Browsing Posts in Virgin America

We’ve seen a million different boarding schemes over the years. First there was boarding by rows, then came group boarding, and now many are going to the all-at-once cattle call strategy. But Virgin America is trying something different. They want to let you board first if you don’t have a carry-on. Smart idea, but something tells me the execution is going to kill this one.

Just to be clear, this isn’t a systemwide policy yet, but rather a test. According to spokesperson Abby Lunardini:

We’ve actually advised the teams in certain airports to adopt the ‘board without carry-on first’ approach to see if it makes the boarding process more smooth. We’ve not officially adopted this as a standard practice, but we’ve begun to explore it selectively.

I like the idea. Those without carry-ons can board quickly and not get stuck while others clog up the aisle while they try to stuff their worldly belongings into the overhead bins. Theoretically, it should speed up the boarding process. I say “theoretically” because I just can’t see it working considering customer behavior. And those people with carry-ons will be pissed.

Let’s think about this. You’ve brought your standard roll-a-board carry-on along with your purse. All you’re thinking about is finding your own piece of bin space so that you don’t have to wave goodbye to your bag at the bottom of the jet bridge as it finds its way into the belly of the airplane. If Virgin America announces boarding for those without carry-ons, are you going to try to get on anyway?

Not everyone will, of course, but there will be at least a few people who will try to sneak on. Then it becomes the gate agent’s job to enforce it, and that can get ugly. Also, what if you just have your purse? Does that count as a carry-on? What if you have a shoulder bag that you want to throw under your seat. Is that a carry-on or is it like an overgrown purse?

My guess is that while it probably seems obvious what should count and what shouldn’t, people will try to push the limits. The enforcement process might end up eating up more time than it saves by boarding this way.

Still, I like the idea in theory. I’m just really curious to see how it works in practice.

[Updated 10/20 @ 949a to remove photo]

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Continental’s CEO Talks About the Rochester Overnight at NBTABNET
At NBTA, Continental’s CEO Larry Kellner talked about flight 2816 and why he has concerns about legislation.

Akron-Canton’s Savvy StrategyBNET
Akron-Canton may not be at the top of your list of places to visit, but the airport is doing some very impressive work.

Southwest and those partsIAG Podcast
Addison over at IAG had me on to discuss the latest issues with Southwest and their “unauthorized” parts.

Alaska Pushes on Virgin America’s Ownership QuestionBNET
This is getting old quickly – the Virgin America ownership debate continues.

The Nerd Bird ThrivesBNET
The Nerd Bird is really coming back strong – Alaska has decided to add a second daily flight.

8 Things an Airline Would Never Tell YouBudget Travel
Budget Travel asked me what to do if an airline kicks you from a nonstop to a connecting flight. (Yes, Delta, I’m looking at you.)

August Revenues Look a Lot Like July’sBNET
August revenue numbers are rolling in, and they don’t look much different than July.

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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.

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I’m at the National Business Travel Association (NBTA) conference this week, and I spent awhile chatting with the folks at AirCell (provider of wifi fun) yesterday. That made me think it was a good time for a wifi update, especially since there has been so much news lately.

Delta and American continue to make progress while Southwest has announced it’s outfitting the full fleet. But the fleet coverage numbers that airlines throw out can be misleading, so I thought I’d break it down further.

Let’s start with this chart showing what percent of the fleet currently has wifi installed by airline.

Onboard Wifi as of Aug 09 (including Express)

You’ll notice that these numbers look WAY different from what the airlines tell you. For example, Delta just announced that it was north of 70% but I’m showing 16%. What gives? Well, Delta has it installed on 70% of the pre-merger mainline fleet. In this number, I’ve included the Northwest fleet and the vast fleet of Delta Connection regional jets and props that have no wifi at all. While the regional fleet probably won’t see wifi, the first Northwest aircraft goes in for modification on 10/1.

AirTran and Virgin America remain the only airlines with 100% completion, though it was a lot easier for Virgin America with only 28 planes than it was for AirTran with 136 planes. Oh, and remember, Virgin America has power outlets so they already have a leg up.

American has just passed 100 MD-80s with the system along with the 15 767-200s flying across the country. talking to AirCell today, I was told that they’re doing 1 or 2 a day, so they keep marching quickly. They will have 150 MD-80s, and I believe that’s the only plan so far.

Alaska is still just in test mode, but they have indicated that they want to go fleetwide eventually.

Southwest is also still in test mode, but they just announced that they would be rolling this out fleetwide beginning in 2010. There is no timeline for completion, but hopefully they can install this quicker than they can paint airplanes in their new colors.

Continental and JetBlue are in the same boat. They are both tied to the LiveTV inflight entertainment system, and that can include narrow-band access for free onboard. That means you can check email, use IM, and visit a couple websites but that’s about it. JetBlue still only has it on one airplane but they’ll begin rolling it out soon throughout the fleet. I know Continental has LiveTV on most of its 737-900s now, but they don’t have wifi of any kind yet.

United had announced that its flights from New York to LA and San Francisco will have internet but that hasn’t happened yet. US Airways will put it on their A321 fleet as well, but that hasn’t begun either.

So if you want wifi, AirTran and Virgin America are your best bet with Delta and American following. Of course, it remains to be seen how many people want wifi and more importantly, are willing to pay for it. I asked AirCell for usage numbers, but of course, they couldn’t provide that. Bummer.

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I was just saying to someone the other day that Virgin America had been really quiet lately, and I wondered Virgin America Goes to Ft Lauderdalewhat they were up to. Apparently they’ve been working the old Jewish grandma market – they’re heading to Ft Lauderdale from LA and San Francisco. That’s kind of a weird move, but it wasn’t nearly as weird as JetBlue’s announcement of the same route a couple hours later.

Thanks to the early demise of Virgin America’s relationship with Direct Air, the airline has some airplanes lying around. So they’ve decided the best place to put that is on two daily flights between Ft Lauderdale and both LAX and San Francisco beginning November 18, just in time for Thanksgiving. LAX flights leave at 1045a and 10p while the returns leave at 7a and 720p. San Francisco flights leave at 1110a and 1140p while the returns leave at 1030a and 830p.

I don’t really get this one. In the past, David Cush told Ben Mutzabaugh over at Today in the Sky, “I think we’ve been pretty clear with people that we want to go to major business centers and primary airports.” Um, right. Ft Lauderdale is definitely not the primary airport in the region. That title falls to the insanely expensive airport down in Miami. So I asked Virgin America spokesperson Abby Lunardini what the rationale was and whether or not this meant they would now consider Midway in Chicago.

When we looked at demand and competition in the South Florida markets, we saw there was no direct service from FLL-SFO and little on FLL-LAX. Also, only about 1/3rd of Bay Area travelers are taking non-stops at present to South Florida – so we saw a pretty compelling competition story. Secondly, Miami has a significantly higher cost per passenger – so to keep fares low this was a consideration as well. Finally, when we looked at the market we found that FLL’s central, convenient location feeds the entire South Florida market and has a larger catchment demographic that fits with our model of service. We’re focused on population centers where our flights resonate with travelers that typically have higher expectations of service and amenities – and we think this is a perfect fit.

I think Midway vs [O'Hare] is a somewhat different story – in terms of competition, demographics, demand, etc. [O'Hare] is a market that currently has no low-fare carrier service from LAX or SFO to [O'Hare]. We do still hope to bring our award-winning, low-cost service to [O'Hare] in 2010.

I understand what she’s saying, but I’m not convinced there’s enough traffic to make this work. I’m also surprised that this is the next best option for the airline. In LA, there is more than just a little competition. Spirit and Delta both fly a daily redeye as does JetBlue out of Long Beach. On the return, Delta has a morning flight, JetBlue an afternoon flight, and Spirit an evening flight. Fares for random Wednesdays in October are showing up as low as $209 roundtrip including all taxes. Meanwhile, you can get a one way walkup tomorrow for $273, cheaper if you connect. I’m not convinced this is an underserved market. In fact, Delta has cut one frequency and shrunk the aircraft used. American has pulled out entirely.

If Virgin America is looking to stimulate the market with low fares, there isn’t much room to go lower. Out of Miami, however, it’s American that’s the only competitor with a half dozen flights a day – a very similar market to what they see at O’Hare except there’s only one mainline competitor instead of two. American can support its flights thanks to extensive connections to the Caribbean and Latin America, something Virgin America won’t have. Fares in the local market are a little higher than Ft Lauderdale, though as JetBlue Fights Virgin America in Ft Lauderdale - SFOmentioned, the costs are way higher.

Out of San Francisco, there were no nonstops to Ft Lauderdale until today, but Virgin America’s schedule makes connections fairly competitive timing-wise. But now they’ll have to contend with JetBlue which announced nonstop flights today on the exact same route. What the heck? I’d be surprised if JetBlue made a rash decision here. When asked, the airline confirmed for me that this had been in progress before Virgin America’s announcement.

My guess? I’d say that JetBlue probably had the route on their list of possibilities, but Virgin America’s announcement moved it up. And the fact that they’re starting the flight the day before Virgin America and using the subheader in their press release “First nonstop service from SFO to Fort Lauderdale”? Pretty tacky if you ask me.

But JetBlue does have something that Virgin America does not, or so they say. The second subheading says it all. “Easy connections available to the Caribbean.” That’s a good way to fill up planes, though when you look at their schedules, only San Juan and Cancun have remotely acceptable connections this winter. (And those connections are really only good one way.) Hmm, this does seem rather hasty, actually.

So Ft Lauderdale is likely to be blessed with low fares to the west coast for awhile. Jewish grandchildren in California should be very afraid.

[Updated 8/12 at 1057a: Looks like Spirit has decided to welcome Virgin to Ft Lauderdale on its website. Take a look below]

Spirit Welcomes Virgin to Ft Lauderdale
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