Virgin America Buy 2 Get 1 Free?!

It appears that Virgin America is getting desperate. Repeat after me . . . MUST-RAISE-CASH.

A friend forwarded me an email that was apparently sent to at least some of Virgin America’s eleVAte frequent flier program members. I’m not sure how many people got it, but this friend has flown them a few times so he isn’t exactly in need of being convinced to fly them further. It is an EXTREMELY generous offer that is not exactly what you’d want to be doing in this cost environment. Here it is.

As an eleVAte Member, you’re entitled to exciting travel privileges, like the opportunity to fly free once in a while.

So we’re extending a special offer to just a few, special eleVAte Members – that would be you.

When you fly two paid roundtrips on Virgin America, we’ll give you a free roundtrip ticket* valid for travel through June 1, 2008.

It’s simple. Book and fly your two paid roundtrips between March 5 and May 4, 2008. After you complete your second paid roundtrip, we’ll automatically send you an email with everything you need to claim your free trip.

Grab a seat at virginamerica.com and you’ll be on your way to a free trip before you know it.

San Francisco : Las Vegas : Los Angeles : New York : San Diego : Seattle : Washington, DC

I read through the terms and conditions, and there don’t appear to be too many restrictions. It looks like two quick trips from LAX to SFO and you’ll have a freebie you could use to get to the east coast. No fare restrictions, just make sure you’re in coach. Now that’s a steal.

Did anyone else get this? Are there any eleVAte members out there who didn’t receive it? I wonder how widespread this is.

In case you’re curious, here’s all the mice-type that was in the email.

* To qualify for the promo code for one (1) roundtrip ticket, eleVAte members receiving this FLY2GET1 offer must book and complete four (4) one-way trips (or two (2) round-trips) on Virgin America between March 5, 2008 and May 4, 2008. Promo Code is valid for travel in the Main Cabin; the applicable travel must be completed between March 15, 2008 and June 1, 2008. If travel is changed to a date outside of this window or if itinerary is modified outside of the promo period, promo code discount will become inapplicable, and the guest will be responsible for a $40 change fee and any increase in air fare. Promo code may be used only towards newly-booked travel and may not be applied to prior bookings. Using the promo code will deduct 100% of base fare; the guest will still be responsible for Passenger Facility Charges of up to $9 each way, September 11th Security Fees of up to $5 each way and a Federal Segment Tax of $3.50 per domestic segment. A segment is a takeoff and landing. Promo code may not be redeemed for cash and may not be used towards premium seats (such as exit row seats) or upgrades. Seats are limited, subject to availability, and may not be available on all flights. The start dates for certain non-stop service are as follows: San Francisco (SFO) – Seattle (SEA) on March 18, 2008 and Los Angeles (LAX) – Seattle (SEA) on April 8, 2008. Only one (1) promo code may be used per eleVAte member in connection with this FLY2GET1 offer, even if the member books and completes more than four (4) trips during the qualifying period. If the person booking the four (4) qualifying trips is different from the person actually flying those trips, promo code will be awarded to the person who actually flies those trips. Promo code may only be used for booking via virginamerica.com.

I don’t like that this is being sent to eleVAte members. You’d think these would be the people who are most likely to be flying the airline already, and this is a very rich offer. Maybe they should start actually defining redemption values for eleVAte members instead of focusing on these offers. That’s right, I haven’t seen anything saying how many flights you need for a free trip in the program. Has anyone else?

This is just one of several cash grabs going on. They’ve had a couple rapid-fire sales lately including one going on right now. You can see where they’re weakest. In coach, everything is cheap. Previous sales have had a premium in JFK over DC, but that’s not the case in this one. Dulles appears to have climbed a little in price. The only strength is in the first class cabin, except for San Diego and Seattle where there are sale fares. Still, with such a small first class cabin, I don’t think that’s going to help them too much.

We’re at around $108 for a barrel of oil and counting. They’ve got to figure something out quickly. Oh, but they aren’t the only ones. ExpressJet announced a big loss this past quarter and for the full year. Those 50 seaters aren’t cheap to run and they’re getting more expensive as oil goes up. They’re going to be feeling more pressure to get out of the branded flying business as this goes on. Consolidation may not be necessary . . . just wait for oil prices to drive airlines out instead.


28 Responses to Virgin America Buy 2 Get 1 Free?!

  1. It’s a good deal for VA because they have a lot of empty seats, and passengers will still be responsible for the taxes and 9/11 fees. The correct strategy is as you note – take a couple SFO-LAX flights (or SEA), and then use the free flight to the East Coast. Thanks for sharing this.

  2. Nick says:

    Nothing here. I’m an elevate “member”, but I’ve not flown VX yet. I did get the 30% off coupon a few days ago (which seemed like a genuine discount when I tests a few itineraries), but I didn’t use it.

  3. Evan says:

    I’m crossing my fingers that VX will keep its current routes and schedules intact… I bought (very cheap) Virgin America tickets for IAD-SEA for July!

  4. Yo says:

    Reminds me of the 50% off sale at America West, were you there then?

    It was pretty surreal, lots of employees thought it was a great thing, but lots of us knew the real scoop…

  5. CF says:

    Yo – Nope, I wasn’t there during that sale. It was way before my time, but it was legendary . . . for creating havoc at the airport and for finalizing the slide into bankruptcy. That was a far more desperate cash grab than this one, but it’s in the same vein.

  6. Scott says:

    I’m a founding eleVAte member but didn’t recieve that email, wish I had. I too got the 30% coupon a few days ago, only a few hours after I booked my first trip no less.

    I think VA should consider moving upmarket to create a low-cost, all business class airline. United has their PS service, but I think VA could win people over pretty easily on long haul routes with their superior experience. Especially if they have more plans to add additional transcontinental routes.

  7. Richard says:

    I too am a founding member of eleVAte, however have not as yet taken a flight with VA. The offer seems a great one and I doubt it’s a cash grab, more a branding exercise/goodwill generator and to flog empty seats.

    After coming so far, it is unlikely Sir Richard will want to see this project fail and more importantly, he’ll be straight in there to sieze control once Open Skies truly takes effect in the US.

  8. Bryan in San Francisco says:

    Hey, I’m an eleVAte member and I didn’t get the email! Humbug. Lots of VA ads around town at subway stops are advertising “Outlets at every seat!” and “Text chat between passengers onboard!” That last feature is not a good sales argument.

  9. VA and Skybus both entered this industry chasing CASM. The best way to get low CASM is to fly your aircraft like crazy and dilute those fixed costs. But what they didn’t think about was that if they started flying 5 hour legs. They only get 2 tickets for those 10 hour days. I’d much rather see an airline with 8 hours utilization on 8 one-hour legs with higher CASM and RASM. It’s not the just the CASM or the RASM. It’s the difference between the two. Oops! Did I just give away some sort of secret?

  10. Zack Rules says:

    What VX needs to do is to start looking for routes with little or no competition. They should add Pittsburgh, Columbus, Raleigh Durham, Hartford, Indianapolis, St Louis, San Antonio and Buffalo to their route map. Each these has only one or two flight to the West Coast and could swallow a few more. Each market could support an LAX flight and Raleigh Durham, Columbus, Pittsburgh, San Antonio, Indianapolis and St Louis would likely support SFO.
    Another plan could be more short haul. Salt Lake City, Portland OR [AS might fight like SEA or not], Reno, Burbank, Ontario, Vancouver [need approval to fly to Canada] could be fruitful.
    Personally, I think VX in another year or two will ultimately bite the dust. They’ve raised a lot of money but will burn through that quick. Maybe jetBlue will pick up the pieces.

  11. So did anyone else get the email? No one else is really discussing this online here at the end of the day.

  12. Richard says:

    Zack

    I think you make some valid points about the routes that should be considered.

    I’m not too sure I agree with the point that VX will ‘ultimately bite the dust’.

    If you look outside of the US, you have Virgin Atlantic (UK’s 2nd largest long haul carrier & who may or may not in the future purchase BMI), Virgin Blue (Australia) Pacific Blue & Polynesian Blue (serving New Zealand and the Indian islands) V Australia which launches on transpacific routes later this year and Virgin Nigeria (the flag carrier for it’s name sake country) There is plenty of aviation talent across the group to prevent such a failure from happening.

    My theory is that if and once the USA oblige their part of the Open Skies agreement, Virgin Atlantic will buy out Virgin America or take a significant stake thus giving it access to a strong capital stream to support a more aggressive growth plan

  13. CF says:

    Some great conversation going on here . . .

    Scott – The upmarket idea isn’t a bad one in theory. Obviously their first class seats are working for them right now, but can they fill an entire plane? More importantly, can they fill an entire plane with profitable fares? I tend to think that it has a better shot than what they’re doing right now. At the very least, they should have a larger F cabin.

    Courtney Miller – It’s true that the short hauls may have a higher CASM but with a higher RASM that’s ok. I agree with you that too many airlines chase CASM blindly, but VX has a unique issue. The problem for VX is that they created a product that’s perfect for long haul. In the shorthauls, people don’t care about TV or powerports nearly as much. And since they aren’t in underserved markets and don’t have a better schedule than others, they don’t have a competitive advantage. Not a good place to be. So, they’re kind of in trouble regardless of whether they go long or short.

    Chris Guillebeau – I received a private email from someone else who received the email. So, I’m really not sure how widespread it is, but I know it went to more than one person!

    Zack – The secondary market idea could work, but there really aren’t that many underserved markets out there. Could they start Indy to LAX? Yeah, but Southwest couldn’t even make that route work. There are probably some opportunities though.

    Richard – You seem highly convinced that true Open Skies is coming, and I’m not so sure. Our government has been very much against it for a long time, and even though the current Open Skies agreement depends upon cabotage being approved, I’m not so sure that will actually happen.

  14. Richard says:

    CF

    I think you’re right. If the US Government/DOT really wanted to commit to Open Skies, I doubt they would have so fiercely tackled the ownership issues with Virgin given in two years they have to commit to opening up the US airline industry to foreigners.

    That said, I’m interested in seeing how the hell Continental etc intend to secure slots at LHR/LGW when already there is a shortage for the incumbent airlines.

  15. Mike says:

    I find it hard to believe that flying two roundtrips LAX-SFO (which the VA website says you can do for as low as $88 each time) can get you a free LAX-JFK roundtrip. Either they only sent this e-mail to the most frequent of frequent VA flyers or the lawyers made a huge mistake when writing the fine print. They left out the “equal or lesser value” part.

  16. CF says:

    Richard – It’s actually pretty easy to secure slots when the price is so high. Partner airlines are more than happy to do it. It’s easy for Delta and Northwest because they share revenue with Air France and KLM. So, they stand to benefit as well.

    Check out this excellent document linked to in the LHR post. It shows where the slots came from. Continental got theirs from Alitalia, GB Airways, and Air France, it seems.

    Air France is reducing Paris-Heathrow from 12 daily to 7 daily to fund all these other Transatlantic flights. It’s definitely worthwhile for these guys to do that with the promise of greater revenue opportunities.

  17. Great exchange on this post!

    CF – I agree with you 100%. VX has put itself into somewhat of a corner by offering a long-haul service on a short-haul aircraft. Sure the A320 has the technical range for VX, but I would postulate it doesn’t have the economical range. At trans-con ranges, the A320/737 effectively becomes an RJ. Remember the tag line associated with the RJ’s? Long, thin, high-yield markets. But VX is putting it’s A320’s head to head with the heavies. The A319/A320 will not be able to compete with a 767 going trans-con, much like an RJ can’t compete with an A320 on a 1,000 mile segment. You have to go to the thinner markets such as the ones suggested by Zack, but you also have to find that high-yield component. VX has a nice first class cabin, which should be exploited to profitability for those high-yield passengers, but they continue to tout themselves as low-fare. Can they market the two polar opposite product types of a high-yield first class and a low-fare economy product?

    I think the X-factor in all of this is how much is Virgin America worth to the Virgin brand. Would they allow them to operate at a loss to boost the Virgin Atlantic ticket sales or simply as a subsidy to market the Virgin brand as a whole? The bigger question may be, does the DOT have the stomach to allow unrestricted influxes of money from an overseas corporation. The legal field is not my cup of tea, but I do know that VX has been on the DOT’s radar from day one. Add in the recent not-so-warm-feelings-for-European-aviation from the Airbus tanker deal, and things could get dicey(er?) for VX.

  18. Scott says:

    CF – I think you are right that all first class might be hard to fill, especially on their short hall routes. But I think there is plenty of transcon traffic to go around, especially if its priced somewhat below legacy carriers. Though I can’t say I’ve sampled the first class product, if its truly similar to business class on international routes, its far and away the best in the domestic market. Maybe they should consider expanding F class to at least half the capacity on long haul flights? If there is any brand that can market excellent service and low prices at once, its Virgin.

  19. CF says:

    Courtney Miller – The A320 isn’t a horrible plane for transcons, but it certainly stretches the limit of its range, especially when going westbound in the winter winds. While it may not be able to compete with a 767 in terms of CASM, how many 767s do the transcon runs these days? Not many. I’d say that outside of the big JFK-LAX/SFO flights, you’re most likely to see an Airbus or 737 doing these runs these days. Smaller planes and more frequent flights have been the norm in recent memory.

    I think that your X-factor is a good point. How much does this matter to Branson? He’s a man not known for being short of ego, and I don’t think he’s going to let this go. It’s been a dream of his for a long time. He can’t keep pumping money into the airline due to foreign ownership rules (assuming they don’t change). So, he’ll have to convince Americans to pour more money in or he’ll have to load up on even more debt, if they’ll let him.

    One thing that it seems a lot of people agree on is that their First Class product is working, and that may be the only thing. They need to figure out what to do with it.

  20. Richard says:

    Something which has sat in my ‘inbox’ from yesterday – Virgin are also pushing a ‘Try & Fly’ sale which is offering fares on the West coast LAX/SFO from $44 each way and LAX/SFO to JFK from $139 each way.

    It appears the mailer is targeted at those people, like me, who have not yet flown but are eleVAte members.

  21. jon says:

    At $110/bbl for fuel I think everybody is about a year away from biting the dust.

    I wonder if a price hike will ever gain traction in the market.

  22. Tom says:

    “bite the dust?”
    “more agressive growth plan”
    “they’ve got to figure something out quickly”

    Virgin America has one of the most aggressive growth plans in US aviation history and has to-date grown twice as fast as jetBlue did.

    … and do we honestly think that the Virgin group is going to take pie in the face by allowing their first airline attempt in the US domestic market to fail? Esxpecially after fighting so hard to make it happen, and with so many other worldwide airline successes under their belt. The damage done to the Virgin brand if VX failed would be great – and it could seriously hinder their chances of ever gaining a significant stake in the US market again.

    The product is great, the network is growing, the service is way above the status quo, the funding is robust, the planes are efficient… aside from the fact that ANY airline flying at nearly $110/barrel is going to have a tough go, VX is certainly not on its last leg as so many have implied. They seem well suited to weather the storm.

    …and why can’t we just enjoy these great intro deals while they last, instead of griping about them… because it is certain that they definitely won’t be this sweet for long!

  23. sophia says:

    Hi

    I tried the “buy 2 get 1 free” code and it didnt work. ??

    Any other coupons out there?

  24. CF says:

    Tom – Welcome back to the VX discussion. I’m not sure why you keep referring to Virgin America as “they” since you work there. (Once again, when you post from a Virgin America IP address, it’s easy to see.) So explain to me what I’m missing here. How are you guys going to differentiate yourself and generate better revenue than these constant sale fares will allow?

    Sophia – I’m guessing that the way to code works is you have to fly two roundtrips using your eleVAte number during the travel period. Then when you go to book your free trip, you enter the code and it will come up as free. Not sure though, because I haven’t used it and neither has anyone else I know.

  25. sophia says:

    Thanks CF…

    Anyone who has more insight on this promo would be greatly appreciated. I booked 4 round trips from lax to sfo for end of May..without any promo codes :(

  26. John says:

    I am a founding member and I received this email as well. I have a friend that’s a founding member as well, but he didn’t receive it. I don’t think you’re required to enter the actual promo code. It says as long as you fly 2x roundtrip, ull get 1 round trip flight.

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  28. Duy says:

    Ok everyone I fly regulary with Virgin America and got that email about a month ago and completed 2 trips and received the email with a unique promo code. Just redeemed it yesterday for a free flight in May to DC. One of the best travel deals all year long, so it does work for those who were fortunate enough to get it.

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