Note to Virgin America: Successful Startups Make Money Fast

Cranky is on vacation, but I’ve lined up some excellent guest bloggers for you while I’m gone. Today I have a guest who prefers to go only by “The Cardinal.” The Cardinal doesn’t pull punches, so hopefully this will generate some good discussion on both sides.

We take as our point of inspiration (or exasperation) Ted Reed’s recent article on Virgin America from The Street.com. There are a lot of annoying things about this article, such as the idea that what Virgin America is doing amounts to innovation. What a crock that is. But that’s not what this blog entry is about. We’ll get to that after a bit of history.

The list of stupid airline startups since US deregulation in 1979 is very, very long, but Virgin America surely ranks high on that list.

Start with Richard Branson’s alleged brilliance as an airline entrepreneur. The man’s record is uneven at best. The flagship Virgin Atlantic airline is certainly high profile, but a look at its financials (the company is private but provides some summary data at the end of this document) shows it to be not excitingly profitable. And note this is an airline that for much of its history was one of only four airlines that was permitted to fly from London’s Heathrow airport to the US — you would think that would be a license to mint money.

But then think of the late, unlamented Virgin Express, Branson’s flop of a European low cost carrier. Among Branson’s mistakes: picking a Belgian carrier as the foundation of Virgin Express (Belgium has some of the highest social charges and toughest labor laws in Europe) and putting Mesa’s Jonathan Ornstein in charge of it (whatever Jonathan’s virtues, he’s a distinctly American phenomenon who was out of place in Europe). It’s no surprise that Branson ultimately threw in the towel in 2004.

But what about Australia’s Virgin Blue? Clearly a success, no? Well, yes, but it’s actually a great example of how it’s better to be lucky than smart.

Virgin Blue started flying roughly a year before Australian carrier Ansett collapsed (for complex reasons but related to the financial trouble of its then partial parent, Air New Zealand. As a rough guide as to the approximate effect that had on the Australian air travel market, imagine if American Airlines and United suddenly went out of business — not just bankrupt, but completely out of business. How difficult would it be for any US air carrier to make money in the wake of such an event? It would be cake. Heck, even Spirit, Mesa and Frontier would make money in large quantities in such an event. So yeah, Virgin Blue was successful, it would have been very difficult for them not to be very profitable in the wake of Ansett’s collapse.

You have to hand it to Branson, he has a reality distortion field around him that rivals that of Steve Jobs. Let’s think about Virgin America. What exactly is the unfilled niche that Virgin occupies in the US?

Virgin America is largely going after long-haul domestic flying between major US cities. Is there a lack of capacity in such markets? No. In fact there’s even an existing not-quite-a-startup that does many of the same things, JetBlue, on many of the same routes. Arguably JetBlue is better at it than Virgin. JetBlue doesn’t have the mood lighting that Virgin has, and JetBlue’s IFE isn’t quite as snazzy as that of Virgin America’s, but JetBlue’s seat-pitch is a heck of a lot better than that of Virgin America (at least Virgin America’s economy-class pitch — JetBlue obviously doesn’t do a first class, but then its single class product is already pretty dang comfy) and JetBlue’s in-flight service is really quite good.

Yet Branson convinced a bunch of financiers to throw money at him to start Virgin America. Chalk it up, perhaps, to a minor moment of wretched excess — minor at least relative to the rest of the financial crisis. Yeah, so a bunch of financiers ponied up some hundreds of millions for a dumb airline concept. Big deal. This was at the same time that Swiss bank UBS was doing real estate deals that ultimately cost it $38bn in writeoffs. So much, much dumber things were being done at the same time. It could have been worse. And the Virgin America backers weren’t alone — there were the folks who lost their shirts with Skybus at about the same time.

Just how poor was Virgin Amerca’s concept is apparent from its appalling financial results. Cranky did a good job covering their dismal historic financials here and Ted Reed covers the 4th quarter of 2008 in his piece referred to above.

And now we’re getting to what this blog entry is about. The most exasperating thing in Ted Reed’s piece is the ill-advised statement by Virgin America CEO David Cush at the end:

“We are not profitable, and you would not expect a new airline to be profitable,” he said. “But we have no debt to be renegotiated, no need to go to the capital markets and we continue to believe we will be profitable in 2011.”

[The Ted Reed story initially said 2011, which I know because I saved a copy. Checking it recently, it now says 2010, but there’s no notice of a change, which is poor practice on the part of Ted and The Street — the kind of thing the media is not supposed to do. It doesn’t matter much whether it’s 2010 or 2011, the same point applies, but don’t be surprised when you click thru and see 2010 rather than 2011.]

Huh? I suppose you can chalk some of Cush’s nonchalance up to the fact that he previously worked for American Airlines. With that background he probably thinks that you wouldn’t expect any airline to be profitable, period. But Virgin America started flying, finally (after a year or two of delay) in 2007 — it’s highly unlikely Virgin America’s long-suffering investors were sold this puppy on the basis of no profits until 2011. Over five years from investment to break-even? That’s a joke.

Yeah, lots of startups are unprofitable — but then most startups fail, and they primarily fail because . . . they don’t make money. Whereas successful startups do the opposite. They make money (what a concept). JetBlue started in 2000 — it was profitable in 2001, and that, as you will recall, was a really bad year for airlines. Then-tiny (and still, today, small) Allegiant came out of bankruptcy in 2002 — in 2003 it was profitable (and has not had an unprofitable year since). ValuJet (now AirTran) was immediately and spectacularly profitable, going public within a year of startup in 1994. In other words, there’s a strong record of good airline startups making money more or less out of the box.

About the only two startups that weren’t immediately successful that are still on the scene are Frontier and Spirit. Frontier limped along for years before making money, and of course is now bankrupt. Spirit has absorbed (in the form of awesome losses) hundreds of millions of dollars in private equity over the last five or more years and may finally become profitable this year. Neither Spirit nor Frontier have evolved in a manner an investor would appreciate.

There’s no worse position to be in than to be a startup airline with cash remaining and a concept that doesn’t work. Skybus found itself in the same position about a year ago, and to the great credit of its board, they had the sense to shut it down. They didn’t have to, they could have kept floundering around and for all we know they might still be with us today (airlines being notoriously hard to kill). But in an all-too-rare (in the airline biz) moment of responsibility, they faced reality squarely in the face and did the right thing.

Unfortunately there are a lot of big egos on the line at Virgin America, and big egos are highly susceptible to believing their own bullsh*t. There’s a good chance that the unfilled market niche Virgin America is really in is that of stroking the aforementioned egos.


The Cardinal is a long time industry observer, who is currently a [redacted] at [redacted]. Prior to working at [redacted], he worked at [redacted], [redacted] and [redacted]. He resides in [redacted] and in his spare time enjoys [redacted with extreme prejudice].


29 Responses to Note to Virgin America: Successful Startups Make Money Fast

  1. Zack Rules says:

    Here Here!
    Great Post!

  2. eponymous coward says:

    Out of curiosity, how many airlines had to have their jets sit on the tarmac for close to a year because a bunch of other airlines sued to prevent a DOT operating certificate from being issued? How many airlines had to have their CEO removed as a condition of having an operating certificate issued?

  3. Dave says:

    What does it matter if Virgin America is making money yet or not? They have launched during one of the most challenging periods in air travel history. Airfares are plunging along with demand, and just as late as last summer, fuel prices were astronomical. The company remains on track towards profitability according to their business plan (albeit it has been revised). With the company’s revenues increasing, solid load factors, and decreasing losses where is the bad news here?

    As a customer, I fail to see why I personally care when the carrier is offering me superior service at a bargain rate. The carrier has money in the bank, so its not going to cease operating unexpectedly.

    Finally, a few notes about “the cardinals” comments…

    The comment regarding Virgin Atlantic Airways’ profitability not being all that stellar… Let’s but that into perspective here. VAA only has a fleet of 38 aircraft, so its not the size of BA or Lufthansa so don’t expect profits as large either. Additionally, while there may be strong demand to London-Heathrow, it is also one of the most expensive airports to operate at thanks to the excessive fees and taxes imposed.

    Regarding JetBlue, the company did not go public until 2002. The carrier finished 2001 with only 21 aircraft, still a very small carrier. 2001 profits were not large either, in the neighborhood of $30m. That company has also seen losses as of late due.

    I think it is so interesting the tone of this blog posting. It seems ‘the cardinal’ is a bit jealous that he’s not cool enough to enjoy Virgin America! Also interesting that he would choose to not give any foundation to give credence to his position. We have been given no data to conclude that his opinion is anymore credible than the Ted Reed article he loaves so much.

  4. A says:

    Interesting post. I’ve always thought the “investors” in Virgin America must be insane since airlines are #1, not the best investment opportunity, and #2, VA’s business plan put them right into an already well serviced field, and that was before the current economic tumble.

    Catering to business travelers has always intrigued me because most business isn’t limited to major cities on just the east or west coasts. What about the major business centers like Chicago, Dallas, Houston, Atlanta, etc.? Even if I did live in NYC or LA it would be doubtful I’d ever fly VA because my work takes me to places all over the US and beyond. The frequent flyer perks gained from carriers like Delta or American would be far more incentive than mood lighting or IFE. I can only imagine this is the reason most start ups begin with leisure travel destinations from one or two hubs.

  5. Scott says:

    I think what makes Virgin Atlantic and Virgin Blue stand out is not necessarily profitability, but rather the fact that they both entered markets in which monolithic, aggressively competitive carriers were already firmly entrenched. The dirty tricks campaign brought against Virgin Atlantic by BA is part of company lore, and I’m sure VX would be only too happy to stumble across the same PR gold. They’re trying to paint the Alaska case in a similar light, but Alaska’s claims are valid, and Virgin America’s response not the most helpful:

    Alaska: “It sounds like you’re not a US citizen anymore. Prove it.”

    Virgin America: “We already did, and we don’t have to again.”

    Alaska: “It’s a simple yes or no question.”

    Virgin America: “Yes.”

    Alaska: “How?”

    Virgin America: “We don’t have to answer that.”

  6. SLAM says:

    My local airport is SFO. My parents live in NY and wife’s family in DC, LA, and Seattle. Coincidentally, VA flies to all these locations and has since became my airline of choice domestically.

    I used to fly the United PS on my flights to NY, but now I’ll pay more just to fly VA (and I’m cheap). The “premium service” route on UA, imho, lacks far behind in terms of service, amenities, and overall condition of the planes. Talk to people on the street (the regular street, not the capitalized one) and you’ll hear the rave reviews people are giving for VA, at least in the SF Bay Area. When I got married in NY this past Feb, an overwhelming majority of my guests chose to fly VA from SFO to JFK even though prices and schedules were similar from other carriers.

    I know, blah blah blah, what does this have to do with making money. Financially it may in the red, but I believe its business model will be successful in the long run. VA is just a piece of the puzzle where the success of it’s brand management will eventually translate into revenues not just for themselves but for its other Virgin brands as well. You can now fly around the world on airlines with the word Virgin on it. Put a feel good attitude to any Virgin names, be it Atlantic, America or Australia and it will cross-sell itself each other. Look at the markets it is currently serving along with its hip, trendy service concept and you can see it is targeting an audience demographic for the long run. I flew V Atlantic to LHR before VA was even started. When VA was announced, I was instantly excited due to my experience on the LHR flight. I was sold before it broke ground and it did not disappoint after my first flight. When United announced Ted and Delta announced Song, it just left me wondering what’s the difference.

    I especially liked the pairing of Branson and Job. Comparatively it would be Microsoft vs. Apple and the legacy airlines vs. VA. Lately there is a Microsoft ad blitz encouraging consumers to buy Windows products while almost everything Apple touches are turning into gold. Therefore (theoretically), we should be expecting the legacies to buy up ad time asking us to use their (perhaps more inferior) products.

    Having reality distortion fields aren’t always bad.

    Btw, I have no vested interests in VA with the exception of not wanting to see it go down as I’ll have to fly.. damn, United.

  7. Allan says:

    This post came off more sour grapes than informative. I travel LAX to SFO a lot for business, usually on Southwest. I can honestly say flying Virgin American is head and shoulders above any other LCC. The author of this post might not enjoy mood lighting, a nice atmosphere or attendants who don’t out right resent you (looking at you Southwest), but after a 10 hour meeting, those little extras make all the difference. God forbid if an airline tried to make airline travel enjoyable and maybe even fun again. How dare they!!!

  8. Trent880 says:

    No one doubts they have a great product, but the problem is no one is willing to pay a premium for that product. Don’t tell me “but I would gladly pay more for good service”. On average, people don’t. And you probably don’t either. Passengers are famous for voting with the wallets in direct contrast to what they say in surveys or on message boards. This airline exists solely to steal traffic from entrenched carriers, rather than stimulating traffic like Jetblue, Allegiant, even Spirit and Southwest, and that is the hardest way to make money in this industry. This is one of the silliest business plans I’ve seen in the industry, ever.

  9. somchai says:

    Agreed. The OP sounds like he’s been sucking on too many lemons.

    Lose the sour grapes, dude. VA is a fantastic airline and please don’t make JetBlue out to be the savior here–need we revisit their stellar on-time performance record and/or slew of f*ups they’ve had recently?

    Nobody is perfect–and the fact that VA has managed to eke out ANY existence at the time they joined the fray is very, very impressive.

    If your post hadn’t sounded like someone with a grudge, it may have passed muster.

    Cranky, this is who you let sub on posts for you?!?

  10. ilikedng says:

    @Trent880. I don’t see how people are paying for a premium for Virgin America. Their prices are mostly inline, if not cheaper, than other airlines on identical routes.

  11. Wayne says:

    Wow dude that was intense. Where you hoping to come that bitter and twisted?

    Having flown domestically in the U.S, I would sell my grandmother off just to fly VA. American carriers are some of the worst in the world so you need to be thanking your lucky stars you have someone like VA coming in and showing you how good the flying experience really can be. As it has been pointed out, it takes time to build up something like this and they have the model for the long term.

    As for your comments about Virgin Blue I would love to know how much you really do know about the airline? Every flown in Australia? Before Virgin we had two airlines who f”ed us all over and only the mega rich could even think about flying. They have busted up Qantas and given everyone options and value for the money, they have even given us V Australia so when we want to fly to the U.S we dont need to take out a second mortage on the house to pay for it. Not bad for an airline that is lucky and only still around because Ansett failed.

  12. Alex says:

    I have to say my first reaction when reading this was that it reads like something thats come directly out of the JetBlue PR department. The fact that whoever wrote it doesn’t have the courage to put his/her name on it makes it even more suspicious. If your going to write such a one sided piece at least have the balls to put your name to it.

    I’ve been wondering for a while now why so many people are so desperate to see Virgin America fail. I mean everyone understands why Alaska et al aren’t keen on Branson’s newest airline, but there seems to be a lot of bad feeling out there in the blogosphere and the general public. As far as I can see they are a new startup employing a few hundred americans in a time where jobs are disappearing. They didn’t take over a loved brand or another airline, I haven’t seen any stories about mistreated employees or customers. Almost all the trip reports and reviews I have read have been positive. VX seems to me like a new airline with some new ideas who are simply trying to compete.

    Quite a lot of the stuff published is actually just pure xenophobia, case in point being this shocking excuse for journalism I stumbled over at bnet;
    http://industry.bnet.com/travel/1000776/is-virgin-america-at-least-75-percent-american/

    I’m not Bransons biggest fan, nor do i think that VX has the greatest business plan I’ve ever seen but i really can’t understand all this hatred.

  13. The Traveling Optimist says:

    Danged if there aren’t sharks in these waters! But to be fair, what’s with all the redactions?

    I’ve said a few times that customers don’t care if the airline they fly/choose is profitable or not (BN, PA, EA, SR, AZ) so long as the price is right and the onboard product (at the very least) convenient.

    Airlines cannot blame customers for losing money or for failing if their business plan cannot sustain slow economies or protracted fare wars. Mr. Cush seems right down the line in terms of start-up profitability: huge capital and sunk costs at the beginning for a trickle of initial revenue until a solid customer base is developed to sustain operations and profits. Makes sense from the perspective of just starting out, which they still are.

    Virgin Atlantic may not be minting money but one thing about it is that it’s still around. As is Virgin Blue with Pacific Blue coming soon (?) to New Zealand. Airlines are hit and miss (Virgin Express, Virgin Nigeria) but the mothership brand is still plying the skies so kudos and respect to Mr. Branson for that.

    I live in Dallas. None of the Virgins fly here so their success or failure doesn’t affect me. Same with Jet Blue. Here in North Texas I both prefer and like American over Southwest, my only two realistic choices for national and/or global coverage.

    If someone else stepped up to American at DFW route for route, toe to toe it would make things interesting but highly unlikely to either happen or change my loyalty.

  14. Ryan says:

    While “The Cardinal’s” tone was perhaps not the most conducive to level-headed discussion, I can’t help but notice that many critiques of the article are based on praise of VX’s service. The issue here is not if VX is revolutionizing the market, but rather if it stands a chance of being profitable. I think the article’s point is that VX is flying on a heavily-served route network (overlapping AA, UA, and US on several routes, and perhaps more dangerously DL and B6) with airlines that already offer comparable amentities. B6 serves many of the transcontinental routes with a comparable (and free) IFE and more pitch; B6 has also successfully branded itself as a “friendly” airline and has a fanatic following (why, I’m not quite sure) with a more varied route network. What’s more, thanks to Delta’s recent rebranding and mind-boggling investment in new AC interiors, IFE, and Wifi–and intellegent routing to offer those products on competitive routes–even this once decrepit legacy is providing a challenge to VX’s product, and DL has a vastly superior network to VX. I understand that mood-lighting and flashy IFE are great–and perhaps that VX has helped accelerate DL’s rebranding and reinvigorate B6–but that doesn’t make it a sound business model for VX-itself, which is what the author is arguing.

  15. John says:

    There is a rumor out there he is going for US citizenship, that would change the game. Even uncle sam would be happy, will all that tax money coming in.

  16. eponymous coward says:

    That’s probably a better argument to be making, Ryan, and one Cranky has made. I tend to think VX’s Magic 8- Ball is still in “Reply hazy: try again” when it comes to their future.

    To be honest, though, VX is aimed much more at AA and UA than DL/NW- every destination VX has chosen so far is served by UA, most are served by AA, and UA’s PS service is centered around JFK, SFO and LAX (and is very clearly what VX F is aiming at stealing, PS customers).

  17. Ned Denney says:

    For the record, the Skybus business model was initially very successful, and racked up some impressive load factor numbers. Especially on their initial routes, where they had taken the time to carefully study and plan-for (e.g. the Portsmouth routes were very full and profitable especially PSM-Punta Gorda).
    You are correct that their downfall was due to the fact that they believed too much in their own initial success (or BS as you call it) and rather than proceeding on a cautious route-by-route approach, decided to bet the entire ranch on a massive entrée into Greensboro as a new Gateway City, opening 11 routes in one month, on completely un-proven and untested routes. Skybus was alive and well (and had some very compelling aspects about their business model) until the Greensboro blitzkrieg where they got completely routed their complete lack of planning, and consumed by their own hubris. Hopefully Virgin will not make the same mistakes.

  18. CF says:

    Hey everyone – I’m back. And as I thought, this post created some good discussion. I wasn’t really going to jump in, but there are a couple points that I’d like to make.

    I know that many of you question the blogger because you know nothing about this person, and I don’t blame you. I wish I could get the cardinal to use a real name, but I have yet to be successful on that front. I can, however, assure you that there is no affiliation with Virgin America or JetBlue at all, so there is no professional conflict of interest in the post. There aren’t many people that I would allow to post anonymously, but the cardinal is one of them because I respect his/her opinions and have known him/her for years. Like I said, he/she doesn’t pull punches, but it’s that bluntness that can spark some of the best discussions, whether you agree or disagree.

    Alex – I see you found Barbara’s piece on BNET. I’d like to point out that I posted a rebuttal on BNET the very next day there:
    http://industry.bnet.com/travel/1000797/virgin-america-should-be-considered-american-for-now/

    Of course, things may very well have changed by now if the US shareholders have cashed out . . .

  19. Chris says:

    I feel that I must reply to some of the comments here:

    eponymous coward wrote:

    Out of curiosity, how many airlines had to have their jets sit on the tarmac for close to a year because a bunch of other airlines sued to prevent a DOT operating certificate from being issued? How many airlines had to have their CEO removed as a condition of having an operating certificate issued?

    The answer here is none to my knowledge as the rules are written to ensure that US ownership exists for American Carriers just like it does with the Jones Act for maritime vessels. Do we really need even more foreign ownership of our national services? As for Airline CEO’s, the only good ones are operating profitable airlines and they didn’t come from backgrounds of being with the bigger carriers. JetBlue’s CEO is an example because when Southwest bought Morris Air, they were so afraid of David starting up a new airline to compete with them that they had a no compete clause, when the clause time ran out, then JetBlue started up.

    Dave wrote:

    What does it matter if Virgin America is making money yet or not? They have launched during one of the most challenging periods in air travel history. Airfares are plunging along with demand, and just as late as last summer, fuel prices were astronomical. The company remains on track towards profitability according to their business plan (albeit it has been revised). With the company’s revenues increasing, solid load factors, and decreasing losses where is the bad news here?

    Stick a fork in them because they’re done!
    1. They don’t cover their costs in order to gain passengers and their RASM is less than their CASM, so they’re bleeding money.
    2. The don’t have the proper fleet mix for profitable long haul flights or network carriers to feed traffic to them.
    3. The flight legs that they are operating are not profitable in the current economic climate.
    4. Their hub of SFO is too expensive to operate out of.
    5. They have not picked the proper route structure.
    6. They do not utilize the maximum amount of flight time available for each aircraft due to their city pairs, even counting their charter operations.

    As for Virgin Atlantic, the margins from the older and less efficient airframes such as the A340’s & 747’s (the A380’s won’t help either), when twin engine widebodies on certain routes would be more cost effective as a percentage of their fleet mix are too small. This combined with their fare structure is what dooms them to making such a low profit percentage due to the expenses of operating in the industry.

    Again in regard to JetBlue, it’s not fleet numbers that matter, it’s utilization of the airframes to create maximum income from what you have.

    There’s a lot more but those are the main points.

    “A”

    Is correct that for business VA is not going to make the grade in the USA and that their frequent flyer program cannot compete with the mainline carriers.

    “Scott” Is Correct!

    “SLAM”

    Is correct that US Airlines for the most part have rotten customer service. There are many complexities to operating an airline and the larger an airline gets, the worse it gets because the culture for the most part changes. Southwest is a bit of an exception, but anyone who ever watched episodes of “Airline” on A&E knows what I mean. It starts with an attitude of service which admittedly VA does a pretty good job of, by PanAm did as well and so do many foreign flagged carriers. Frontier does pretty well and so does Alaska, AirTran and Midwest, yet that’s sliding since the takover/buyout by NWA. You don’t have to be the cheapest to have customers, but if you do it right, people will want to fly your airline, you just need to know how to battle the big carriers since they have bigger bankrolls to outlast you or even drive you out of business with and you need to be ready for that going in. To launch VA in this economy was the stupidest thing that they could have done and they’ve doomed themselves to failure, no matter how nice the flight is, unless they get more capital and that’s no guarantee that the sinking ship will stay afloat.

    “Allan” Is Correct!
    “Trent880” Is Correct!

    But maybe the goal should be to attract the passenger who want a nice & respectful experience for a few dollars more on a smaller carrier that cares about it’s customers with a decent route structure and enough flights on a route per day to make people want to fly that carrier (with the right fleet mix). To have a decent frequent flier plan helps as well and there are many good ones out there to pick and choose parts from to create one. This is what most US carriers don’t get.

    “Somchai” Needs to have a cup of Chai. JetBlue is going through growing pains, but commits far less errors than the other mainline carriers.

    To ‘Wayne” and others… Virgin Blue is only partially owned by Virgin Group and also faces the same ownership issues that Virgin American has, even though they’re now in a better position.

    “Alex”

    It’s not hatred of Virgin America, the country does need an airline like this, but it is knowing the reality of how the industry operates that shows us the Virgin America is doomed to fail as so many others have done before in the USA and across the globe. Airlines are an ego booster for many “businessmen” but they don’t make a lot of money anywhere unless you’re a flag carrier for a nation. I’d equate it to owning a sports franchise other than ManU or the Yankees, it costs a lot to buy, you don’t make that much profit and you hope to get some profit when you sell the team, but teams don’t go bust as much as airlines do (depending on the league). Read my summation below for more.

    I’ve skimmed over the remainder of the comments to save space.

    The fact is that I have been around the airline industry my whole life growing up in Seattle (the home of Boeing as we all know) and will be starting a carrier (yes really) in a few years when the economy picks up more and when the airframes that I want to obtain are available (that’s all I’ll say for now on that topic). Virgin America has may attributes, but their business plan is fatally flawed in a time where it is unsustainable to do business in the industry with such an operations plan. They have some good people, but so did many other carriers who have failed before them and no amount of customer praise or optimism can change the financial bottom line. I can’t give away out business plan here, but there will be some attributes from VA’ operations that we’ll utilize (not the mood lighting though) and we’ll make sure our people treat our customers with respect as well, but we’ll remain being a profitable, smaller, privately held airline that’s big enough and frequent enough to serve the majority of the nation and even parts of Canada too. The peanut gallery will laugh here as well (that’s why you avoid being a public company since the so called expert airline analysts will destroy your share price with the chicken little gamblers on Fall Street) but it can be done right if you have the right size and style of operation. You don’t need to be an LCC to succeed, but having fair prices for a great product that make sense, the right fleet, the right routes and a good rewards program for frequent flyers will be what does it. It’s just that simple & surprising that’s it’s so difficult for so many companies to actually do in this country. You’ll all be pleasantly surprised and we’ll be the greenest air carrier around as well and that’s not hype but fact & the reason that we’re a few years offin the future.

    Best wishes to all and I hope that you’ll support Virgin America, JetBlue, Frontier, AirTran, Allegiant, Alaska, & Horizon in the mean time!

  20. Kevin says:

    It’s funny I’ve seen mention of cross marketing between the different Virgin Brands, but nobody has given mention to Virgin Galactic. This is where it is at people. Soon, should people take hold and embrace the concept, you will be able to get from point A to B anywhere on earth in a fraction of the time. Imagine the selling power of Space!

    I don’t know a whole lot about any financial history of any airline, but I have flown with VA and I personally liked it. I may not fly them again because they only have the Airbus. You know two of them have already gone down this year! It’s the tail it falls off the plane because its only glued on. Change the fleet to another set of planes and I will be aboard.

  21. CF says:

    Easy there, Kevin. The tails on Airbus aircraft are not simply “glued on.” In the Air France accident, the investigators issued a preliminary report noting that the aircraft crashed intact, so the tail did not fall off. In the Yemenia crash, there is no cause determined but there certainly is no reason to think the tail snapped off. I would also note that the Air France A330 and the Yemenia A310 have virtually nothing in common except for the manufacturer. They are completely different airplanes. Virgin America also flies a completely different airplane – the A319/A320.

    So let’s not jump to any conclusions here.

  22. H2 says:

    WOW, i don’t know where to begin.
    This author, the “Cardinal [redacted]” ????, is really a [redacted] !!!

    One of the dumbest [redacted] articles I have ever seen !!!

    ????!!!! [redacted] …LOL

  23. I flew Virgin America airlines three times and their service each time was perfect. The new jets had great comfort in the coach section which was nice for such a long flight on a low budget. They are better when compared to other flights.

  24. You are correct that their downfall was due to the fact that they believed too much in their own initial success (or BS as you call it) and rather than proceeding on a cautious route-by-route approach, decided to bet the entire ranch on a massive entrée into Greensboro as a new Gateway City, opening 11 routes in one month, on completely un-proven and untested routes. Skybus was alive and well (and had some very compelling aspects about their business model) until the Greensboro blitzkrieg where they got completely routed their complete lack of planning,

  25. bankruptcy says:

    Yeah, lots of startups are unprofitable — but then most startups fail, and they primarily fail because . . . they don’t make money. Whereas successful startups do the opposite. They make money (what a concept). JetBlue started in 2000 — it was profitable in 2001, and that, as you will recall, was a really bad year for airlines. Then-tiny (and still, today, small) Allegiant came out of bankruptcy in 2002 — in 2003 it was profitable (and has not had an unprofitable year since). ValuJet (now AirTran) was immediately and spectacularly profitable, going public within a year of startup in 1994. In other words, there’s a strong record of good airline startups making money more or less out of the box.

  26. des says:

    @John When you reach this level of wealth you’ve got a whole football team of accountants that can save you tax on most levels. If Branson is looking for citizenship, I doubt he’s losing sleep over tax charges.

    With regards to his several enterprises. The fact that he diversifies so much means he can offset losses on one enterprise with a more profitable venture. Also, if you look at his dealings close enough, he actually sells quite a huge chunk of shares to plough back into another venture with more scope and more opportunities.

  27. Acid says:

    Had the opportunity to fly Virgin once and to be frank, I was pretty impressed. Have heard some pretty bad review from my colleagues before.

  28. Pingback: A Bon-Bon for Richard: Why Delta Should Buy Alaska ASAP . . . - >> The Cranky Flier

  29. Boris says:

    I travel often on business between my home in Boston and Los Angeles. Until three years ago, I usually flew on jetBlue (B6), and also tried American Airlines as I?ve got a lot of miles in BA Executive Club. Then, in an effort to save my client money, I tried Virgin America (VX) and since then have only used any other airline on the route once (B6; I then resolved not to do this again).

    I still use B6 (and Acela for shorter trips) in preference on routes where VX is not available, so I can continuously compare the two. I usually fly in premium economy on both airlines regardless of reimbursability.

    Aside from the obvious benefit (important to me) of a wider Economy seat in an A320-family aircraft (also used by jetBlue) than in a Boeing 737 or 757, I was surprised to find how attention to numerous details can create an entire environment worth my fervent loyalty, despite my living in a jetBlue focus city. The obvious benefits are glaring: powerports (two per three seats on VX, none on B6); WiFi (reasonably priced on VX, none on B6); speed at the outbound departure airport (garage at terminal and intimate three-gate BOS Terminal B area on VX, Central Parking and Terminal C Ellis Island security theatre fest on B6, the VX difference making for more early-morning sleep and much less Dreigroschen Oper); food (eminently delicious on VX, intolerable rubbish on B6); seat selection (at similar load factors, window and aisle seats are much more readily available in advance on VX than on B6, perhaps because VX releases more seats for selection earlier).

    But that?s not all and not even what I immediately think of when I think of VX in comparison to B6 or any domestic network carrier. It is two things that, according to many commentators here, shouldn?t matter, yet they profoundly do: the interior fitted into the same fuselage form factor, so much more soothing and aesthetically appealing on VX than the indifferent grey of B6; and the attitude of the staff.

    I expect only a modicum of helfpulness, cordiality and comfort. VX crews? easygoing attitude suits me well most of the time. B6 people used to be like that but my personal experience suggests that they are slowly yet institutionally caving under stress. A flight attendant who rampaged up and down the cabin screaming at passengers to power their mobile devices completely off rather than placing them in airplane mode (for what legitimate or regulatory compliance purpose must passengers sacrifice caches into which they loaded books or articles to read in flight?). The particularly zoo-like morning at BOS Terminal C security with every lane staffed but hour-long delays, most of those passengers booked on B6 flights, where no-one from the airline came out to help those many who stood to miss their flights. The helpless sighing from the gate agents when I thus missed a flight and asked for help. The general unhappiness that now pervades almost every crew. Of course, contributing to this sense are press reports of the flight attendant who exited via emergency slide and the pilot who went nuts and had to be restrained, but I care much more about what I personally observe and what I observe just isn?t good.

    It?s possible that what is going on at B6 is a function of its being older and/or larger, and the same problems will become noticeable at VX if and when it gets to the same age and size. There have been some mild experiences that could be seen as supporting this theory, but none have so far substantially altered the balance: VX remains by far the superior airline. Others increasingly think so too; the overnight VX370 LAX-BOS is now routinely full, whereas it usually wasn?t just a year ago.

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