VA- Why an Airline that travelers Love is Falling

[Mr. Johnson]

"The problem with Virgin America is that they are stuck with the low revenue end of the market."

Plus having so many operations in SFO, one of the worst in the country for delays and cancellations.

 

[HA25]

Virgin is a Cadillac Cimarron in a Chevy Cavalier world.

I could have written a 10 page opinion about this topic and not captured the gist of it any better. Well stated.

 

[climbhappy]

okay.........you've just been made CEO of virgin america...how do you fix the company? or get through this weak economy? or do you limp along like jetblue with a big foreign minority partner..?

united should just buy them then let them show a loss or profit..however they let the accountants disguise it.....but it would be a good brand to have in your offering....plus the pilots get a raise.....i just dont see how they can survive in a US market that has consolidated almost fully to just a handful of big players..

 

[Ky.BrownBourbn]

or do you limp along like jetblue with a big foreign minority partner..?

united should just buy them then let them show a loss or profit..however they let the accountants disguise it.....but it would be a good brand to have in your offering....plus the pilots get a raise.....i just dont see how they can survive in a US market that has consolidated almost fully to just a handful of big players..

Limp along with a BIG Foreign Minority Partner....Pot meet Kettle, Oh yeah, he's not a "MINORITY partner"

Why would United buy a losing product, they have enough problems, to get the customers, already have them...let the predatory pricing that happened into the 90's kick in and they are gone tomorrow..., to get the employees, NOPE, don't need them, I'm at a loss, why would anyone buy them?
KBB

 

[climbhappy]

i guess that's exactly whats happening....matching price, saturating their routes...it's more a slow death.....kind of like rat poisoning...

 

[Flyby1206]

okay.........you've just been made CEO of virgin america...how do you fix the company? or get through this weak economy? or do you limp along like jetblue with a big foreign minority partner..?

united should just buy them then let them show a loss or profit..however they let the accountants disguise it.....but it would be a good brand to have in your offering....plus the pilots get a raise.....i just dont see how they can survive in a US market that has consolidated almost fully to just a handful of big players..

I'd go for broke whoring the company out to be a codeshare partner to any foreign carrier that flies into LAX/SFO. Like was said previously, those connecting int'l travellers are where the $$$ is.

Jetblue is surviving partly because of the dozens of interline and codeshare agreements they have with foreign carriers.

 

[climbhappy]

i agree with that.....delta has a good deal going with alaska air...united should sign them up...

 

[Flyer1015]

VX does have codeshare connections with a lot of foreign airlines to drive feed through VX cities.

 

[Flyby1206]

VX does have codeshare connections with a lot of foreign airlines to drive feed through VX cities.

Virgin Atlantic and Virgin Australia are the only partner airlines I could find on their website. Are there others?

http://en.wikipedia.org/wiki/Los_Angeles_International_Airport#Airlines_and_destinations
http://en.wikipedia.org/wiki/San_Francisco_International_Airport#Airlines_and_destinations

The above lists on wiki show all the foreign carriers and that would be a good place to start, especially the asian carriers.

 

[Flyby1206]

Also happens to be a thread about this on a.net too. long but good read

http://www.airliners.net/aviation-forums/general_aviation/read.main/5601590/1/#75

 

[bri5150]

Singapore was a big one they just inked. There is a lot of excitment about that one. Seems as though they had high standards for service.

 

[Flyer1015]

http://www.virginamerica.com/travel/virgin-partners.html

 

[n757st]

The problem with VA is simple. Airlines make money on the long haul, large (low seatmile cost) airplane flying and lose money on short haul.

The regional and domestic system is a money loser, but nessecary to feed the big money long haul flights. That is why the domestic shorter routes are going to smaller and smaller airplanes and the seats on those flights are very expensive unless you are connecting to a long haul flight.

For example I fly LAX-LAS in 50-65 seat RJs all the time. The flights are nearly 100% asian connecting passengers. 5 years ago the LAX-LAS flights were all 130+ seat airplanes. The airline basically ditched all the low revenue weekend gamblers from SoCal and just kept the high revenue international passengers. The old United shuttle west coast flying is all done by RJs now for the same reason.

The problem with Virgin America is that they are stuck with the low revenue end of the market. VA lacks both the big money international routes and the regional feeder system. Jetblue, Spirit, etc also have this problem and as the majors regain strength those carriers will also feel the pressure.

Also Delta, American, and United can all sell their extra seats (the ones that are not sold to long haul connecting pax) dirt cheap. This technique was first used by American to kill People's Express and it is exactly how VA is being killed today and it is how other small airlines may be killed tommorrow.

Cheers,
Scott

Way too simplistic. First, the majors such as delta are not downsizing aircraft on connecting routes, if anything they are up-gauging equipment. Second, all it's going to take for the LCC airlines to put a hurt on the big guys is to order a gaggle of widebody aircraft and there goes those high paying "connecting" passengers, or enter more codeshare agreements which puts a hurt on the major, and gives the LCC access to those high connecting fares.

Va's main problem that I can see is they are after a customer they can't actually get. The Delta's of the world are going to get the corporate clients through their berth of network. The virgins and JetBlues can expect to get the average consumer or low level corporate fare, and these folks are not willing to fork out thousands of dollars on a transcon fare, no matter how fancy the product is.

 

[Flyby1206]

http://www.virginamerica.com/travel/virgin-partners.html

Thanks for that. It looks like VX has plenty of partners, so there goes my previous theory.

 

[Flyer1015]

If AA and US Air end up merging, I think we'd probably see at least two LCCs combine. VX/JBLU or Spirit/Allegiant.