irelayer
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Can Virgin America Survive?

Thu Nov 01, 2012 5:44 am

http://business.time.com/2012/10/25/...lleHongKong/product#prclt-fOXHm21v

We see it again and again...an airline emerges that offers an innovative, quality travel experience being priced out of the market because noone is willing to pay a little extra for it? What can they do?

-IR
 
apodino
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 5:54 am

Personally, I feel Sandy has dealt VA a devistating blow. A good chunk of their transcon flying was into the northeast and that crippled much of their flying, with only a handful of other flights to operate. Considering they are bleeding money, this doesn't help.
 
davescj
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 5:44 pm

Another problem for VA in general -- limited destinations. For me (living in MEM) they simply aren't an option. I am almost forced to DL for any level of frequency to my destinations.

Dave
Can I have a mojito on this flight?
 
AADC10
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 6:13 pm

VX's problem is that they do not have any region of strength. B6 cut many of their non-JFK transcons and they have extensive routes in the Northeast and from there to Florida and the Caribbean. VX's main hub is at UA's SFO hub where many routes compete with UA. The also have a substantial presence at LAX where both UA and AA claim as hubs. Many transcons also have competition from B6. The regional flights on the west coast have the usual WN problem. UA did not implode, which hurt VX. Helping them are rising costs at WN and B6.

The other factor that the article does not mention is the power of frequent flyer programs. Many business passengers out of SFO will put up with UA because of upgrades and award redemptions, particularly on international flights, along with the ability to earn miles and EQMs on Star Alliance.
 
RyanairGuru
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 6:16 pm

Quoting apodino (Reply 1):
I feel Sandy has dealt VA a devistating blow
Quoting davescj (Reply 2):
Another problem for VA in general

Hate to nitpick, but I think you mean VX. VA is Virgin Australia.
Worked Hard, Flew Right
 
davescj
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 6:29 pm

Quoting RyanairGuru (Reply 4):

You are right......VX (oops)

I was looking at the VX site. Somethings else I noticed, for good or ill, VX does NOT upgrade elites to F. F is a paid upgrade only (as I understand the site, paid either with $ or points). With UA, DL, AA also having a heavy presence in SFO, that has to have an impact as well.

If you're elite with UA/D/AAL, you already get the Y+ either for nothing or reduced fare.

With UA/DL, upgrades are complimentary for all elites. AA allows cert upgrade and complimentary for EXPL.

If I were going to be looking for upgrades, I would have to consider the free upgrade as part of my overall flying pattern ex-SFO.

Dave
Can I have a mojito on this flight?
 
G500
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 6:34 pm

They have the same exact product Jetblue has, same market, same aircraft, and just like Jetblue, they decided to set up shop in a very expensive and populated area, Jetblue going with NYC, Virgin with San Francisco..

However there is one HUGE diference, Jetblue is succesfull becasue they started when things were booming... Virgin started operations during very difficult economic times

my 2 cents
 
ROSWELL41
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 7:02 pm

I also believe that VX was counting on a much weaker UAL when they devised their business plan years ago. Perhaps they even envisioned a UAL collapse or abandonment of their SFO hub. Today, the reality is that UAL is stronger and larger than ever. Also, while I concede that their product is very impressive, they obviously cannot command a RASM premium over other alternatives in the markets they serve. They are too much a champagne product for a flying public that largely has a beer budget (reference the profitability of NK and G4).
 
bluesky73
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 7:50 pm

Shame to hear VX are not doing well. Must be hard for new start ups in US especially as the large legacy carriers are merging so much. How is JetBlue doing across the pond?

Also shows how fragile the airline business can sometimes be especially in this climate.

Fingers crossed they survive the dip and make good decisions to hopefully pull VX back up before its too late.
 
SANFan
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 7:57 pm

Virgin selected a niche, and stuck with it, and stuck with it, and continues down the same path. In another time perhaps they would have thrived but timing, as been said a million times, is everything and the road has always been rough for VX. And it sure doesn't look like it's getting any smoother now.

IMO, I would give them a slim chance to still be around in 2014.

bb
 
Prost
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 8:07 pm

Quoting bluesky73 (Reply 8):
Fingers crossed they survive the dip and make good decisions to hopefully pull VX back up before its too late.

Unfortunately, even with their great product, they've never had an 'up' to get back to.

How is it that in the USA we're able to support higher end, middle, and lower end retail, but for airlines, its either Sears or Walmart/DollarTree? Why can't we make a Bloomingdales or Nordstrom airline work?
 
phxa340
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 8:19 pm

VA has 3 serious issues :

1. Lack of a strong network
2. Lack of a strong FFP
3. Lack of of frequencies

These 3 things are very important to the high yeilding business customers looks for. If VX wants to chase the leisure market do it like Spirit or Allegiant.

Simply put - VX's business model is highly flawed and unless they do drastic changes ... no they will not survive. Their losses are increasing in what are supposed to be the most lucrative quarters for airlines - that is not a good thing.
 
RyanairGuru
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 8:36 pm

Quoting phxa340 (Reply 11):
VA has 3 serious issues :

1. Lack of a strong network
2. Lack of a strong FFP
3. Lack of of frequencies

These 3 things are very important to the high yeilding business customers looks for. If VX wants to chase the leisure market do it like Spirit or Allegiant.

  

And there-in lies their problem. They have developed a high-value product to woo high yield traffic, yet due to the factors you identify above simply aren't able to get those passengers onto their aircraft.

This leaves them with bottom-of-the barrel leisure traffic, yet their costs are too high to profitably shift bargain basement fares.

When they devised their business plan and selected San Francisco I think that they were banking on picking up the yuppy tech crowd - think Google, Apple, Facebook etc. By being quirky and slightly hipster, they probably thought that they could sway these cashed-up young people. What they, apparently, didn't count on was that (a) these are publicly listed multi-national corporations, and need more than just a few frequencies to JFK, IAD and PHL, and (b) that UA weren't going to let some of the most valuable traffic at one of its fortress hubs just waltz off to a competitor.

Unfortunately I feel that their plan was fundamentally flawed from the very beginning...
Worked Hard, Flew Right
 
seahawks7757
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 8:49 pm

Quoting AADC10 (Reply 3):
The regional flights on the west coast have the usual WN problem.

Your kinda forgetting about the other big player with that guy on the tail? I mean they only rule the west coast and are beating WN more and more.   
 
hmelawyer
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 8:52 pm

Another issue is that with their limited route maps they seem to fly a large number of routes that are another airlines hub on both ends. I know this is b/c they want to be in the largest metro areas, but I am not sure those are the most profitable areas. For example, I am located in Austin. I think the VX product would be a good fit with the AUS market and they could get a foothold here (see the B6 trajectory in AUS). Instead the only Texas destination is DFW, where anybody not AA is going to struggle to get an meaningful % of the market.

They are a hub and spoke airline with not enough spokes to gather their somewhat limited market.
 
BMI727
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 8:54 pm

Quoting Prost (Reply 10):
Why can't we make a Bloomingdales or Nordstrom airline work?

We do. It's up in the front of many airplanes. And things beyond that like NetJets.

But coach class air travel is a commodity. It's like gasoline: there are some people who swear up and down that their car will run better on Shell than BP, but at the end of the day, it's mostly the price and availability that counts.
Why do Aerospace Engineering students have to turn things in on time?
 
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EA CO AS
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 9:00 pm

Quoting SANFan (Reply 9):
Virgin selected a niche, and stuck with it, and stuck with it, and continues down the same path.

So did the Donner Party. How'd that work out for 'em, again?  

With their low cost structure, VX can survive, but only if they radically change their strategy and even their product to some degree. If they stubbornly cling to the notion of "If you build it, they will come" they're doomed to fail. Losses of $671M over 5 years simply aren't sustainable.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

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commavia
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 9:28 pm

VX's largest issue continues to be, in my opinion, that it is simply too "niche." The clientele that VX is heavily focused on, and for which its product and service offering is optimized, is simply not large and concentrated enough to make an entire airline business model work.

Are there some young, hip, trendy people who are willing to pay a premium for better service, mood lighting, etc.? Sure. But are there enough of them in any one place to support an entire airline catering to them? Outside of a relatively short list of markets, no. That type of clientele is certainly very heavily concentrated in a few markets - certainly SFO, LAX and NYC, plus South Florida, CHI and probably SEA, with some possible fly-ins to LAS. So there you have it - much of VX's network. But their model and market are not, in my view, very scalable beyond that. I do not think an airline so focused on that particular type of client could ever find a viable way of serving say, PIT, or PHX, or BNA, or RDU, even though all of those are places where some - though not enough - of their target customer type live.

VX's Achilles heal continues to be the inherent limitations of its route network driven by the inherently limited scalability of their product.

Quoting hmelawyer (Reply 14):
For example, I am located in Austin. I think the VX product would be a good fit with the AUS market and they could get a foothold here (see the B6 trajectory in AUS).

The problem with AUS is that while it is "hip," perhaps, as markets go, it's not particularly large. The entire market for AUS-California right now is only 10-15 daily flights. Sounds like a lot, but AA has more flights than that just on DFW-LAX, as an example. So the market AUS-California is already well-served, and fragmented, among four different carriers. Is there room for VX in that mix? I'm not sure. Yes, other markets like SFO-LAX have just as much if not more competition, but they're also vastly larger markets. Plus, the comparison to B6 is somewhat irrelevant in this case - while B6 is a great airline with a great product and service offering, they are much more of a "pure" low-fare carrier without premium cabins, full hot meals, etc. and also a generally lower price point, which is probably more attuned to the AUS market, which has not only media, tech and entertainment types, but plenty of shorts-and-flip-flops college kids and families, too.

Quoting BMI727 (Reply 15):
We do. It's up in the front of many airplanes. And things beyond that like NetJets.

But coach class air travel is a commodity.

  

Precisely.

The U.S. domestic air travel market is already plenty segmented. Passengers in major markets already have a wide variety of options, at varying service levels and price points. They can buy an economy or premium cabin ticket from multiple airlines.
 
phxa340
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 9:49 pm

Quoting BMI727 (Reply 15):
at the end of the day, it's mostly the price and availability that counts.

Very true , VX's issues are compounded by the fact that US, UA, DL, B6 are all in relatively healthy financial positions to vigorously protect their markets. When VX entered the ORD market, UA and AA responded with 180 R/T fares to LAX. VX had to respond in kind. The difference is that UA and AA (Even though in BK) are large and diverse enough to absorb the losses , VX has no protection like this.
 
koruman
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 10:14 pm

Quoting davescj (Reply 5):
I was looking at the VX site. Somethings else I noticed, for good or ill, VX does NOT upgrade elites to F. F is a paid upgrade only (as I understand the site, paid either with $ or points). With UA, DL, AA also having a heavy presence in SFO, that has to have an impact as well.

Yes, this is a large part of why they don't keep going bankrupt like every other US carrier.

The business model of every US legacy carrier seems to be:

1. Comp the seats which should be earning the most revenue to your most loyal coach seat purchasers.
2. Go bankrupt.
3. Whereas in every other western country you would then be closed down and have your assets split between your staff and other creditors, you can instead........
4. "Reorganise" by stealing your staff's entitlements to reduce your cost base, while the failed managers are somehow permitted to oversee this organised theft in spite of having bankrupted the company.
5. Continue trading with this anti-competitive advantage.
6. Persist with an insane business model wherein you earn no revenue from your First Class seats.
7. Go bankrupt again.

It's extraordinary that in areas with similar sector lengths (Australia, South Africa, Southeast Asia, East Asia) airlines can sell their Business Class seats rather than comp them, and earn their biggest profits from that cabin.

But American consumers seem both unwilling to pay for First Class and to have a sense of entitlement that if they buy enough Coach tickets they have "earned" the right to be upgraded for nothing.

And all American legacy carriers appear to collude in anti-competitive behaviour which leads to effective price-fixing by having quasi-identical upgrade policies, which perpetuate this appalling business model.
 
SANFan
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 10:21 pm

Quoting EA CO AS (Reply 16):
So did the Donner Party. How'd that work out for 'em, again?

Exactly! And as I also said, how about the timing... if the Donner group had crossed The Pass in, say July, things might've worked out a whole lot different (read: better!)

And as I've posted about a hundred times already, VX continues to fly routes to and from SF and LA. Period. With an unbelievable ONE p-2-p route outside of their otherwise blinders-restricted route map of SF and LA to ... (well, now two if we include the amazing PSP-JFK weekly seasonal flight) they stick to THE plan, even as they falter and continue to try to turn a profit.

A niche is a great idea. But at some point, if it ain't workin', how about trying something else!? And IMHO it sure looks to me like it ain't workin'...

bb
 
civetfive
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 10:35 pm

"Speaking of competitors, they have regularly jumped into markets where Virgin America is operating, making it difficult if not impossible for Virgin America to be profitable."

This quote frustrates me. It makes it sound like poor VX is being picked on by bigger airlines looking to cherrypick VX's routes, when in reality its the *exact opposite*.
 
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cosyr
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 11:07 pm

We were just wondering what happens at SFO if they go under here SFO Terminals If Virign America Shuts Down? (by cosyr Oct 14 2012 in Aviation Polls)
 
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Polot
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 11:20 pm

Quoting koruman (Reply 19):
Yes, this is a large part of why they don't keep going bankrupt like every other US carrier.

No, the reason they haven't gone bankrupt is that they are fortunate to have investors who are willing to continue to give the airline money. You realize that VX has yet to make a profit during a single quarter in their existence right?
 
Flighty
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 11:26 pm

Quoting civetfive (Reply 21):
This quote frustrates me. It makes it sound like poor VX is being picked on by bigger airlines looking to cherrypick VX's routes, when in reality its the *exact opposite*.

That is the beauty of competition.

One of the requirements of legal competition is, you don't try to drive your competitor out of existence through predatory pricing. If you have a clear strategy to bleed VX to death just because you have bigger capital reserves, that would be illegal AFAIK.
 
Viscount724
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 11:30 pm

Quoting koruman (Reply 19):
But American consumers seem both unwilling to pay for First Class and to have a sense of entitlement that if they buy enough Coach tickets they have "earned" the right to be upgraded for nothing.

The problem is that the passenger's employer is in most cases paying the bill and most U.S. companies don't permit F class fares under their corporate travel policies.
 
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DocLightning
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 11:34 pm

Quoting phxa340 (Reply 11):
1. Lack of a strong network
2. Lack of a strong FFP
3. Lack of of frequencies

4. Not growing fast enough.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
jetblueguy22
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 11:36 pm

Quoting koruman (Reply 19):
But American consumers seem both unwilling to pay for First Class and to have a sense of entitlement that if they buy enough Coach tickets they have "earned" the right to be upgraded for nothing.

I strongly believe people don't buy first class tickets because they expect to get upgraded domestically. My stepfather is a DL Diamond and gets upgraded every time. I always ask why he doesn't just buy a first class ticket when he could and not have to worry about coach? He says why spend the money when I my chances of sitting up front are basically guaranteed? Although it is nice to reward your frequent travelers for their business you can't give away every single seat. to those people.
Back to the topic. I honestly can't believe they have lasted this long. I have never personally flown them but from what I've seen they have a pretty nice product. With fuel prices as high as they are they are focusing on all the wrong places. Have flights to PHX, MSP, STL, DEN, STL etc. Sure you might not have celebrities or tons of rich people on board, but you're gonna be able to control prices better. Not to mention get some partnerships! I'd love to try them, but I'm not going to throw a couple thousand Skymiles away to get a taste of them.
Blue
All of the opinions stated above are mine and do not represent Airliners.net or my employer unless otherwise stated.
 
slcdeltarumd11
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RE: Can Virgin America Survive?

Thu Nov 01, 2012 11:55 pm

They can surive as long as the investors want to keep pumping them with money. I think its pretty soon to the point where they demand a totally different business model unless we see some signs of life. I have no idea what they can do but there have to be some big looser runs out there to be so consistant on loosing. I would have to think there has to be some evidence that their oldest routes are some dogs, no?
 
AirCalSNA
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 12:35 am

Their presence is too small and if their FF miles can be used on any major US airline, I haven't heard it. Nevertheless, I like to fly them when I can.
 
hiflyeras
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 1:21 am

Quoting AirCalSNA (Reply 29):
Their presence is too small and if their FF miles can be used on any major US airline, I haven't heard it.

No other U.S. airline will partner with them. They're all just biding their time, waiting for the ax to fall. This winter is going to be tough for VX....they needed to add capacity to sun destinations but the best they could come up with was a weekly flight to PSP.
 
alphaomega
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 1:40 am

Quoting g500 (Reply 6):
They have the same exact product Jetblue has, same market, same aircraft, and just like Jetblue, they decided to set up shop in a very expensive and populated area, Jetblue going with NYC, Virgin with San Francisco..

However there is one HUGE diference, Jetblue is succesfull becasue they started when things were booming... Virgin started operations during very difficult economic times

my 2 cents

Quite a bit of irony here for those that know the full history of VX....its initial start was stalled due to foreign ownership blah blah blah, and instead of VX getting started, B6 was born in its place...
 
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Polot
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 1:48 am

Quoting alphaomega (Reply 31):
Quite a bit of irony here for those that know the full history of VX....its initial start was stalled due to foreign ownership blah blah blah, and instead of VX getting started, B6 was born in its place...

Not really. While I believe there was some consideration in investing in the eventual JetBlue no serious attempt was ever made to create a Virgin USA/Virgin America until the mid 2000s, long after JetBlue's founding in 1999.

It is also incredible simplistic (re:wrong) to say the B6 succeeded because they started flying when "times were booming." The mid to late 90s (when times were booming) is riddled with failed startups and lets not forget 9/11 occurred 21 months after its startup (note that VX has been around longer than 21 months). B6 succeeded because they had a then innovative business plan (leather seats and live TV was basically unheard of in the domestic market at the time) at a then underutilized airport (JFK) in a major city (NYC) that had basically no LCC service (WN at ISP was basically it) offering reasonably fares to a destination that New Yorkers love (Florida).

[Edited 2012-11-01 18:57:53]
 
SANFan
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 1:52 am

Quoting HiFlyerAS (Reply 30):
This winter is going to be tough for VX....they needed to add capacity to sun destinations but the best they could come up with was a weekly flight to PSP.

   With existing stations in SAN, LAS, MCO, FLL plus south of the border in SJD, PVR and CUN, outside of LAX, VX still hasn't come up with any sensible ideas for winter flying. Is it any wonder they continue to flush money year after year?... Amazing that the investors keep writing the checks.

bb
 
drerx7
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 1:53 am

Quoting HiFlyerAS (Reply 30):

Quoting AirCalSNA (Reply 29):
Their presence is too small and if their FF miles can be used on any major US airline, I haven't heard it.

No other U.S. airline will partner with them. They're all just biding their time, waiting for the ax to fall. This winter is going to be tough for VX....they needed to add capacity to sun destinations but the best they could come up with was a weekly flight to PSP.

Agreed.
They don't fly anywhere. Not to minimize the destinations they serve buuuttt....c'mon you overfly the heart of the country for the most part to connect the coast chasing travelers who value there Elite status more than a novelty flight. They missed there window of expansion and expanded into the wrong markets, the wrong way. The things that they do well don't translate to $$ and not enough of the country can experience them. I'd say they are doomed.
Third Coast born, means I'm Texas raised
 
iFlyLOTs
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 1:54 am

Quoting DocLightning (Reply 26):
4. Not growing fast enough.

I think this is their real issue, they have a grand total of twenty destinations and unless you're going to the west coast there is no reason to fly them. They need to work on getting people around the east coast and the midwest. The routes they fly have already been saturated by other airlines so they need to look for ones that have less competition. Memphis, St. Louis or Kansas City maybe? and they need to get more connectivity between their destinations.
"...stay hungry, stay foolish" -Steve Jobs
 
koruman
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 1:55 am

Quoting koruman (Reply 19):
But American consumers seem both unwilling to pay for First Class and to have a sense of entitlement that if they buy enough Coach tickets they have "earned" the right to be upgraded for nothing.
Quoting Viscount724 (Reply 25):
The problem is that the passenger's employer is in most cases paying the bill and most U.S. companies don't permit F class fares under their corporate travel policies.
Quoting jetblueguy22 (Reply 27):
I strongly believe people don't buy first class tickets because they expect to get upgraded domestically

Companies are the same in other areas where people DO buy First (or Business) class tickets.

In Australia I live in an area equivalent to Washington DC (Location-wise). My main employer sends me in Economy Class to the equivalent of Miami, Boston and Los Angeles, on either one of two airlines with which I have status.

If I want to fly in Business Class, I have two options.

a) I can pay the fare difference myself ($800 return to "Boston", $1300 return to "Miami" or $2000 return to "Los Angeles".

b) I can use my own frequent flyer points to request a standby upgrade into unsold Business Class seats, at the following rates:

"Boston" 16,000 miles return.
"Miami" 24,000 miles return.
"Los Angeles" 48,000 miles return.

The airline still profits from its loyal Coach customers - if I get a one-way Upgrade to "Los Angeles" its frequent flyer liability to me falls by 24,000 miles.

And the higher your status, the higher your priority for the upgrade. But if a Top Tier elite doesn't apply to burn miles for an upgrade but a no-status passenger does, the no-status passenger gets the upgrade.

And if a passenger really wants to fly Business Class, they know that they can only lock it in by paying the fare difference.

Virgin America seems to be the only US carrier which similarly monetises its most expensive seats. It's what we call a "fur coat and no knickers" approach for other airlines to charge for bags, food etc while not bothering to obtain revenue for seats which are worth $400-$2000 per sector more than other seats.

But we all knew that anyway. That is why there are plenty of British, Irish, Australian and European people in senior management around the aviation world, but all US airline executives are essentially unemployable outside North America because they are considered to be masters of ineptitude, trapped in a business paradigm which prevails in their market but which would cause disaster anywhere else. Because for the rest of us, bankruptcy = liquidation.
 
ytz
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 2:05 am

On top of other issues, I think they have the wrong fleet type. I think an airline like VX should operate with CS100 and A321NEOs. The NEOs for the long-haul routes to major cities. And the CS100 to regional routes.

They should be flying to inner city airports like Laguardia, Midway and Love Field. Yes, I get the restrictions at those airports. But really, the only way to have a business case for VX to operate a fleet like the above to airports like that. See Porter at YTZ for the rationale.
 
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Polot
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 2:08 am

Quoting ytz (Reply 37):
On top of other issues, I think they have the wrong fleet type. I think an airline like VX should operate with CS100 and A321NEOs. The NEOs for the long-haul routes to major cities. And the CS100 to regional routes.

Considering that neither of those aircraft are currently flying (and in fact available to order when VX was starting up), what do you propose that they fly now?

[Edited 2012-11-01 19:09:50]
 
ytz
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 2:25 am

Quoting Polot (Reply 38):
Considering that neither of those aircraft are currently flying (and in fact available to order when VX was starting up), what do you propose that they fly now?

At the moment? They should be all A321s targetted at major urban centres. That's it.

But honestly, I think the business plan is flawed for them. For their business model (aiming at slightly more upscale clientele), they need those city centre airports, a very efficient fleet with good CASM, and a smaller airplane to open up regional routes (A319 is not it). Right now, they don't have CASM. They don't have frequencies. And they don't have coverage. So what exactly do they have other than a fresher image?
 
zippyjet
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 2:32 am

Does Virgin America fly to IAD or DCA? I'm not sure. If not, they may have some better luck if they expanded into our area whether it be BWI, IAD or DCA. Also, VA should give up FLL and start operations out of MIA. Their upmarket innovative product may just do well out of MIA instead of over-saturated domestic FLL. Sure MIA is more expensive but, with their big brother Virgin Atlantic there wouldn't it make better sense? As someone else mentioned they don't serve MEM. Seems like they want to skip over "flyover" country and concentrate on the two coasts. They might just do well if they initiate service somewhere in Middle America. Where, I'll leave it to y'all to speculate.
I'm Zippyjet & I approve of this message!
 
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mariner
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 2:38 am

Quoting SANFan (Reply 33):
With existing stations in SAN, LAS, MCO, FLL plus south of the border in SJD, PVR and CUN, outside of LAX, VX still hasn't come up with any sensible ideas for winter flying.

I have a lot of sympathy with Virgin America in this - and with the airline generally.

A fair swag of the authorities to resort Mexico (the snazzier ones, anyway) from LAX/SFO are already taken. MZT and ACA? The cruise lines (and some airlines) have abandoned those two because of the Narco violence.

Moving south, BZE doesn't exactly fit the target market and while SJO or LIR might work, ideally they'd need a vacation packager which may conflict with costs. Virtually all the south of the south of the border/Caribbean flights by the LCC's (Airtran/Frontier/Sun Country) have such deals.

East coast? A lot of those deals are sewn up, too, and it could cause problems with the scheduling. For a brief period of time, Apple was showing BOS-CUN/PUJ as operated by Virgin but now its JetBlue again, and I suspect scheduling was the culprit, as with Frontier last year.

I've no doubt a.netters can think of a bunch of routes Virgin should fly, but the reality may be somewhat different.

mariner
aeternum nauta
 
slcdeltarumd11
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 2:42 am

Quoting SANFan (Reply 33):
With existing stations in SAN, LAS, MCO, FLL plus south of the border in SJD, PVR and CUN, outside of LAX, VX still hasn't come up with any sensible ideas for winter flying. Is it any wonder they continue to flush money year after year?... Amazing that the investors keep writing the checks.
bb

Yeah PSP is just pathetic IMHO that they cant think of anything better to try.

Isnt a large part of the problem just too long flghts generally? They have flights that are long take up tons of plane time, are super competative on price per mile anyway even if you get a premium, and use tons of fuel. I would have to think this airline needs to think of a total new business plan aka new routes, just fold under, or shows some signs of potential pretty soon. What other options do they have how many years will the investors just keep throwing money at them?

The economy doesnt look to be turning around fast enough for people to just be willing to pay a bigger premium coming up and service expecations keep sinking people are getting more use to no entertainment and boring plain cheap cabins and seem to want that if the price is a little lower. The virign america product is amazing no one doubts that but it doesnt seem like people are willing to pay enough of a premium for it i guess.

Look at Frontier i think its still very risky and has along long way to go but a total transformation of defocusing DEN, becoming an allegiant as model, and becoming an ULCC seems to be working for them they are changing and at least trying totally new things when its obvious they needed to change something. Isnt Vigin America getting pretty close to Frontier level that something has to change or be reinvented to avoid just a very slow long death?
 
timpdx
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 3:00 am

I liked them, and used them a few times on California-Toronto where their product was superior to AC, for sure. The flights I was on were packed (non summer high season, too) but, alas, they dropped YYZ. Haven't flown them since. Their flight are so limited even on the West Coast where I do LAX-PDX almost every month, but AS and B6 beat them on schedule every time, and I can do "easy" airports like LGB or BUR to Portland. Would rather leave LAX to my Intl flights. I want them to succeed, they have a product aimed squarely at my demographic, "Creative Class" if you will, but their scheduling is so limiting. Hope B6 can survive without being swallowed....
 
phxa340
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 3:28 am

Quoting ytz (Reply 39):
They should be all A321s targetted at major urban centres

Considering they can't even fly an A320 profitably transcon , how does flying a larger jet make sense ?

Quoting zippyjet (Reply 40):

Does Virgin America fly to IAD or DCA?

Yes to DCA from SFO.
 
masseybrown
Posts: 4411
Joined: Wed Dec 11, 2002 2:40 pm

RE: Can Virgin America Survive?

Fri Nov 02, 2012 3:50 am

Quoting phxa340 (Reply 11):
VA has 3 serious issues :
...
3. Lack of of frequencies

My wife booked them IAD-SFO-IAD and ended up spending a night at an airport motel on both legs. Never again, she said; so far she has been true to her word.

The local story is that kind of problem killed Maxjet, which once offered a very nice (when it operated) trip to LHR.
 
skycub
Posts: 318
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 3:59 am

Wasn't it once said that the definition of insanity is doing the same thing over and over again and expecting a different result?

That's what I think when I watch Virgin America grow.

They have yet to find a way to make money flying long-haul transcons from LAX and SFO to the east coast.... however... every time they expand, it seems to be in the form of still another long haul route from SFO/LAX to the east coast.
My opinions are my own. They are not representative of my employer, my union or my co-workers. They are all mine.
 
ltbewr
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 4:02 am

Another problem, as with any non-legacy major carrier including WN and VX, is that you are stuck with them for your transportation, you can't transfer to another airline if something goes wrong. If US or UA has a problem with a flight, they might be able to transfer you to UA or AA, or they can route you differently, VX can't.
 
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lightsaber
Crew
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 4:47 am

VX seems to cater to those who want the perception of luxury without paying for it.

Quoting AADC10 (Reply 3):
VX's problem is that they do not have any region of strength.

The last analysis on VX pointed out they had *zero* routes without competition. There is no route that they 'own.'

Quoting SANFan (Reply 9):
IMO, I would give them a slim chance to still be around in 2014.

I am of the same opinion.

Quoting BMI727 (Reply 15):
Quoting Prost (Reply 10):
Why can't we make a Bloomingdales or Nordstrom airline work?

We do. It's up in the front of many airplanes. And things beyond that like NetJets.

If one doesn't have frequency, NetJets and the like are killing premium fares.

Quoting Polot (Reply 23):
You realize that VX has yet to make a profit during a single quarter in their existence right?

Is that true? I simply ask for confirmation that zero quarters were in the black. I cannot recall one where VX is profitable. Note: I do not consider an operating profit good enough. Every business has some amount of overhead that isn't in the operating profit (e.g., advertising) that would destroy the business if that expense didn't occur.

Quoting phxa340 (Reply 44):
how does flying a larger jet make sense

The A321 has better CASM than the A320. If a route supports the plane, it is likely that the minor discounting to fill the additional seats would offset the added seat revenue. I speculate most A320 routes will go the A321NEO (excluding shorter runways, naturally).

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
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EA CO AS
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RE: Can Virgin America Survive?

Fri Nov 02, 2012 5:08 am

Quoting koruman (Reply 19):
Quoting davescj (Reply 5):
I was looking at the VX site. Somethings else I noticed, for good or ill, VX does NOT upgrade elites to F. F is a paid upgrade only (as I understand the site, paid either with $ or points). With UA, DL, AA also having a heavy presence in SFO, that has to have an impact as well.

Yes, this is a large part of why they don't keep going bankrupt like every other US carrier.

  

Maybe you didn't see my post or read the article in its entirety, but they are a fairly small carrier and they have lost $671M over the past 5 years. At that rate, without any significant changes to their way of doing business that break their streak of losses, it's unlikely they'll survive beyond the next 12-18 months.

And whereas "every other US carrier" has gone through Chapter 11 bankruptcy reorganization, if they fail VX would likely be an outright liquidation.
"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

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