10:16 pm

Quoting UALFAson (Reply 15):
All that BS about being "the airline of choice for eco-conscious fliers" and having planes that are "far more fuel efficient" than their competitors.

Well I guess because they don't have any regional jets, it's true? Well, WN doesn't have any either, but they still fly quite a few classic 737s, so maybe it's still true.

But honestly, just like lower wages, it's a benefit of being a new carrier. As the airline ages, that advantage diminishes...

Quoting RamblinMan (Reply 18):
Why do you think the Camry is the most popular car among $1million+ net worth households?

Because they hate driving?  

Seriously, it may be the most popular single model, but your argument falls apart because it doesn't sell more than the luxury brands combined to this group. Far from it.
Of all the things to worry about... the Wookie has no pants.
 
RamblinMan
Posts: 785
Joined: Sat Oct 09, 2010 3:57 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 10:30 pm

Quoting ikramerica (Reply 20):
Seriously, it may be the most popular single model, but your argument falls apart because it doesn't sell more than the luxury brands combined to this group.

Huh? Seriously missing the point there bud.

The majority of wealthy individuals (the ones not on this forum) won't pay more than they have to for air travel because they don't see the reason for it. We often assume on this forum that the bargain-fare-chasers are the lower-income fly-once-a-year types, but that isn't really the case.
 
LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 10:49 pm

Quoting ScottB (Reply 13):
I'll agree that this is a reasonable way to allocate cost per segment, but I do not agree that this is a logical way for allocating revenue. This methodology has the potential to bias segment revenue in favor in favor of low-yielding connections which in truth do not contribute anywhere near that amount of revenue, particularly in markets with highly competitive pricing.

I'm not sure why you would allocate cost any different then revenue. If you did you would have major disconnects in your network P&L. For example if you only use such squared proration for cost, your short-haul will be (rightfully) show higher cost on per miles basis, but in turn not contribute its share of revenue compared to long-haul which would show very high revenue but have a low cost cost threshold.
In theory then, no one would operate short-haul segments.

Anyhow, the method I described is the most common one out there - and utilized by most (maybe even all) US majors, in additional to several foreign carriers I am familiar with.

Quoting ScottB (Reply 13):
If this is how VX is running their revenue models, then I'm not surprised they continue to lose money.

Their financial numbers have nothing to do with how they internally allocate cost or revenues. It all comes out in a wash at the end.
VX financial performance is what it is as total revenue has not covered the total operating cost plus other financing and special cost items to date.

Quoting enilria (Reply 14):
I can't believe they will really take those 13 additional planes in the next year. I think they will scale it back.

No I think they are indeed coming. VX only last week signed a new maintenance vendor agreement that covers the fitting out of the new deliveries, while they have been on a recent hiring binge, and been spending moneys on a rather substantial IT projects to scale the company up in size.
From the desert to the sea, to all of Southern California
 
iaddca
Posts: 199
Joined: Tue Jul 17, 2007 4:36 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 11:28 pm

Last time I flew VX, plane was so clean and new, felt like I could have eaten off the wing. Much nicer than the grease stained 75s UA shuttles across the country.

That said, they don't know how to develop routes or create a FF program to attract flyers. G4 is doing 10% operating margins on almost exactly the same amount of revenue, while VX is doing -14%. G4 has monopolies on its routes, VX has low market share on its routes. That said, VX has a great opp to take advantage of disgruntled UA flyers who are livid about the rumored changes to MileagePlus. But I doubt anyone in Burlingame has a strategy to take advantage of that opportunity.
 
laca773
Posts: 2033
Joined: Sat Nov 06, 2004 7:10 am

RE: Virgin America 4 Years Later - CEO Talks

Wed Aug 24, 2011 11:49 pm

How is VX doing in their transcon markets? Everyone I know who's flown them has been extremely happy with their inflight product offering and all comment, the legacies are a sad joke at this time when you compare what they have to offer their customer base in terms of inflight amenities.
 
catiii
Posts: 2391
Joined: Mon Mar 31, 2008 1:18 am

RE: Virgin America 4 Years Later - CEO Talks

Thu Aug 25, 2011 12:25 am

Quoting laca773 (Reply 24):
Everyone I know who's flown them has been extremely happy with their inflight product offering and all comment, the legacies are a sad joke at this time when you compare what they have to offer their customer base in terms of inflight amenities.

How so? I flew DL JFK-LAX in first, and the onboard amenities, product, and service surpassed VX. Just because VX offers virtually the same product (although I would submit the AVOD and TV are, in fact, inferior) with some mood lighting behind it does make it a superior product. Plus with DL I have unlimited access to the SkyClub (not the "90 minutes or less rule" that VX has with the 3 Virgin Atlantic Clubs they contract with at JFK, IAD, and SFO only), access to the network, and as a Platinum Medallion flier a whole host of other amenities...
 
JHCRJ700
Posts: 215
Joined: Fri Oct 30, 2009 5:51 pm

RE: Virgin America 4 Years Later - CEO Talks

Thu Aug 25, 2011 12:33 am

If i'm flying cross country i always fly VX. They are truly refreshing. I even drive down to DC to fly on them!
RUSH
 
jfrworld
Posts: 367
Joined: Thu Aug 19, 2004 8:21 am

RE: Virgin America 4 Years Later - CEO Talks

Thu Aug 25, 2011 2:14 am

Quoting LAXintl (Reply 5):
Below is what they mentioned in their DOT filings back in 2007 as potential future destinations for consideration in addition to the initial 1st year launch cities of San Francisco, New York, Washington, DC, Los Angeles, San Diego and Las Vegas.

You forgot SEA. SEA launched APR 08.
 
LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: Virgin America 4 Years Later - CEO Talks

Thu Aug 25, 2011 2:22 am

Quoting jfrworld (Reply 27):
You forgot SEA. SEA launched APR 08.

What I posted was based on the airlines pre-launch DOT filings.

Seattle was not mentioned as an intended year-one city, but instead included in the list of potential future destinations which I posted in reply 5.
From the desert to the sea, to all of Southern California
 
User avatar
EA CO AS
Posts: 13441
Joined: Wed Nov 14, 2001 8:54 am

RE: Virgin America 4 Years Later - CEO Talks

Thu Aug 25, 2011 5:36 am

Quoting jfrworld (Reply 27):
You forgot SEA. SEA launched APR 08...

...and it's been costing them money ever since.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
hatbutton
Posts: 275
Joined: Tue Mar 01, 2005 11:39 am

RE: Virgin America 4 Years Later - CEO Talks

Thu Aug 25, 2011 6:24 am

Quoting UALFAson (Reply 15):
All that BS about being "the airline of choice for eco-conscious fliers" and having planes that are "far more fuel efficient" than their competitors. Girl, please! I don't know what the reputation is of the Mercury News, but this article makes it look like a puff piece.
Quoting ikramerica (Reply 20):
Well I guess because they don't have any regional jets, it's true? Well, WN doesn't have any either, but they still fly quite a few classic 737s, so maybe it's still true.

Maybe David Cush should check his numbers before making statements like being number one in fuel efficiency. If you take 2010 Total ASMs and divide them by Total Fuel Gallons consumed, AS is the most fuel efficient.

AS
Total ASMs - 24,437,658,000
Fuel Gallons - 320,479,864
Seat Miles per Gallon of Fuel - 76.3

VX
Total ASMs - 7,648,450,000
Fuel Gallons - 101,442,004
Seat Miles per Gallon of Fuel - 75.4
 
ikramerica
Posts: 13763
Joined: Mon May 23, 2005 9:33 am

RE: Virgin America 4 Years Later - CEO Talks

Thu Aug 25, 2011 6:59 am

Quoting RamblinMan (Reply 21):
Huh? Seriously missing the point there bud.

I rarely if ever "miss the point" of a post. It's usually the other person failing to make the point they thought they were making, or me simply not agreeing with the point they are trying to make...  

You implied that because the best selling car among millionaires is the camry that it demonstrates millionaires are frugal.

That's false logic, because the camry doesn't outsell all non-frugal cars combined to this group. Combined as a whole, millionaires buy more luxury cars than camrys, which by your logic would mean that millionaires AREN'T frugal.

But the camry statistic is far more likely a simple case of this: camry is most popular new car in the USA, millionaires can afford to buy new cars and do not tend to buy budget cars or used cars, thus it would follow that the camry, a car that costs slightly more than the average car sold in the USA, would likely be the most popular car millionaires buy because millionaires are the group most likely to buy cars of that type or better. It really says nothing about how much they would be willing to pay for a plane ticket.

BUT, VX didn't say they are popular among millionaires. They claim to be popular among whom we used to call yuppies. And this type is more likely to buy iPads and BMWs than Camrys anyway. They aren't necessarily millionaires and may never get there.

So the question is, why aren't they willing to pay enough to make VX profitable? Or if VX is so sure that this group appreciates them, why does VX still insist on matching the lowest fare on every route it flies?
Of all the things to worry about... the Wookie has no pants.
 
LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: Virgin America 4 Years Later - CEO Talks

Fri Aug 26, 2011 4:50 pm

Quoting laca773 (Reply 24):
How is VX doing in their transcon markets?

Well as people have pointed out, the company has not turned a profit, but VX certainly has had an effect on the market place. As article points out LAX-JFK is now 6x daily, no small feat.

Below is their 12-month market-share and load factor on their transcon routes:

LAX-BOS: 13% / 80%
LAX-FLL: 18% / 78%
LAX-NYC: 11% / 88%
LAX-WAS: 13% / 82%

SFO-BOS: 15% / 79%
SFO-FLL: 23% / 75%
SFO-NYC: 12% / 87%
SFO-WAS: 16% / 84%

LAS-NYC: 8% / 79%
From the desert to the sea, to all of Southern California
 
User avatar
RWA380
Posts: 4451
Joined: Fri Feb 18, 2005 10:51 am

RE: Virgin America 4 Years Later - CEO Talks

Fri Aug 26, 2011 9:28 pm

Quoting SANFan (Reply 17):

If you look at response number 5 you will see PDX was listed in their 2007 DOT filing. That was the source I used that you requested.
Next Flights: PDX-HNL-OGG-LIH-PDX On AS, WP & HA
 
LGA777
Posts: 954
Joined: Fri Jul 04, 2003 12:46 am

RE: Virgin America 4 Years Later - CEO Talks

Sun Aug 28, 2011 5:48 pm

I just took my 3rd & 4th Virgin America flight last week LAS-SEA with about a 3 hour connection in their Awesome new Terminal 2 in SFO. Despite both my flight being short another AWESOME travel experience. Very friendly crews and gate agents, my 319 and 320 where very clean and love the Red system and being able to order food & drinks on my timing, not theirs. And finally T2 in SFO was just awesome. Great views of arriving and departing aircraft, the black dots on the windows make quality photos impossible, the only negative. I found a nice area with a great view where I could sit comfortably and charge my netbook, digital camera, and cell phone simultaneously. Nice dining and shopping options as well. I think the main reason VX is not more successful and larger than they are so far is getting biz travelers who want their AA, DL, CO-UA or US mileage or perhaps have never even tried them to realize just how great their product is. If you have never tried them you should.

Cheers

LGA777
 
Cubsrule
Posts: 11432
Joined: Sat May 15, 2004 12:13 pm

RE: Virgin America 4 Years Later - CEO Talks

Sun Aug 28, 2011 6:13 pm

Quoting LGA777 (Reply 34):
I think the main reason VX is not more successful and larger than they are so far is getting biz travelers who want their AA, DL, CO-UA or US mileage or perhaps have never even tried them to realize just how great their product is.

Sort of - most business travelers (including me) must travel to "undesirable" places (i.e. those not on a coast or Chicago or Dallas) from time to time, so VX isn't real useful to us. VX has a lousy network for the vast majority of business travelers.
I can't decide whether I miss the tulip or the bowling shoe more
 
MaverickM11
Posts: 15266
Joined: Thu Apr 06, 2000 1:59 pm

RE: Virgin America 4 Years Later - CEO Talks

Sun Aug 28, 2011 6:14 pm

Quoting LGA777 (Reply 34):
I just took my 3rd & 4th Virgin America flight last week LAS-SEA with about a 3 hour connection in their Awesome new Terminal 2 in SFO.

How much was that ticket?
E pur si muove -Galileo
 
LGA777
Posts: 954
Joined: Fri Jul 04, 2003 12:46 am

RE: Virgin America 4 Years Later - CEO Talks

Sun Aug 28, 2011 6:55 pm

Quoting MaverickM11 (Reply 36):
How much was that ticket?

It was a ZED fare as I was travelling non rev space available.
 
StuckInCA
Posts: 1618
Joined: Wed Oct 19, 2005 12:55 pm

RE: Virgin America 4 Years Later - CEO Talks

Sun Aug 28, 2011 7:21 pm

Quoting ScottB (Reply 6):
But in the very competitive short-haul routes, they are still unable to get their "people with higher disposable incomes" to pay more for their product -- or even as much as the competition can get.

I know that I fairly regularly book on VX when there are other options, even if it means paying a bit more (which it doesn't always).

Quoting MaverickM11 (Reply 7):
Details . Their passengers have iPads.

I don't.

Quoting ikramerica (Reply 31):
I rarely if ever "miss the point" of a post.

LOL
 
Flighty
Posts: 7686
Joined: Thu Apr 05, 2007 3:07 am

RE: Virgin America 4 Years Later - CEO Talks

Sun Aug 28, 2011 8:01 pm

Quoting commavia (Reply 4):
those people are generally all concentrated in a very small group of markets.



Rich (or high spending) people live all over the USA. The entire nation is nearly wall to wall in affluence.

Quoting ikramerica (Reply 31):
which by your logic would mean that millionaires AREN'T frugal.

It doesn't matter what millionaires do. It only matters what high spending frequent travelers do. Whether they have a net worth, or not, is not important to airlines, unless they are hoping to be in these people's will.

[Edited 2011-08-28 13:02:51]
 
ScottB
Posts: 5447
Joined: Fri Jul 28, 2000 1:25 am

RE: Virgin America 4 Years Later - CEO Talks

Mon Aug 29, 2011 2:24 pm

Quoting LGA777 (Reply 37):
Quoting MaverickM11 (Reply 36):
How much was that ticket?

It was a ZED fare as I was travelling non rev space available.
Quoting ScottB (Reply 6):
in the very competitive short-haul routes, they are still unable to get their "people with higher disposable incomes" to pay more for their product
Quoting Flighty (Reply 39):
Rich (or high spending) people live all over the USA. The entire nation is nearly wall to wall in affluence.

Incomes are generally higher on the coasts, and that is reflected in things like real estate values. And a business model which relies on selling pricey first class seats and amusing ADHD passengers with mood lighting and TV will depend on longer-haul flying. TV will not sell seats between SFO & LAX or IAH & DFW; frequency and price will.
 
milemaster
Posts: 995
Joined: Tue Mar 20, 2001 10:19 am

RE: Virgin America 4 Years Later - CEO Talks

Mon Aug 29, 2011 3:50 pm

Quoting ScottB (Reply 40):
Incomes are generally higher on the coasts, and that is reflected in things like real estate values. And a business model which relies on selling pricey first class seats and amusing ADHD passengers with mood lighting and TV will depend on longer-haul flying. TV will not sell seats between SFO & LAX or IAH & DFW; frequency and price will.

Is that why DFW (Ranked #8) and IAH (ranked #1) are both in top 10 most expensive airports to fly from in the country while only two costal cities made it to that list?
 
ikramerica
Posts: 13763
Joined: Mon May 23, 2005 9:33 am

RE: Virgin America 4 Years Later - CEO Talks

Mon Aug 29, 2011 4:22 pm

Quoting LGA777 (Reply 34):
Very friendly crews and gate agents, my 319 and 320 where very clean

Do the seat backs still have the pointy plastic magazine pockets or are those gone. I want to book VX again for an upcoming trip, but can't deal with those digging into my knees for 5 hours.
Of all the things to worry about... the Wookie has no pants.
 
ikramerica
Posts: 13763
Joined: Mon May 23, 2005 9:33 am

RE: Virgin America 4 Years Later - CEO Talks

Mon Aug 29, 2011 4:25 pm

Quoting ScottB (Reply 40):
and that is reflected in things like real estate values

Scarcity of land is what drives up real estate values. Incomes often have to be higher to allow employees to afford to live anywhere nearby, but you also find people commuting for 1 to 2 hours in these regions to go from places where real estate is cheaper to the job, or renting really small apartments.
Of all the things to worry about... the Wookie has no pants.
 
ScottB
Posts: 5447
Joined: Fri Jul 28, 2000 1:25 am

RE: Virgin America 4 Years Later - CEO Talks

Mon Aug 29, 2011 4:32 pm

Quoting milemaster (Reply 41):
Is that why DFW (Ranked #8) and IAH (ranked #1) are both in top 10 most expensive airports to fly from in the country while only two costal cities made it to that list?

Rankings of average fares don't really reflect per-capita income in a region. MEM is #6 on the list and yet Memphis is far from a high-income area. Likewise, FAT is #13 but is also in a low-income area (Fresno County is in the bottom 20% of California counties by per-capita income). DFW & IAH are somewhat unusual in that their low-fare traffic is siphoned off at DAL and HOU respectively. One would expect IAH to have more domestic O&D traffic than BWI, for example, but (1) close to 40% of Houston's O&D passengers are over at HOU and (2) BWI is a low-fare alternative for the Washington metro, so BWI ends up with 40% more domestic O&D traffic than IAH.
 
milemaster
Posts: 995
Joined: Tue Mar 20, 2001 10:19 am

RE: Virgin America 4 Years Later - CEO Talks

Mon Aug 29, 2011 9:27 pm

Quoting ScottB (Reply 44):

Quoting milemaster (Reply 41):
Is that why DFW (Ranked #8) and IAH (ranked #1) are both in top 10 most expensive airports to fly from in the country while only two costal cities made it to that list?

Rankings of average fares don't really reflect per-capita income in a region. MEM is #6 on the list and yet Memphis is far from a high-income area. Likewise, FAT is #13 but is also in a low-income area (Fresno County is in the bottom 20% of California counties by per-capita income). DFW & IAH are somewhat unusual in that their low-fare traffic is siphoned off at DAL and HOU respectively. One would expect IAH to have more domestic O&D traffic than BWI, for example, but (1) close to 40% of Houston's O&D passengers are over at HOU and (2) BWI is a low-fare alternative for the Washington metro, so BWI ends up with 40% more domestic O&D traffic than IAH.

Per capita income is pretty irrelevant if a market in very large volume is sustaining some of the highest fares in the country. Fares are high because people are paying it. That indicates the capability and willingness to pay a premium for air travel which also directly correlates with a market for competitive premium services. Especially If you can offer a superior product to the incumbent carrier. Lower fares without having to go too low + better service = customers & hopefully profit.

Just my opinion
 
Flighty
Posts: 7686
Joined: Thu Apr 05, 2007 3:07 am

RE: Virgin America 4 Years Later - CEO Talks

Mon Aug 29, 2011 10:01 pm

Quoting ScottB (Reply 40):
Incomes are generally higher on the coasts, and that is reflected in things like real estate values.

Right, you bring up real estate prices... which are one reason why disposable income is not necessarily any higher on the coasts. I won't say Alabama is equal to Massachusets. But Iowa may be. It is easy, maybe a little too easy, to assume the USA is just the top 5 cities... the same goes for China by the way. The weird thing about the USA is the top 100 cities all have significant disposable income. VX is going for glamor, and volume, so the top 10 cities focus is understandable, for now. But it's not like this will be a long term limitation.
 
ScottB
Posts: 5447
Joined: Fri Jul 28, 2000 1:25 am

RE: Virgin America 4 Years Later - CEO Talks

Mon Aug 29, 2011 10:04 pm

Quoting milemaster (Reply 45):
Per capita income is pretty irrelevant if a market in very large volume is sustaining some of the highest fares in the country.

It depends on what you call "very large volume." MEM has pretty low O&D traffic, and the hub there isn't exactly growing.

Quoting milemaster (Reply 45):
Fares are high because people are paying it. That indicates the capability and willingness to pay a premium for air travel which also directly correlates with a market for competitive premium services.

No, all it indicates is that there is a monopoly supplier (or nearly so) with the ability to charge monopoly rents. If I own the only store within 100 miles, I can probably charge $10/gallon for milk. I'm probably not going to sell a whole lot of it, but I'm going to sell some. That doesn't mean that I'm selling "premium" milk -- I just don't have any competition so I can charge what I want.
 
milemaster
Posts: 995
Joined: Tue Mar 20, 2001 10:19 am

RE: Virgin America 4 Years Later - CEO Talks

Mon Aug 29, 2011 10:22 pm

Quoting ScottB (Reply 47):
It depends on what you call "very large volume." MEM has pretty low O&D traffic, and the hub there isn't exactly growing.

I was mostly talking about DFW and IAH rather than MEM.

Quoting ScottB (Reply 47):
No, all it indicates is that there is a monopoly supplier (or nearly so) with the ability to charge monopoly rents. If I own the only store within 100 miles, I can probably charge $10/gallon for milk. I'm probably not going to sell a whole lot of it, but I'm going to sell some. That doesn't mean that I'm selling "premium" milk -- I just don't have any competition so I can charge what I want.

The dollars are being spent regardless of whether it's to a monopoly player or a new entrant is my point. The population is clearly capable of supporting the higher fares which is what largely matters when you look for a city to introduce service. This enables you to lower fares to a point that keeps the flight profitable and enticing enough with added value and services. By skimming a microscopic amount of the large number of premium passengers that depart every day from those cities, it's viable. I'm guessing that's why VX planned to fly to DFW since the airline's inception.
 
BOStonsox
Posts: 525
Joined: Sun Dec 30, 2007 5:20 am

RE: Virgin America 4 Years Later - CEO Talks

Tue Aug 30, 2011 4:28 am

Back when VX announced the list of cities they wanted to fly to, people noticed that BOS, PVD, and BDL were on the list. I find it interesting that SFO (their main hub), SJC, and SMF were also on the list, possibly to be served from LAX, as well as every major Florida city. It made some people wonder (and now including myself) if there is or was a plan to open an East Coast focus city or even another one somewhere out west.
2013 World Series Champions!

Who is online