Virgin America Finally Comes to Chicago

Virgin America has been talking about serving Chicago even before its first airplane took to the skies. Now, 37 years later, it is finally rolling into O’Hare. This should be a good route for the airline, but why is it just starting it now? There are a lot of reasons, but ultimately, it can thank Delta.

O'Hare Concourse L

Virgin America hasn’t been shy about telling people that it’s wanted to go to Chicago for a long time but it had plenty of problems. First of all, it didn’t want to go to Midway and only wanted O’Hare. Even after going into Ft Lauderdale as an alternate for Miami, the airline still had no interest in Midway.

But when it tried to go to O’Hare, it said it couldn’t find gates. That’s not entirely true. It could have operated out of the international terminal, but it didn’t want to pay the higher costs and it didn’t want to have to use buses to get to airplanes. (Apparently all the gates in that terminal would have been full during some desired departure times.) It also could have gotten itself gates from legacy airlines at the airport, but I’m sure it just didn’t want to pay the price of admission. So it waited . . . and waited.

What’s changed? Concourse L, that’s what. O’Hare has a problem in that it controls very few of the gates at its own airport. The rest are on long term leases to airlines. So when a new airline wants to come into the airport, O’Hare can’t really get very involved in that process other than to facilitate discussions. Then an opportunity came up with Concourse L.

Delta controlled the 11-gate concourse L in Terminal 3 at O’Hare. When it merged with Northwest, it opted to move into Terminal 2 and take over the old Northwest gates instead. That left Terminal 3 with plenty of room. Six of those gates are actually leased out to American already. (American controls the rest of Terminal 3.) But those other five gates were in limbo as Delta worked on a deal.

Just last week, Delta agreed to turn over Concourse L to O’Hare. American will still use those six gates, but now the airport controls the other five. That opened the door for Virgin America to come in for a lot less than it would have had to pay otherwise. It also leaves the door open for others to come in as well, if they cared. It doesn’t have to stop there. That particular concourse has a little room to add on a couple of gates if they get creative enough, so there could be a nice operation there for anyone who wants the gates.

Now Virgin America will start service May 25 with two daily flights to LA and 3 to SFO. As you can imagine, this is not enough to take a big bite out of American and United but it can still do well. It’s the same problem the airline had when it went into Dallas. It brought a knife to a gun fight. Let’s look at this visually:

Daily Flights to O'Hare From LAX and SFO

If Virgin America wants to be a real competitor, it needs to fill out its schedule more. For example, if you want to come to LA, you can leave O’Hare at 845a or you have to wait until 715p. It’s hard to really take a chunk of the market with a schedule like that. But that doesn’t mean Virgin America can’t do well here. Like Dallas, this is a market that should work for the airline if it’s going to be able to survive at all. It’ll be awhile before we see any meaningful data on these routes, but this is one of those markets that I’ll want to watch closely.

In the meantime, enjoy those low fares. Virgin America has decided to jump in with a $99 fare each way.

20 Responses to Virgin America Finally Comes to Chicago

  1. Zack Rules says:

    I think David Cush mentioned that he wanted to up frequency. I imagine a lack of planes at present (should change by the end of the year) is why the schedule is currently limited. VX had to drop Toronto in order to add flights to Dallas/Fort Worth. In the past, he mentioned the ideal schedule of 4-5 daily flights on each route so in a few months, I would guess they will be there.

    I wonder how many gates they got, two maybe? O’Hare is ripe for low cost competition to places VX already serves so it might be a decent focus city operation of sorts, Cancun, Las Vegas and Orlando come to mind.

    • CF says:

      There isn’t a lack of planes – it’s all strategy. They easily could have held off on Chicago and instead used those airplanes to beef up Dallas. You can have breadth or depth with the current fleet and they’ve chosen breadth. Now, if that changes when they have more airplanes, that will be good, but it’s really a strategy issue.

      They only need one gate for the schedule they operate. Two airplanes stay overnight, so they also need a remote pad for the overnight but that’s it.

  2. i still don’t know why VX was so dead set against MDW. IMO MDW presented two advantages. first, the convenience factor, which appeals to business travelers since the downtown / loop is 20 minutes from MDW by train or car and also appeals to the many young, urban chicago residents. these are the two groups presumably most likely to eschew AA and UA for VX in the first place. second, MDW would have provided the ability to differentiate their service further from the two 800 lb gorillas (i.e., convenient li’l MDW vs uber-congested perennial traffic nightmare ORD). oh well!

    speaking of ORD, why is it that AA’s terminal 3 is so cruddy, especially compared to UA’s terminal 1? did UA throw in a bunch of money for the new terminal that AA has been unwilling to spend? or was it a classic chicago backroom deal w/ pols and UA execs?

    • CF says:

      One reason to be against Midway is that Southwest already flies twice a day to SFO and four times a day to LAX. But ultimately, if you really want to go to Chicago, O’Hare is “the” airport while Midway is basically just Southwest’s terminal.

      As for Terminal 1, it’s just a newer terminal. No backroom deals that I know of, but just the way things evolved at the airport.

  3. tivoboy says:

    Yes, but service doesn’t actually START till mid MAY 2011, is that correct?

  4. 1. Where are the airplanes coming from?

    2. ORD has something that MDW doesn’t have, and that would be Virgin Atlantic between mid-May to October. Opens up a buddy-buddy relationship for people from SFO/LAX who need to stop in CHI before going on to London. After all the VX website does say their airline partners are Virgin Atlantic Vaustralia and Virgin Blue.

    • with VA already flying from London nonstop to LAX and SFO, why would there be a connecting opportunity via ORD? perhaps if it opened up new 1-stop destinations but it does not. i cannot believe there are enough LHR-ORD-LAX/SFO-LHR “triangle trippers” to make any impact whatsoever.

      • UA/DL/CO/AA will offer connecting options from a city with nonstop service via other city with nonstop service so it’s possible. A flight can be sold out or a person need to arrive in the morning into London and via ORD/NYC/IAD/BOS connecting to VS would do that since flights from the west coast nonstop arrive London in the afternoon.

        Plus business people in the west might think they are more important if they arrive at ORD compared to MDW…….LOL

    • CF says:

      1) Virgin is actively taking deliveries so I assume these are just new airplanes coming in. I don’t know that for sure.

      2) I’m not sure why so many people are hung up on a connecting traffic deal between Virgin Atlantic and Virgin America. (This has come up before.) It would be such an insignificant amount that it’s certainly not worth it. And considering how low fares are over the Atlantic most times of the year, this would be a terrible reason to start to the flight and it certainly would be a very tiny consideration if any at all.

  5. Sanjeev M says:

    Virgin America really wanted O’Hare cause most of the high-profile, big-money companies are in the northwest suburbs of Chicago. (Think Lake & Cook counties)

    Closer to the city doesn’t necessarily mean better in this case.

    • That’s good to know Sanjeev. We all tend to think business people go to the downtown area all the tiime, but now a days big companies like to build ‘campus’ like complexes which would be a way from the main downtown area of the major area city.

  6. When you think of ORD and MDW doesn’t one give you a different sense then the other. ORD makes you think of a big major city with international traffic with important people using it. MDW makes you think of cheap priced airlines who can’t afford ORD.

    VX may want a different image and ORD fits what it wants. Since UA and AA use ORD they want to compete with what the business crowd is used to. Using MDW high dollar business travelers may think they will be traveling with ‘bus’ passengers like on WN and avoid VX.

  7. Lets not forget that VX won’t be the only LCC at ORD. JetBlue has been there for quite some time. As I remember, they’re at ORD and not MDW because the northern suburbs tend to be more affluent.

    And Cranky, you’re making that little pup VX look like an old old man.. 37? I’m not even 37, and I remember VX’s Birth, Death, and Rebirth…

  8. Jerome L says:

    I think Delta was looking at the big picture at OHare…this is a way to compete/fight against AA and UA without having to invest their own planes and resources. I wouldn’t be surprised to see VX and JetBlue pick up more gates and add flights in the next few months.

  9. Jerome L says:

    I think Delta was looking at the big picture at O’Hare…this is a way to compete/fight against AA and UA without having to invest their own planes and resources. I wouldn’t be surprised to see VX and JetBlue pick up more gates and add flights in the next few months.

    • i was just thinking that! far be it from DL to be altruistic to a plucky upstart. rather, they probably just figured that it would be better for them if VX siphons off some high rev pxs from two of their three main competitors (AA and COUA) and three major stations (SFO, LAX, ORD). and they would be correct!

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