Why it Took So Long for Virgin to Link All its Frequent-Flier Programs – Conde Nast Daily Traveler
You can now earn and redeem across Virgin airlines. What took so long?

In the Trenches: Learning From My Team – Intuit Small Business Blog
It’s always good to learn something from the team.

United merger’s OK despite problems, experts say – Houston Chronicle
I was asked about how the United tech transition was going. You probably won’t be surprised by what I said.

Let’s keep the Virgin theme rolling this week, shall we? Last week, Chris Rossi, Virgin Atlantic’s Senior Vice President, North America was in town here in LA for Brit Week. While he was here, we were able to get together for half an hour to talk shop. I was hoping this could become an Across the Aisle piece, but my inability to master recording on my new Android phone prevented me from getting the full transcript. So, I’m afraid you’ll have to settle for highlights.

We covered a lot of topics, so let’s dive right in to them.

Will Virgin Atlantic remain independent?
No use in starting off with fluff questions, right? With all the speculation about the future of Virgin Atlantic as an independent entity, I thought it best to just start there. Of course, there wasn’t much Chris could tell me. He said that it’s really business as usual. I asked if it was a distraction and he said that it was only a distraction in all the external coverage being focused on the airline. Internally, it’s no different.

He did drift into alliances a bit by saying “we’re one of those last few independent [airlines], and we happen to be in a very good position in terms of assets at Heathrow.” But that’s as much as I could get. Not a surprise, of course. We won’t know of a deal until it’s actually happening, if it happens at all.

Former Tail Slogan #1: No Way BA/AA
Virgin Atlantic spent a lot of time fighting the British Airways/American Airlines anti-trust immunity grant (that’s why that slogan was painted on the airplane), but the alliance has gone forward. I wanted to know if Virgin had seen any impact so far. The result? Nothing. “It’s too early stage to know. We haven’t seen any impact, negative or positive.”

His concern is about what will happen if AA and BA use their market power to pressure corporations and travel agencies into signing more restrictive deals. That’s a process that takes time, so Chris says Virgin Atlantic is still waiting to see where it goes. So far, nothing has changed.

Former Tail Slogan #2: 4 engines for long haul
We then spoke about the introduction of A330 service. I could only chuckle at the introduction of this airplane, because Virgin Atlantic used to have “4 engines 4 long haul” painted on its birds. Clearly, economics got the better of them. Chris said the A330 provides a 15 percent cost advantage over the A340, so it’s a very attractive airplane.

There are two in the fleet right now, and the first five will be dedicated to leisure routes with only economy and premium economy seats. Today, they’re flying Orlando to Manchester and London/Gatwick. Airplanes 6 through 10 will have Upper Class and could go on more business-oriented routes, but those are a little way down the line.

I asked if the A330s would open up new routes for the airline, but for now, the answer is no. The plan is to put these on existing routes. They can return some of the A340s if they want, but no plans have been made. If business is good, these can be used for expansion. I imagine with a 15 percent cost advantage, that could open up some routes that don’t make sense with the existing fleet today.

Swapping Spit with Other Virgins
Since Chris runs the show in the US, I was curious if there had been much traffic flowing between Virgin Atlantic and Virgin America. He said there hadn’t been a ton, but he anticipates that will change. Much of the hold-up has been with Virgin America’s systems since they couldn’t communicate properly with other airlines. Now that’s changing and he expects the next step in cooperation to be in the fall.

I wondered why there would be much traffic. After all, Virgin America only adds a few cities (San Diego, Seattle, and Los Cabos) that Virgin Atlantic doesn’t serve itself with legitimate connections. (Nobody is going to connect through LA to go to Dallas.) Chris said the bigger opportunity is in the UK-based passenger who wants to make multiple stops in the US. So they’ll be able to sell a single itinerary to the person who wants to fly into Vegas, up to SF, and then back to the UK.

I still don’t see this as a huge market. It seems to me that if there’s going to be real traffic flow, Virgin America would need to start serving more cities from eastern locations where connections make more sense. But it does seem that they should be sharing more traffic than they are today.

The Ever-Changing Livery
One thing that always bugs me about Virgin Atlantic is that it seems to change its colors every other week. And it’s never a big change. The airline just adds some silver or purple, changes the font, etc. So why the heck does the management team bother?

Chris laughed, and he said that the most recent livery change was really an internally-focused one. They refreshed their brand principles and had a big effort internally to get people re-dedicated to the airline. So the external face of that effort was the change in colors. I still don’t get it. I’m all for touchy-feely things, but this just seems like a huge exercise without a ton of benefit. If there are Virgin Atlantic folks out there, chime in and let me know what you think.

Airlines Start Tightening Belts as Fuel Prices Rise – BNET Headwinds
Fuel prices are on the rise and that means it’s time for airlines to start revisiting growth plans. Delta’s already done it.

Low-Cost Airlines: Increasingly Flying to a Major Airport Near You – BNET Headwinds
Secondary airports used to be the place to find low cost carriers, but they’re now increasingly moving toward primary airports.

Why airline fees are good for travelers – CNN.com Out of the Office
I’m now writing a new weekly CNN.com column entitled Out of the Office. I started off with a very controversial topic, and the reaction was, um, stiff. People aren’t nearly as civilized with their comments on CNN.com, that’s for sure.

US Airways: Why We Don’t Bother Hedging Jet-Fuel Prices – BNET Headwinds
US Airways doesn’t hedge, and so far it’s paying dividends. See why the strategy makes sense for the airline today.

Google-ITA Rewards Orbitz and Undercuts Merger Opposition at the Same Time – BNET Headwinds
ITA signed a renewal with Orbitz and that might have some impact on whether or not Google’s effort to buy ITA gets approved.

In the Trenches: Getting Help with Hiring – Intuit Small Business Blog
After realizing that hiring on my own wasn’t going to work well, I looked elsewhere for help.

Heathrow-Virgin Spat: Virgin Caves, but Wins the PR Battle – BNET Headwinds
Virgin Atlantic’s effort to withhold funds from BAA has failed, but the war is still ongoing.

Delta ranks near bottom in on-time performance – Atlanta Journal-Constitution
I was asked whether a poor on time performance record would make fliers consider alternatives. Yep.

Southwest Learns the Dangers of Unbridled Enthusiasm With Its Frequent Flier Relaunch – BNET Headwinds
Southwest is excited about its new frequent flier program, and it should be, but not everyone feels the same way. Southwest, however, isn’t acknowledging that and it really should.

Making Your Travel Agenda More Efficient – Intuit Small Business Blog
One way to save money is by being smart with your travel budget, but you can also save money be just being more efficient with how you spend your time traveling.

Airlines vs. Airports: Virgin Atlantic Stiffs Heathrow After Icy Shutdown – BNET Headwinds
Virgin Atlantic is withholding all landing fees from Heathrow until it knows the result of the inquiry into what happened during the snow storm in December. This is not a great plan.

In the Trenches: Going Corporate – Intuit Small Business Blog
We’ve ramped up our small business efforts at Cranky Concierge, and it’s already paying off.

Southwest Keeps ‘Em Happy, but Its Late Flights Are Starting to Stack Up – BNET Headwinds
Southwest is not running the best operation these days, but its reputation keeps people happy anyway. I don’t know how long that can continue if things don’t improve.

Cranky Flier Radio Interview With Brett Snyder – Ask Mr Credit Card
I spent 90 minutes doing an interview with Ask Mr Credit Card about the industry. We talked a lot about current events and some of my personal background. If you’ve got time to kill . . .

JetBlue Blames Airport Construction for Late Flights. Um, No – BNET Headwinds
JetBlue is another airline that’s been struggling to run on time, and the excuse has been airport delays. I’m not so convinced.

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.