Virgin America Heads to Dallas, Let the Brawl Begin

American, Virgin America

Finally, Virgin America has picked a new city that makes sense. It only took them a few years to get there. Starting in December, the airline will roll into Dallas/Ft Worth from LAX and SFO. Will it be successful? I have no clue. I mean, the Metroplex is littered with carcasses from American’s kills, but hey, it’s worth a shot. If Virgin America is going to work, this is a market that should work for the airline. If it doesn’t work, well, at least we’ll finally know for sure.

So why do I say that Dallas/Ft Worth makes sense? A few reasons.

  • It’s a big business market
  • There is no nonstop low cost competition to LAX or SFO
  • The 3-4 hour flight times means the Virgin America product is more relevant
Typical American Airlines Competitive Response

Now, why would Dallas/Ft Worth not make sense? It’s a short list.

  • American

Yep, that’s right. American has killed many a competitor who has tried to come into Dallas. In fact, instead of trying to create a better product and compete that way, American usually goes with the old school, full-on scorched earth strategy.

Remember when Vanguard came to town? No, neither does anyone else, because American destroyed it mercilessly. How about the Legend debacle at Love Field? Legend flew airplanes in executive configurations, and American got nervous. It actually refitted a fleet of airplanes just to go to Love Field and kill Legend. Once that was done, the airplanes were reconfigured and sent back into the main fleet.

We can also look at more recent events at Love. Remember when Missouri got approved for nonstop flights from Love Field? American wasted a ton of money going into the market just to compete with Southwest. Now, winning against Southwest is a hard thing to do, and American failed, but that’s one of the few times that American hasn’t won in Dallas. Is Virgin America up to the task?

It has an advantage over other failed efforts, that’s for sure. The airline has built up a nice little following in San Francisco, so it has a base to pull from. Meanwhile, American has been retrenching in San Francisco, most recently dropping Boston. In LA, it’s going to be tougher. American has called LA a key part of its strategy, but it actually hasn’t done anything new in the city for a long time. Maybe this will kick start American to finally do something there.

But competing with American is going to be virtually impossible for the serious business traveler. Virgin America will have two measly flights per day in each market. American has 16 a day to LA and 9 day to SFO. There’s just no comparison. But United has two a day in each market as well, some on tiny CRJ-700 aircraft. Virgin America should compare quite favorably there.

The real question, however, is how will American react? There’s no question that fares will be matched, if not undercut. I would assume there will be some huge frequent flier promotion and probably a bulking up of schedules. American will do anything to protect DFW. This may even push it to fight in other markets as well.

So, this puts us in a good place for seeing if Virgin America can actually make a go of things. The airline is finally entering a market that it should be serving, considering its previous strategy of big city business markets. It offers a much better product than American, which doesn’t even offer an overhead screen on half the flights in these markets. But can it survive American’s scorched earth tactics? We’ll finally find out.

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39 comments on “Virgin America Heads to Dallas, Let the Brawl Begin

  1. Cranky- This will be especially interesting given David Cush’s history with American. He was heavily involved in the successful competitive response to AirTran entering DFW-LAX and the Wright Amendment fight. When AirTran entered the market, AA went nuclear very quickly and I imagine that they will do the same this time around.

    1. Interesting points with Cushing. To add, this may also be a preemptive strike at the Post-Wright Southwest product several years away. Why would VA stop with LAX and SFO and not also connect all their existing markets out of DFW in the future before Southwest can do the same out of DAL?

      One thing is clear, Branson and Cushing are not going away, and it is also becoming clear that targeting major cities with both large populations of leisure and fringe (perhaps not so loyal) business travelers captures just enough revenue to build the base for future growth in the markets. But is it enough?

      Way to go VA! Next ORD… THEN THE WORLD! :-P

    2. I love the graphic as well btw.

      This is a curious move given Cush and his connections to his former Lord and Master, AMR. I do not want to sound like a conspiracy theorist … but could this foray into the DFW market have AA’s blessings??? Look at the industry-wide ‘huh?” when AA announced their quasi-partnership with B6….they are leveraging a competitor’s cost advantage to provide feed that they can not do economicly on their own. Think about it; AA has had their @zz handed to them, twice, on the west coast (OC & Reno) . What better way to meet market demand (sans the expense of throwing Eaglet on money losing city pairs like LAS-SFO/LAX) then to use the competition??

      1. I can’t imagine how that’s going to work for them. I mean, they effectively own these two markets themselves with a sprinkling of United in there. Why would they want Virgin in two of their big markets? They wouldn’t. If JetBlue went into DFW, they’d be pretty angry at that too.

  2. Who is the meanest of all? American…or the late Northwest? I’ve got to go with NWA. Who else would try and set up a remote hub (Reno) to kill an entire airline just because it added two flights into your home hub (MSP)? Who started non-core routes (DEN-LAX is an example) to retaliate for two non-stops into your home hub (Frontier LAX-MSP)? Northwest was brutal!

      1. I would agree now, but AA in its heyday, especially under Bob Crandall, was truly legendary in its ability to bring the pain. Remember that the Wright Amendment was essentially AA’s idea to run WN out of business (though Herb Kelleher ultimately proved to be the wrong guy to pick a fight with). Now, not so much, since AA is, like, broke and stuff.

  3. There will be people who will fly American and those that will fly Virgin America. The big mileage holders will still with American no matter what the service is like, and others may chose Virgin America to see what it’s like and to sample the inflight service.

    With only two flights in each market, AA doesn’t have to worry about Virgin America taking all it’s business away. The only thing it may do it get AA to use select aircraft for the routes and improve the inflight product on those aircraft.

    Still not sure why Virgin America hasn’t been going into other business markets that are not hubs cities for the big boys. At least at first, just to add more cities and to get it’s name out there more before going head to head with the giants.

  4. I’ve enjoyed seeing the pictures that you put on your posts, Cranky, but this one made me laugh out loud. It really shows just how aggressively American likes to defend its territory.

  5. Any news if VA is going to add flights from DFW to places east? I know to some the world revolves around LAX & SFO, but to the business traveler it would be nice to connect big business centers of the mid-west to those on the east coast.

    I’m surprised VA didn’t pick IAH, just because it’s a similarly sized metro without the AA problem. That said, all of Texas has pretty good competition from WN so I don’t think AA really has the monopoly that people think they do. I agree with Cale that MSP was held hostage moreso by the old NW.

    1. According to the article in the Dallas Morning News yesterday, no plans to go east right now, but they did leave the door open to doing so in the future.

  6. Maybe AA doesn’t care to worry about Virgin A. coming to Dallas. It’s more worried about Delta in New York. Besides getting chummy with jetblue, they
    announced today a sweepstakes highlighting New York City in partnership with NBC Universal.

    They don’t have to worry about Virgin A. in DFW, they have to worry about giant Delta in New York. Maybe Virgin A. is counting on that and saw that this was the right time to enter DFW. to take the New York/AA quiz to enter or just to watch the promo video. I don’t watch network TV so assume it was all NBC shows featured.

  7. Nicholas is on to something here. I agree that this move is related to the VA/BA competition and recent alliance approval.

  8. I wish they would have come to Houston – however, face off with CO/UA at IAH or WN at HOU. That would have been interesting, to say the least.

  9. It’s also worth noting that between American and Southwest, even Delta got squeezed and finally gave up the DFW hub. How soon we forget…

    1. And remember the second ‘new’ Braniff (or sould that be said as Braniff-3 ???) even left Dallas and moved their hub to Kansas City. They were an old home town name with a following and had to leave to try and make it.

      But then again maybe some of the locals are just tired of AA and want someone new to try. A hub carriers terminal(s) can be a nightmare to deal with compared to a carrier with a few flights and 1 or 2 gates.

  10. If you look at what happened the last time VX did something similar, you find something interesting. VX started LAX/SFO-SEA, AS retaliated… and a couple years later after the fare wars (you could fly round trip SEA-LAX for less than $100, which was nuts) AS is there, VX is there, but the airline that shrank their service was UA- they completely took mainline off LAX-SEA (RJ-only), and they fly a number of RJs now on SEA-SFO.

    I think the same thing might happen here- UA already flies RJs on LAX-DFW, and is merging with a company (CO) that LOVES to fly RJs on routes into fortress hubs (IAH-MSP, for instance). VX isn’t thinking they can muscle AA out of their hub; they’re thinking they can get some of UA’s slice of the pie.

    1. There’s also the factor that I would guess that the combined UA/CO will replace some DFW-SFO/LAX connecting service with connecting people through IAH, especially as 787s come online.

      1. DFW to SFO/LAX is to feed Asia so it is doubtful it will go anywhere. The CRJ-700 on that haul is a pretty lousy plane to draw the high yield paxs though.

    2. Which is a good reason why Virgin America should go after United right now. I mean, you think anyone at United really cares that much? They’re distracted by the merger and are just hoping to keep a job.

  11. Right on the money (and I laughed out loud at the photo too). Let us not forget AAdvantage members are some of the most maniacal (they’re almost as bad as Mileage Plus devotees). I’m surprised we haven’t already seen a quadruple miles from DFW-LAX/SFO offer. If AA wants VX out of Dallas, it’ll happen.

  12. A little bird says that Frontier moving to HOU is a prelude to Virgin adding service to IAH as well. Branson was in Houston when the announcement was made. This begs the question, if Virgin goes up against AA and CO to the west coast can they make money?

  13. You wonder if VA’s startup in DFW can survive AA’s ‘scorched earth’ tactics. I wonder if–and hope that–the newly combined presence of Branson’s enterprise with the ever-popular WN in the Greater Dallas-Ft Worth market will revive the battle against the so-called revised Wright Amendment, perhaps even dump it and its niggling limitations entirely, so that truly competitive service can begin at Love Field. Anything else is indefensible.

    1. Only problem is, Wright is already scheduled to die in 2014. And even after it does, I’m skeptical that anything truly transformational will happen at Love. Remember, as a kickback to the militant neighborhood associations around Love Field, they agreed to demolish the old Legend Airlines terminal and cut the number of gates to 20 permanently. You think WN is going to be willing to give up some gates to share? You might see increased frequencies on some routes, and maybe a few new routes like DEN, MDW, LGA, etc., but even then, it’s probably only a matter of time before the city council puts a kibosh even to that to get the neighborhood associations to shut up.

      And also, expanding Love was a great idea 15-20 years ago, and still does make a certain amount of sense for business-related day trips for people coming from out of town, it’s not really the same today. The D/FW metro area has really sprawled its way to the north, with a lot of local business types living up that way, and it’s actually more convenient to go to DFW from up there. Just a long way of saying, the market for Love probably isn’t what it once was.

  14. Quote from Dallas Morning News article “with the very accommodating position of D/FW Airport and their willingness to meet our needs…”

    I think the real question is what did DFW have to offer to make this happen? They have been after Jet Blue for years, at one point even had a commitment that as the Embraers entered the Jet Blue fleet that there “was an aircraft with DFW’s name on it”

    My guess is that there is enough incentives in this to make it worth trying. Unless they can really catch on, they will be gone as soon as the incentives dry up. Or AA nukes em’ first. (Sorry I’m not to keen on pictures of airliners split in pieces on the ground, even in jest)

    Competition is good for everyone, so I wish them well.

  15. This will have very little impact for AA. Remember, AA’s goal of SFO traffic is to connect beyond DFW. Virgin’s goal is local traffic – they will be able to co-exist. Keep in mind, business travellers like frequency – I’m not sure two flights will have an impact. If and when Virgin goes to 4 flights or more, AA will respond with a full court press – possibly adding 777s on the route and flood the market with capacity.

    It will be nice to see Virgin, but I am a customer of the Star Alliance carriers!

  16. This seems like a good route for VA; it strikes me that all too often they pick their routes to cities that are considered “hip” rather than ones that make good business sense. However, I really can’t see them winning in a head to head war with AA…but I suppose time will tell what happens.

  17. Well I don’t know what the actual numbers are, but its been a year, and just by word of mouth, VA is winning the DFW turf war! Loyal is right. Dallas likes things to look new and nice. And Virgin is just that. Consider me a new cult follower. AA is great, but they can stick it.

    PS. Feel free to have a price war indefinitely for the next 10 years. I love Dallas! lol!

  18. The biggest difference this go around is AA is so close to bankruptcy and practicing tactics like this is what got them into this situation in the first place…. It’s backwards thinking… Why businesses forget the golden rule, I’ll never understand. Focus on your product and employees, make them happy, who in turn make the customers happy, meaning happy employees, happy customers. Instead, you have miserable people who you tell to all take pay cuts, they are miserable and in turn, tray the customers like crap. You get so focused on trying to making a profit by adding fees and take away perks, that you forget the reason why you are in existence… To deliver quality service and taking care of your people and customers. Try that for a change and you might be surprised. If Virgin continues to add destinations from DFW and can weather the almost bankrupt AAs misguided focus to take them down, they will do fine

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