I have no doubt that this is merely coincidence, but it is certainly funny that at the exact same time Virgin America announced a substantial improvement in finances, JetBlue announced it’s stepping up its focus on San Francisco. Funny indeed.

Let’s start with Virgin America. The airline announced second quarter numbers, and I have to admit that I was surprised that they were as “not horrendous” as they were. Don’t get too excited – they still lost a bunch of money – but they were in the realm of normal airline losses this quarter.

Though most airlines look at year-over-year changes to judge performance, I’m not a fan of doing that in Virgin America’s case. I think comparing it to the previous quarter, especially on the cost side, is more relevant since they’ve added so many flights in the past year. They lost a little under $16 million on revenues of just shy of $136 million. Net margin was a bit worse than -11%. That crushes their previous best of -34%.

Unit revenue was up 17% from a dismal first quarter, so it’s just a hair shy of last year’s unit revenue. They’ve made the most progress on costs. Excluding fuel, unit costs were down 12% since last quarter.

Things still aren’t great. They lost $10 million in cash and now stand at $28 million. But, revenues were up 35% on a 16% increase in seat miles. That’s a big improvement. So are others scared?

I don’t know if scared is the right answer, but I wouldn’t be surprise if we saw more moves like JetBlue’s. Just to make things clear, I don’t think JetBlue had any advance knowledge of Virgin America’s second quarter numbers. But clearly they have decided that SFO is worth a second look, and it’s coming at the expense of Oakland. That certainly will impact Virgin America.

JetBlue will kill one JFK and one Washington/Dulles flight from Oakland. Those airplanes will now become a second daily flight from SFO to both JFK and Boston. JetBlue will also add two more daily flights to Long Beach from SFO and a single additional daily flight from Oakland to Long Beach. Those new Long Beach slots are coming from the three daily Long Beach – San Jose flights which are going away.

So why are they doing this? Well, San Jose was underperforming. JetBlue spokesperson Sebastian White told me:

We wanted to offer Long Beach travelers service to all three Bay Area airports. While we ended up doing that, we found we weren’t doing the market justice with the schedule we were offering. Unfortunately we are constrained in Long Beach, and have no ability to add additional flights under the current slot restrictions. . . . The cancellation of our San Jose route will free up the slots necessary to add more San Francisco and Oakland flights and give those markets the frequencies to make them even more competitive.

Sebastian also mentioned that if they could use their Embraer 190s in the Long Beach commuter slots, it might be a different story. But we’ve discussed that here before.

The most interesting piece was his take on the Bay Area’s changes in the last few years, especially the shifting demographics at Oakland (OAK).

We’ve noticed a change in travel patterns since we launched service to SFO two years ago. When we first launched service at OAK, San Francisco residents were more willing to travel across the Bay to catch flights there. In fact, it used to be the case that 35% of OAK Customers actually lived closer to SFO than OAK. Since our arrival at SFO, and Southwest’s and Virgin America’s, there has been no shortage of low-fare, long-haul flights there. People now are less likely to travel to OAK for the type of flight that they can just as easily get at SFO. Now only about 15% of our Customers in OAK are coming from areas closer to SFO.

Well that does make sense. So were these aimed at Virgin America? I wouldn’t really think so, but I’m sure the unwillingness of people to go out of Oakland is directly related to the entrance of Virgin America and Southwest. That’s kept fares way down at SFO. If JetBlue can put pressure on Virgin America, that’s an added bonus for them. We know Alaska is aiming for Virgin America, and others may start to take notice now that their results have gone from absolutely horrendous to within the realm of other airline losses.

United Aggressively Responds to “United Breaks Guitars Part 2″ – BNET
Part 2 of Dave Carroll’s musical crusade against United is out, but this time, United responded well.

NBTA Day One Wrap-up – BNET
It was a busy first day at the National Business Travel Association (NBTA) annual conference, so here’s a wrap of what happened.

Frommers.com Podcast: A Conversation with the Cranky Flier – Frommers.com Podcast
David Lytle invited me back for another podcast to talk about fees, decreasing demand, and finding a deal. This was a fun one.

NBTA Day Two: Bag Fees, Business Opportunity Grants, and Biofuels – BNET
Day two was even busier than the first, so I just picked out a few of the highlights here including some fun-filled goings on with BA, Boeing, and the airline CEO panel.

NBTA Day Three: Virgins, Travel Trends, and President Clinton – BNET
The final day saw things wind down, but most people stuck around to see President Clinton talk about the importance of travel.

NBTA’s Airline CEO Panel on Travel Outlook and Bag Fees – BNET
As always, the NBTA Airline CEO panel was the most anticipated event for me. This year Southwest and Continental CEOs got together to talk shop.

The big thing at NBTA seems to be showing off seats. Dozens of airlines seemed to have brought their seats with them to make the travel managers drool. While most simply showed off the best seats onboard, others brought everything from coach all the way up. When I stopped by American, I was particularly interested in their new coach seat which is being installed on new 737-800s and some 757s as well. After all, I spend most of my time in coach, so that’s where I get most interested.

The new seat doesn’t recline like a traditional seat. It now actually slides a little forward and up while reclining less than it used to. This gives a very slight cradling feeling when you’re sitting there. Here’s a short 30 second video I took for those who aren’t familiar with the seat.

I know other airlines have moved this way, but I’ve heard mixed reviews. American’s display was quite misleading because there was no seat in front of you. That meant that when the seat moved slightly forward, you still had a ton of leg and knee room. Obviously, that’s a different story than when you’re on the plane.

Who out there has opinions on this? Is this new design any good or do you prefer the old way of doing things?

(And no, you can’t have it where you get the old seats but the person in front of you gets the new ones that don’t recline very far.)

I have to admit that I was quite skeptical when I was told that British Airways was going to launch the next round of its Face to Face campaign which encourages business travel. I didn’t think it would really be newsworthy, but when I was told I had the opportunity to meet with BA EVP of the America Simon Talling-Smith at NBTA, I jumped at the chance hoping to discuss other things. It turns out, however, that round two of the campaign is actually quite interesting. They’ve decided to offer Business Opportunity Grants.

So what the heck is a Business Opportunity Grant? Well, it’s actually something BA dreamed up as a way to promote small to medium-sized businesses to travel. In effect, BA will give 100 grants that offer 10 free business class tickets to go anywhere in the world. As Simon said, “In this campaign, we can use some assets that BA has . . . spare seats.”

But it’s not just free tickets. They’ve also brought in other partners to add more.* BA Cargo will give the winner 5 free container shipments to send anywhere they fly. They are working with Regus to offer winners the Regus Gold Card which will allow access to any of their business lounges around the world. Also, Canon will provide an all-in-one printer to each winner. Simon told me that he had a great deal of interest from other partners at NBTA as well, so the pot could grow.

Why are they doing this? It’s quite smart, actually. Business travel has been down tremendously, as we all have seen, and many businesses have started using alternate technologies like teleconferencing more frequently. BA came up with this idea as a way to make sure that people understand the benefits of actually traveling and not just sitting in an office. They’ve even done a study with Harvard Business Review (pdf) to show the importance of being face-to-face.

While formal business can be done via teleconferencing, it’s the informal business that suffers. And often, that’s how transactions get completed. There’s nothing like having a drink with a potential partner to help build a relationship, for example. I think this is certainly true and something that may have been lost in some companies.

So, BA decided to put this together to really push smaller businesses to not underestimate the importance of travel. It’s a small investment for BA, but it can have big dividends if it gets people traveling again.

If you’re a smaller business and want to enter, head to businessgrants.ba.com. The last day to enter is Sept 30. They’ll make you fill out a bunch of stuff on your company and then you have to write essays about why you need this and what you’re planning to do with it. A group of business leaders from around Europe and North America will act as the advisory panel for this, and 100 businesses will win a grant.

I asked if anything else had to be done in return for winning, and the answer was that only a testimonial would be requested. They’re hoping to put some of these stories out via social media so that they can really spread the word.

I like this promotion. It’s unique and it certainly fits with the BA brand. I also tend to agree with the premise. Good stuff.

*[Updated 8/28 @ 113p - Sure enough, they have added more partners already. Courtyard by Marriott will now give winners $1,000 in accommodations for their travels.]

As I mentioned in my post last night, I was able to take a ride on a beautiful Grumman Albatross owned by Row 44, the company that is just beginning to ramp up its satellite-based wifi service. What was even more incredible is that I sat in the bubble nose for departure and took some amazing video (see below).. But it wasn’t all just fun – there was plenty of talk about onboard wifi choices as well. It proved to be a very interesting discussion.

Earlier in the day, Southwest CEO Gary Kelly and Continental CEO (for now) Larry Kellner were on an airline CEO panel at NBTA (at left). I also had the chance to speak with Gary later on. Both times, the topic of wifi came up. I wondered why Southwest had chosen the satellite-based system from Row 44 when their flights could all have been handled by AirCell’s ground-based network in the US.

The reason that really struck me was that Southwest has more control with Row 44. See, AirCell brands their service as GoGo and they set the pricing and keep the branding their own. With Row 44, Southwest keeps the branding and they get to set pricing and determine how revenues will work. Everything I’ve heard is that Row 44 is more costly, but it appears that Southwest finds that worthwhile because of the extra control they have.

At the end of the day, I stopped at the Southwest booth when someone recognized me from my Halloween judging in Dallas. Next thing I know, I’m being invited to go for a ride with Row 44 on N44HQ, a Grumman Albatross built in 1951 and previously used for search and rescue as well as astronaut training. Done deal.

Even though it was a seaplane, we were flying from San Diego’s Lindbergh Field thanks to problems with getting permission from the locals to operate on water. That was too bad, but we still had an incredible time.

The nosecone isn’t a nosecone at all but rather a clear bubble for surveillance from the airplane’s previous life. As we hopped on board, I grabbed a seat until being told that I could ride up front. I snuck in underneath the pilot’s seat and found myself laying on an old blanket with my head on a pillow in the nose. Yes, I stayed there for takeoff and took this video.

When we came back to earth, the sun was setting and I had a chance to talk with Row 44 CEO John Guidon. He echoed much of what I already discussed with Gary Kelly, but he also threw out some figures. He said that on average, about a third of people onboard have wifi-enabled devices with them. When the service is free, he said that most people just log right on. But when a fee is added (any fee, no matter how small), only about a quarter to a third of people with devices log on for longer flights. That’s only about 8 to 11% take rate.

This is why John hopes to see an ad-supported model in the long run where passengers don’t need to pay. I asked about the expensive cost of bandwidth, but he seemed confident that ads could still pay for this. Of course, that will be the airline’s decision as long as they go with Row 44.

Personally, I have to wonder about the financial viability of all this. There’s a lot of money going into this effort, and I have to wonder where these wifi companies are getting all this cash. If it’s debt, then it’s going to be tough to pay it all off. But ultimately it doesn’t matter for the customer. If a company goes bust, someone will buy the remains and get the thing started again.