Another day, another long delay. The good news is that this one was actually handled well, despite what you might be hearing elsewhere.. Let’s talk about Virgin America flight 404 and its 16 hour odyssey getting from LA to New York.

You probably know that the weather in New York was simply horrendous last week. It was shockingly bad to the point where JFK stopped operating for awhile when wind gusts reach more than 70 kts. Now, a ton of flights were canceled, but Virgin America 404 wasn’t one of them.

The plane took off from LAX at 734a and diverted to New York’s Stewart/Newburgh Airport when it couldn’t land at JFK. The plane landed at 515p, meaning it was in the air for nearly 7 hours. What you’ll see in other news outlets is that the people were trapped on the plane for hours and hours, getting verbally abused by the crew. Now let’s get the full story.

The plane had already been circling New York for awhile, hoping for a gap in the weather to open up. That didn’t happen and they were running low on fuel, so they went to Stewart and passengers sat there for 4.5 hours. Upon landing, there were no gates available; they were filled by JetBlue diversions. So, the plane went to what’s called a hardstand. Basically, that’s an empty spot where they could park.

Thirty five minutes after parking, they rolled up airstairs and gave people the option to get off. Some got off right then. Another couple groups left over the next couple hours totaling twenty people in all. Passengers were quickly served water and more was brought to the plane when they ran low. The lavs were working the whole time. About halfway through the sit, they ran out of food, though people could have gone in to the airport if they wanted.

Through the ground sit, Virgin America kept monitoring the weather and hoping that they would be allowed to takeoff again. Things kept changing rapidly but they got worse instead of better as originally expected. Four hours into the ground sit, Virgin America decided to cancel the flight and bus people to JFK instead. The plane did eventually take off without passengers and went back to New York to position it for its next flight.

So what really went wrong here? It sounds like the crew had a meltdown of sorts. There are reports of crewmembers snapping at the passengers and getting angry. You can watch some snippets of what seems like good cockpit communication here, but I guess the fireworks happened later. That was probably the only thing that really should have been done differently.

Let’s go down the checklist.

• Were passengers trapped on a plane for more than 3 hours without being allowed to leave? No.
• Did the lavs work? Yes.
• Were passengers provided food and water? Yes, until they ran out of food, but people could have gone into the terminal.
• Did the crew give constant updates? It seemed like the pilot did a good job.

So as far as handling goes, things went somewhat by the book. And the three hour rule wouldn’t have applied here. But regarding the long wait on the plane, well, the quickly changing weather was the culprit. There was no mass conspiracy to keep people on a plane. They honestly thought they were going to be able to get out of there.

Still, the flight attendants losing their cool is a huge problem, and whether it’s their fault or whether it came due to lack of support from the airline itself doesn’t matter. The airline is responsible, and they owned up to it quite nicely. The CEO of social media site Kontain was onboard and updating frequently (link posted above), and Virgin America saw it. CEO David Cush immediately reached out and offered a personal apology. He sent a written apology to each passenger, gave them full refunds, and gave a credit for a future flight.

Things go wrong, we know that. In this case, the weather didn’t cooperate and the flight attendants seemed to have trouble handling the situation. But the airline recovered nicely. Overall, a nasty situation was handled quite well. Had the flight attendants handled things better, we probably wouldn’t have even heard about this.

[http://www.flickr.com/photos/spine/ / CC BY 2.0]

Update 3/18 @ 726p: Virgin America has posted a very detailed report (PDF) on its website if you want full details. Also, it appears that I was wrong. Since they ran out of food a couple hours in, that technically would have been a violation of the new 3 hour rule despite doing absolutely everything else right.

The DOT has ruled once again that the “America” in Virgin America isn’t a lie. Despite Alaska Airlines’ efforts to have the airline ruled to be under foreign control, the DOT decided that wasn’t the case. But to get to that point, Virgin America had to make some real concessions according to a letter from the DOT (pdf). The bottom line? They aren’t going away anytime soon, but they had to make a lot of changes to get that to happen.

The secret rumors of a change in control at Virgin America proved true. Let’s see if I can make this make sense, because it’s somewhat complicated. Richard Branson’s Virgin Group will continue to own the maximum 25 percent of voting shares in the airline that’s permitted for international investors. The rest is owned by VAI, as it was before. Before, the shares of VAI were owned primarily by Black Canyon Capital and Cyrus Capital Partners funds, but they cashed out with the guaranteed return that was promised to them.

Now, the new owners are in four groups. The biggest is a familiar name, Cyrus Capital. They’re back with 42% of the airline. Another 12.5% of the airline is owned by a group set up for distribution to employees if they sell or go public. A very tiny 0.2% is saved for management. But it’s the last group that I find most interesting.

VAI MBO Investors was formed to own just over 20%. Who is behind this? Five Virgin America board members. Actually, it’s four current members, including CEO David Cush, alongside a new guy. Robert Nickell will become a board member as soon as the deal closes. So why is this so interesting? While they were able to get Cyrus back onboard, it looks like they had to get their board members to pony up the rest of the cash. The DOT actually likes this move, because it makes the American management team more invested, but it also makes me wonder if they couldn’t find anyone else to give them money.

But simply replacing the existing equity wasn’t enough for Virgin America. They’re low on cash, so they’re pulling in some more loans. Cyrus will loan the airline $5 million in new money and $15 million to replace some existing Virgin Group debt. Meanwhile, Virgin Group will loan another $63.4 million to the airline. The amount of money they’ve poured into this airline is just amazing.

In return, they’re getting a bunch of warrants. Virgin America will issue 60 million warrants to Virgin Group and 62 million to Cyrus and the board members. Isn’t that problematic for ownership percentages? Nope. These aren’t considered voting interests unless they’re exercised. And if they’re exercised, they have to alert the DOT.

But this structure alone wasn’t enough to get the DOT to sign off. They had to make some more changes. The biggest is that no guaranteed return is allowed for these investors. That’s a good thing since it keeps it more like equity and less like debt.

Virgin America will also add a ninth board member to its roster. CEO David Cush will now be a full-fledged voting member, probably something he wanted as a new investor. The DOT also likes this because it dilutes the say that the Virgin Group has on the board.

There are also a ton of additional restrictions being put out there to restrict Virgin Group’s ability to control the airline. Virgin America will now be able to make more decisions without asking for Virgin Group’s approval. A host of other provisions have been added that you can read in the letter from the DOT if you care.

To me, this looks like Virgin America needed new investors and it needed money. Virgin Group had to give up a lot here and the board members had to throw in some cash, but in the end, Virgin America seems to have a new lease on life. Let’s see if they can keep up the improved financial performance they showed in the last quarter. If so, they’re in a decent place right now.

First Alitalia had to go and post a profit and now Virgin America has done it. What is this world coming to?!? Ok, so they didn’t actually post a profit. They still lost money, but they did squeak out an operating profit. Though this is certainly encouraging news for Virgin America, this is just one quarter and there are a lot of things to be concerned about. Still, they’ve done better here than I ever expected.

I’ve obviously been a harsh skeptic of the viability of Virgin America since the beginning. While I’m sure there are many expecting me to eat crow, I’m not quite at that point. Sure, maybe I’ve picked up the fork and knife, but there’s a lot more we need to see before proclaiming this to be a true victory for the airline.

Virgin America says it posted an operating profit of $5.1 million in the third quarter of 2009. That comes out to be a 3.2% operating margin. Good for them. But let’s think about a few things here.

Remember, this is the third quarter and it’s the easiest quarter to make money. A single almost-profitable quarter in the summer, while good news, is not an indication that all is rosy now. If they can pull out a profit in the fourth quarter, then that’s a different story.

The information here is somewhat opaque and will remain so until they go public. The nice thing about being private is that you get to remain relatively quiet about your financials. The airlines in the US still have to submit their data to the government for dissemination, but it’s hard to really understand what’s going on there. For example, I remember a few quarters ago when Spirit posted a profit in the government data. It turned out they sold a bunch of hedges and made money that way. So it can be misleading.

While they’re touting their operating income, they bury the piece at the bottom showing that they still lost $6 million on the quarter. That’s obviously still a big improvement. How did they do it? Unit costs excluding fuel were down nearly 25%. How did they do that? Is it a permanent reduction or was there something in there that skewed it?

According to spokesperson Abby Lunardini, “The reduction in unit costs was primarily driven by our growth (and the efficiencies of scale that come with that) and cost control.” Very good. But there are clearly some secondary reasons that kept costs low as well, and we don’t know what those are.

Also, while they may have posted an operating profit, they still lost cash. At the end of the second quarter, cash was at $28 million. At the end of the third quarter, it was down to $23.2 million. Will that be enough to last the winter?

The data hasn’t been filed with the government yet, so I can’t dig into that. I only have the press release to go by. Yes, this was a good quarter comparatively, but there is still a lot to worry about.

This past weekend, my wife and I were planning on driving up to wine country to spend the weekend with some friends. As the weekend drew closer, I decided that I really didn’t want to drive, so I went to look for flights. Three days before departure, I saw that Virgin America was, as usual, the cheapest around. Not only were they cheap, but they were absurdly cheap. It was on. (Sorry to steal your slogan, Southwest.)

My flight up on Friday morning was a whopping $49 all-in. The flight back was $99 at prime time on Sunday, but wait, that fare was for Main Cabin Select, the airline’s premium economy product. Cheap, yeah. But I was confused. Take a look at this fare display:

Now, at the time, our flight was available for $99 for Main Cabin Select, $143 for regular coach and $158 for refundable coach. I’ve often seen a tremendous premium for Main Cabin Select on the order of hundreds of dollars, but pricing it below coach? That’s just odd. It was also cheaper than any other airline’s coach, so I bought it.

Let’s get on to the trip. This was a textbook example of why I prefer Long Beach. I had to take the blue line train to LAX (at left) and that meant leaving my house just before 630a to catch an 825a flight. Had I flown out of Long Beach, I could have gotten an extra hour of sleep.

I did get to LAX at about 725a but there was a 20 minute security line. Once through, I headed to the gate and grabbed one of the many open seats. The gate area was strange because it sounded like the gate agent had turned her iPod on to play some trendy music that belonged in a cool club. It was an odd juxtaposition with the bright morning sun streaming in to the terminal.

Our captain, Lloyd, made his way around the gate area before boarding, thanking everyone for flying and saying how nice it was to have us onboard. That was a really nice and heartfelt touch. Lots of smiles around the gate area.

Boarding started and I waited for my group to be called. After groups A and B, they announced that anyone without a carry on could board. I had a carry on so I waited. I saw maybe only two or three people without carry ons, so it didn’t create any chaos. Boarding, however, was very slow. There was only one gate agent, and she seemed a bit overwhelmed as things ground to a halt.

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November 13, 2009
Virgin America #925 Lv Los Angeles (LAX) 825a Arr San Francisco (SFO) 950a
LAX: Gate 37A, Runway 24L, Dept 3m Early
SFO: Gate A1, Runway 28L, Arr 18m Early
Aircraft: N633VA, Airbus A320-214, Standard Colors, Mostly Full
Seat: 6F
Flight Time: 56m

I hopped on the plane and took my seat near the front. Unfortunately, my bag, which has always fit underneath the seat, didn’t make the cut on this plane. Maybe it was the power outlet or it could have been the life vest, I don’t know. All I know is that I was annoyed that I had to put my bag up, but I wanted to keep my computer down so I could use it inflight. This is where it turned into a comedy of errors.

I pulled my bag up hoping to get my laptop out but the zipper snagged on the mesh netting pouch. After struggling for a minute, I liberated my bag. Then I pulled the laptop out and realized it didn’t fit in the hard seat back pocket. Crap. So I put my bag up and came back down to fiddle with the laptop. I noticed the mesh was a separate pocket so I put it there. Not a good plan. Apparently, this particular pouch didn’t have the bottom connected properly, so my laptop went straight through and hit the ground with a loud thud. Completely frustrated, I just put the laptop under the seat in front of me and sat back to relax. The flight attendant came by asking for drink orders for when we were in the air.

It was an absolutely beautiful day to fly, but as soon as we hit 10,000 ft, I turned away from the window, opened up my computer, and plugged in for my first wifi experience on a commercial aircraft. See, this was the first day of the Virgin America/Google/GoGo partnership for free wifi onboard. Unfortunately, my power outlet didn’t work. Damn. But I had about 20 minutes of battery to use.

The internet connected with no trouble but it wasn’t exactly super fast broadband speed. I pulled up YouTube to see how it would work and it kept buffering.

My laptop is apparently too big because I couldn’t open it fully. Actually, I didn’t even get close to getting comfortable with it and had to become a contortionist to use it. No way could I do that for a long time.

I did catch up on email and sent communications regarding a couple flights for Cranky Concierge clients. Meanwhile, a flight attendant brought me a little bottle of water. Then my battery died so I pulled out my BlackBerry.

That was a little more difficult to connect but I did get it to work. Surprisingly, for a minute I had a UMA connection which I believe would have let me make a call. I didn’t try.

Soon enough we were on our way in to a sunny Bay Area. I love it up there. We landed parallel to a little United Express Brasilia, and I got a great video. Unfortunately, it was on my BlackBerry so the quality could have been better.

With that, we taxied to the gate and it was time to head off for a weekend of wine tasting. It was a fantastic weekend up in Guerneville. We headed back down Sunday morning and dropped off our $10 per day rental car (thanks, Priceline). We hadn’t checked in before, so we went to the counter, used a kiosk, and got the itty bitty Virgin America boarding pass. (Makes sense to me – easily fits in your pocket and uses less paper.)

Security wasn’t as easy. It wasn’t a long line, but our line had the millimeter wave scanner. I was excited to try it, but I wasn’t happy with the result. First of all, you have to remove everything from your pockets, not just metallic items. So a piece of paper, boarding pass, ID, etc all have to go. You also have to pull your belt off. Then you line up and it is very slow. The scan itself takes only a couple seconds, but then you have to wait for the person watching the scans in the back to give the ok for you to pass. They have a place for two people to stand at one time, so every else waits on the other side. About every 5 minutes, they backed up so much that they yelled “overflow!” and sent a group of people through the metal detector on the side instead.

I don’t care about going through that process, but I do care how much it slows things down. Not good. But once we were through, we headed to our gate at the end of the concourse and they were boarding. The guy in front of us was turned away after they already took his boarding pass because he had a carry on and the gate agent didn’t see it. So they turned him back and made him wait to the side. This is what I thought might happen with this process. We, however, sailed right through because we were in Main Cabin Select.

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November 15, 2009
Virgin America #928 Lv San Francisco (SFO) 150p Arr Los Angeles (LAX) 315p
SFO: Gate A11, Runway 1L, Dept 1m Late
LAX: Gate 37A, Runway 24R, Arr 2m Early
Aircraft: N633VA, Airbus A320-214, Standard Colors, Mostly Full
Seat: 10A
Flight Time: 54m

We stepped on the exact same plane I took up on Friday and took seats in the exit row. There was a bottle of water and a headset in each seat marking it as Main Cabin Select. We pushed just a minute late and headed to the runway, which we sat just short of for about 10 to 15 minutes without any explanation. Finally, we rocketed into the wild blue yonder and turned around for our trip back to LA.

I flipped on the TV and was sad to see that there was no football on. The best I could do was watch ESPNews (even ESPN had billiards – friggin’ BILLIARDS?!?) until we crossed 10,000 ft and were allowed to use our electronics. I do like the system they have – it, unlike the JetBlue version of LiveTV, has a program guide, though it wasn’t actually populated with information and the channels didn’t match those in the paper guide in the seatback. I know the new LiveTV system on Continental has this feature as well and it really makes a difference. The only problem here was that it was really slow to react to the touch.

I was determined to make the most out of Main Cabin Select, so I went on and started ordering food. No meals were boarded for such a short flight, of course, but they had snacks and snack boxes. I tried to order a Galaxy Munch box, but the system froze. It froze on everyone so they had to restart the thing. They did, however, come by with the drink cart, so I had a scotch and, after finding out the Galaxy Munch had been discontinued (why was it on the system still?), I had a “Food Cube” box and a chocolate bar.

Soon after, I finished my scotch and decided to see if the ordering system would work after the reboot. It did. I ordered myself a ginger ale as I was typing away on my computer, writing this report. The internet was about the same speed as on the way up, so no video watching for me. I caught up on emails and then felt the plane point down. We were already descending, and my ginger ale was nowhere in sight.

There were a few bumps heading into LAX so the captain flipped on the seat belt sign. When the flight attendant came down the aisle as we passed through 10,000 ft, I mentioned I had ordered a ginger ale and asked where it was. She said they never received the order (huh?) but she raced up and got me the drink even though we were descending into the LA basin.

After circling around downtown, we lined up for a nice soft landing right on time. Overall, this was a very good experience on Virgin America, though it does highlight that the more technology you have onboard, the more likely things are to go wrong.

Would I have paid more for all this? No way. Not for an hour flight. In fact, I was annoyed with myself when I saw that American and United later matched Virgin America’s cheap fare on the way up and I could have left a couple hours later. But on a long haul, it would certainly be worth paying a little more over the Uniteds and Americans of the world.

It’s no surprise that when you make something completely free, people use it a lot more often than if you make them pay. Duh. And that’s why it’s not surprising to see airlines scrambling to find a way to offer wireless internet for free. Just in the last few days, we’ve seen three promotions that will let anyone log on from 30,000 feet without paying a dime.

First up was Virgin America. They teamed up with Google to offer the most robust opportunity so far. Wireless connectivity will be free for anyone traveling between November 10 and January 15. Just turn on your computer and follow the instructions.

Meanwhile, American has joined with Lexus to offer free wireless as well . . . but only for a week. Lexus is promoting a new line of cars with free wifi from now through November 7. Remember, American has wifi on a lot more aircraft than Virgin America, so this is still a sizable promotion. It’s just a lot shorter. And on this one, it’s not automatically free. You have to enter code 2010LEXUSLS.

The last one I’ve seen is from AirTran. They are being a little more conservative still. The deal on AirTran is that if you pay for wifi on one flight, you’ll get a second one free. That’s probably the least attractive of the three opportunities here, but the end goal is the same.

Airlines are trying to stimulate wifi use, and really they should. Remember, once an airline hits on a great idea, the others will jump in and copy. So those airlines that have wifi now will have a limited opportunity to showcase their differentation. Eventually, everyone will have this.

Getting people to try onboard wifi is something that the airlines hope can attract people to their airline. If they’re going to do it, now is the time.