What’s Going on With Virgin America?

Virgin America

It’s been awhile since I’ve checked in on Virgin America, but they’ve had some recent news that made me think it was time for a post.

I’ve heard reviews from several friends who have flown them lately and they’ve all really enjoyed their experiences. Yes, they’ve had problems with the inflight entertainment functioning correctly, but that didn’t stop people from praising the airline. You would think things were going well for the airline, but that doesn’t necessarily seem to be the case.

As noted over on PlaneBuzz, Virgin America has pulled down capacity on its JFK-SFO/LAX routes in November, December, and January. 07_11_14 vxpickadoorThe airline is already at a schedule disadvantage versus United and American, so this isn’t a good thing for their prospects of attracting business travelers. Why are they doing this? Well, I’ve heard three possible explanations.

1) At first glance you would assume that high oil prices and low fares aren’t mixing very well, especially on long haul routes. It’s probably no coincidence that just this week they launched another fare sale. This one is offering flights for $129 each way between LAX/SFO and JFK for travel until right before Christmas. This is certainly not a peak travel time, except for Thanksgiving weekend, but $129 is extremely low with oil prices where they are today.

This is the worst possible reason for them to be canceling flights. The airline built it’s product for long haul flying. Nobody cares about inflight entertainment or food on the one hour hops on the West Coast, but it matters on the long hauls. On short hauls, people care about the number of flights first and foremost, and Virgin loses that battle every time.

Why do I think they’re focusing on short hauls? Well, they recently announced they were going to start service to San Diego in February. Flights aren’t going to JFK or Dulles. Nope. They’re just running a few flights up to SFO. But their 5 flights compare pretty poorly with United’s 11 or Southwest’s 18 to Oakland. And things are looking worse for them and their six flights in LAX-SFO as well. Southwest came in with 8 and realized that they didn’t have enough, so they’ve gone up to 12 per day. How is Virgin going to do well with only 6?

If they’re pulling back on their long hauls to focus on their short hauls, they are in big trouble. Let’s hope for their sake this isn’t the case.

2) Unconfirmed rumors are flying that they needed to make some changes to the aircraft and pulling airplanes out during the weaker winter months is the easiest way to do it. The rumor is that they may be adding more First Class to their planes since right now it’s full while coach isn’t. Though I heard this rumor previously from another source, a version of it also popped up in this week’s PlaneBusiness. It’s also expected that they are going to work on installing inflight internet and fixing the inflight entertainment system problems while this is happening.

This all makes sense from an operational perspective, because eliminating a LAX-JFK and SFO-JFK roundtrip frees up two planes. From a business perspective, however, I can’t say this seems smart at all. Instead of starting San Diego in February, maybe they should just delay that and work on the planes then. I have to think that this is an airline used to waiting. Another three months isn’t going to kill them.

If this is the truth behind the pulldown, then it just doesn’t make sense to me. It’s not worth pulling planes out of service on key routes, especially when you have new planes coming in that could be used to fill in instead of starting short haul routes in February . . . unless the flights aren’t doing that well in the first place.

3) The last explanation is that they just don’t have the planes they need to run their full schedule. They thought they would have the planes, but for some reason they don’t. Could there be delays in deliveries? Probably not. It’s more likely that if this is happening, there are delays with them outfitting the aircraft with all their cool bells and whistles.

If this one is true, then that’s just unfortunate. But again, why not move the schedule around to eliminate short haul flying instead of long hauls?

Part of my frustration here is that they’re being quiet about it in the press. If they are adding First Class and internet, they better get out there and talk about it. It’s a great story, and what company doesn’t like positive press? If it’s a delay in receiving aircraft, it may not be positive press, but it makes the suppliers look worse than Virgin. They should still push it out there.

The best reason to keep quiet is if those routes really just aren’t making money. Like I said, I hope for their sake that’s not the case.

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5 comments on “What’s Going on With Virgin America?

  1. Great post. I completely agree with you in that VA’s in-flight services are designed for long haul flights cross country, not short California only hops. The problem is of course that long haul flights aren’t too profitable for anyone right now given fuel prices, and especially not for VA with their $129 fares. It seems like the San Diego choice was a go between, they needed a place to expand but didn’t want to start a loss making route like SFO-MIA. I think that was the wrong answer, their competitive advantage lies in their long haul service, and they should stick to what they do best.

  2. You would be hard pressed to find someone who wants Virgin America to prosper more than me, so I’m naturally concerned about them cutting back on their transcontinental routes (which are the ones I fly). Sadly, I fear some of Virgin’s problems are the airline’s own doing.

    Virgin is a great airline for budget-conscious business travelers. A first-class ticket is comparatively cheap and being able to work comfortably for six or more hours on a cross country flight is well worth the money. Yet the airline totally ignores this segment and instead spends its limited marketing dollars on frivolous and costly promotions that generate a lot of media buzz, but clearly don’t attract loyal customers. I recently received a promotion to fly a Virgin flight featuring Victoria Secret models; Virgin American should be focused on stealing AAdvantage flyers not people who frequent Hooters Air. I can think of several business promotions utilizing the airline’s in-flight entertainment systems that I’m confident would attract business travelers.

    Then there is the decision to outsource the reservations system and agents. Perhaps it’s been fixed in the past month, but the last time I tried booking on Virgin’s site it was plagued with all sorts of problems. I’m a firm believer that companies who truly care about providing quality customer service don’t outsource any related functions to third parties. Shockingly, Virgin’s CIO Bill Maguire was bragging about the system to the media even before it was introduced.

    Finally, Virgin doesn’t even promote some of the fringe benefits of flying the airline. In my experiences the airline’s turnaround time unloading luggage has been simply amazing; on my last flight, my luggage was waiting for me on the carousel by the time I got there (admittedly, the walk at Kennedy is pretty long). By comparison, I waited nearly 45 minutes for my luggage on a Jet Blue flight last weekend. The international terminals at Kennedy and SFO have considerably better security crews, and I’ve gone from check-in to the gate within less than 15 minutes. And in case anyone’s interested, the pizza served at the Italian kiosk near Virgin’s gates at SFO is pretty darn good by any standard. Lastly, and I know Cranky you and others say it’s all in my head, but the air quality on Virgin’s flights is decidedly better.

    Fred Reid has put together an amazingly dedicated and competent team of professionals. But he’s got some real problems on the marketing, public relations, and technology front. If he doesn’t take corrective action soon, I can’t see how Virgin America can survive.

  3. I tried them for an SFO/LAX flight. The plane was not configured yet, so no entertainment, reclining chairs, etc. The plane was new, yet the first class seats already looked a little worn. Could be the color combinations selected or quality of the leather. I do want them to succeed, but so far they don’t have the level of service or schedule options. I do have a $25 voucher due to the lack of entertainment so perhaps I’ll try them again in a few months when they get their business in shape.

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