What is Virgin America Thinking With Its New Dallas to Austin Route?

I know I wasn’t the only one scratching my head last week when Virgin America announced it would use its precious gate space at Dallas/Love Field to fly to Austin. It seems crazy, right? It probably is, but there has to be some method to this madness.

Virgin America has 2 of the 20 gates at Love Field and is running 8 flights per day on each gate. It had previously said it would add a couple of flights to Chicago/O’Hare, but apparently it has changed its mind. Instead, Virgin America will start 5 daily flights between Love and Austin on April 28.

The only other airline in the Love – Austin market is Southwest with double that number of flights. This is an old school Southwest market. In fact, the airline has been there since the year I was born (1977). It’s only three hours by road though, and last year a luxury bus service started up as well. Let’s also not forget the 14 daily flights each way operated by American from DFW.

With that background, why would Virgin America want to enter this market? The most obvious reason is operational. A short haul market like this helps Virgin America increase gate utilization in Dallas. One of the flights can arrive early in the morning and then turn around. Another can arrive late in the day and turnaround. Those are times when the gates are least utilized now. Airplanes on short flights also tend to be able to turn around quickly (less mess in the cabin, fewer checked bags, etc). Oh, and it helps if you won’t have a lot of people on them either….

That’s the argument for short haul, but why Austin? Well, Austin has more people in the target Virgin America demographic than any other city in the area. But more importantly, it’s the only place nearby where Virgin America already flies, and that makes it easier.

Operationally, this sounds great. Of course, you never fly a route due to operational capabilities. That’s a recipe for disaster. On the commercial side, is there any way this makes sense? Well, um, let’s see.

The Love to Austin market is one that has shrunk dramatically over the last few years. Then again, that’s been the case in a lot of short haul markets. According to masFlight, passenger numbers peaked in the second quarter of 2006 (when American also flew the route from Love) with 130,130 people flying nonstop. In the third quarter of 2013, passenger numbers had plunged to only 71,920, a 45 percent drop.

At the same time, fares skyrocketed. Take a look.

Dallas Austin Average Fare

Could CEO David Cush be right? Is this just “a monopoly route that has long suffered high fares“? Is there room for someone to come in and create the “Southwest effect” at Southwest’s expense?

Eh, probably not.

Maybe if Spirit came in with rock bottom fares and the costs to match, then it would be a different story, but even that would be a tough sell when the drive is only 3 hours. And anyway, Virgin America isn’t Spirit. If it’s hoping to pry higher dollar traffic from Southwest on this route, good luck.

I can only assume the primary target market will be the Austin techie traveler who loves Virgin America and all its gadgets. But Virgin America has very little other utility in Austin with only two flights to San Francisco. Plus, people don’t care about bells and whistles on short haul flights. They care about frequent flights, and Virgin America can’t provide that the same way Southwest can.

Short haul business markets are tough since frequency makes such a huge difference. Virgin America learned that the hard way, now having 9 a day in LA to San Francisco. It started much smaller than that. In Dallas to Austin, it can never have the frequency unless it wants to cut other markets. There just isn’t gate space for growth. (It apparently declined to even try for the gates United leased to Southwest.)

Can Virgin America just win on price? If you think Southwest will just sit there and let Virgin shoot it out of the sky for a lousy $39, you’re wrong. (Actually, the $39 fare was just an intro sale, but it looks like the lowest selling fare is around $69 right now and Southwest is matching.)

The only saving grace here is the low cost of oil. Even with that, it’s hard for me to understand how this is going to be a great market for Virgin America.

Brett

44 responses to “What is Virgin America Thinking With Its New Dallas to Austin Route?”

ChuckMO

Feb 23, 2015

It will be interesting to see if VX offers through flights from LGA, DCA and LAX. Connections, sure. Direct flights via DAL, no change-of-plane would be a marketing plus. The added bonus is if VX maximizes their gate utilization at DAL, it forces WN to accommodate DL at for the time being until the matter of DL keeping their DAL access is settled.

Of course these could just be place holders if VX decides to add more distant markets ex-DAL.

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1. CF
  
  Feb 23, 2015
  
  ChuckMO – It looks like for flights from Dallas to Austin, one originates in Washington. The others are not through flights from anywhere. For flights from Austin to Dallas, one continues on to LAX. That’s it. Weird, huh?
  
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  1. ChuckMO
    
    Feb 26, 2015
    
    It is weird, IMHO these are placeholders until they figure out what else do with them, and keep DL out.
    
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2. MC
  
  Mar 5, 2015
  
  first of all, i think it’s great….Southwest needs some competition, yes they compete with Virgin on 4 routes but that’s it….in my opinion, Love Field doesn’t have much competition since Southwest has and will most likely remain the 90percent holder of all flights….the city messed up and now needs to fix the Delta issue and give them some gates….Southwest is obviously highly favored in Dallas therefore, Virgin was given 2 gates to compete, sort of….in my opinion again, Dallas hopes Virgin will fail as does Southwest so they can get more gates….Austin is a large market and i hope they do well…..now about the, filling gate time to keep Delta out….Virgin said in the beginning they would have a total of 19 flights a day when they get settled in…..this is before the Delta mess so Virgin isn’t keeping Delta out, they planned to have more flights anyway so Virgin is just doing what they planned to do…. Southwest is, and to a point so is United since they sold their gates to Southwest….in total, Virgin will have 20 flights a day out of DAL….4 flts to each city they serve…
  
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Joe

Feb 23, 2015

New airport, Wright amendment lifted, legal battle for gate access, and.… new service on the shortest possible route from DAL? Have they ever announced a new route with barely a 2 month lead time?

Was this really the next best opportunity Virgin America (or in the top 20)? Does ultra short haul fit in their model? If they did this for any reason except for gate blocking, I’ll be very disappointed. I honestly think they looked at their route map and noticed that AUS was close to DAL. If they already had service to HOU or SAT (in leu of AUS) they would be flying there instead.

This is similar to what jetBlue (start high frequency OAK and LAS) did in LGB when AA was wanting additional slots.

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Left seater

Feb 23, 2015

Just one point, there isn’t anyway someone is making the Dallas Austin or reverse in a car in three hours. This can often be a four plus hour trip.

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1. Neil S.
  
  Feb 23, 2015
  
  It’s one of those odd routes, like NY to Boston. The drive is about 4 hours, the train is about 4 hours, and by the time you get to the airport, clear security, deal with delays, fly, and get to the cab, it’s not much shorter. Will be interesting to see what happens.
  
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2. Diego
  
  Feb 23, 2015
  
  Agree. With construction and traffic it can easily take 5 hours. Especially on Friday and Sunday nights. It only takes 3 hrs if your drive at midnight.
  
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3. MeanMeosh
  
  Feb 24, 2015
  
  I live on the far north side of Dallas, which means 220 miles to downtown Austin. That’s 3 1/2 hours roughly if nothing goes wrong, or closer to 5 if I hit rush hour on one end or the other. Cush said he’s going after people like me to get me out of the car and into his planes. But frankly, I’d rather deal with 4+ hours on IH-35 then deal with the TSA on both ends, and pay the extortionate taxes and fees that AUS levies on rental cars to get where I’m going. Plus, a traffic delay just means an excuse to stop for a chicken fried steak at the Elite Circle Grill or a box of kolaches in West on the way home…
  
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George

Feb 23, 2015

Um….err….HUH! The only thing I can figure is that’s where the dart hit when corporate said we need more service out of Love, either that or they’re keeping to Branson’s dictate of flying only to “Hip Cities”-he did actually say that.

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Geoff

Feb 23, 2015

It’s very curious that they are passing on the opportunity to be the only ones flying DAL-ORD

That said, I agree there might be some logic in terms of connecting traffic as mentioned above. And VX has already said they’re trimming down to 4 daily in a few months when they add another east coast frequency (DCA, I think)

Finally, while Dallas and Austin may be “3 hours apart” that drive pretty much always takes longer. Without an accident it can take 4 or 4.5 just with traffic on either end. With an accident or some construction along the way — prepare to stop for kolaches to break up the 5 hour slog.

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SEAN

Feb 23, 2015

I can only assume the primary target market will be the Austin techie traveler who loves Virgin America and all its gadgets. But Virgin America has very little other utility in Austin with only two flights to San Francisco.

But the “Austin techie” has a tie in to the bay area as well as the corporate center known as DFW, so at first glance it appears to make sense. The problem semes that as you state – “it’s only three hours by road though, and last year a luxury bus service started up as well. These new bus services have become popular with techie travelers even with lower fuel prices.

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Xnuiem

Feb 23, 2015

Well, according to my flight diary, i took the DAL -> AUS -> DAL trip last year 31 times. I often do day trips, which means the car isnt an option. The office in Austin is on the far side, and I live on the north side of DFW. The car ride can be up to 7 hours, like it was over the holidays recently, usually around 4-5 though with all the construction from West on south.

I like VX’s product, but on such a short (45 m) flight, it really isnt a factor. I need the frequency as I often arrive back at the airport early or late, and WN can still get me home. In addition, Southwest has a much better rewards program.

That said, I am taking VX from SFO to BOS in this summer, because let’s face it. I want to be in F for it, and I dont want to have to stop somewhere along the way. That kind of market is where WN really falls short.

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Wayne Rutman

Feb 23, 2015

You are correct: this route makes no commercial sense. Unless the fares are crazy low (aka “unprofitable”), there is little leisure demand for a flight that you can drive in under 4 hours. Door-to-door, it will almost never materially save time and it’s much easier to drive whenever you feel like it and save the various airport hassles. So these routes are mostly flown by business travelers who have someone to pick up the tab: I know if I have to go somewhere for a meeting, 8 hours in the car isn’t a very attractive option. So you’d want to fly small planes with good frequency to cater to these business travelers. The incumbent airline, WN — with a 40+ year history and greater frequencies — is almost certain to win this battle. Look for Virgin to pull out within a year or so.

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Sean S.

Feb 23, 2015

The only thing I can think of is that for fleet reasons the airplanes have to move from Dallas to Austin anyways, and they figured they might as well make money on the planes moving. Otherwise there is no legitimate reason for this to exist; it is also another good argument as to the sorts of legs that a decent rail system in this country could provide if the powers that be were so inclined.

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Mike

Feb 23, 2015

I think this has more to do with the fighting between UA/WN/DL over gate space than VX seeing a great opportunity in the DAL-AUS market. In their gate lease agreement, airport tenants are required to use all their slots for each gate (10 per day). Prior to this announcement VX only used 13 slots and allows Seaport to use two more (for Hot Springs and El Dorado flights). With 5 AUS flights they fully utilize their gates and don’t run the risk of losing slots to accommodate DL. Long term I see this as more of a stop gap measure until they can find a better destination for those 5 flights.

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John G

Feb 23, 2015

I’m thinking like others that this is VX’s way of making sure that they don’t have to share their gates. They want routes to ORD but I believe they don’t have gate access or won’t, and they want to have some time for the traffic to other markets to develop. This is an easy to way to protect that.

By the way, the drop in traffic on the DAL/DFW – AUS route is in a big part due to the increase in nonstops out of Austin. I lived in Austin from 1979-1989, and traveled there frequently afterward. At that time, you pretty much had to connect in Dallas or Houston to get anywhere. Eventually there were a few flights to large hubs like Chicago and Atlanta, but since there was a big hub at DFW with connections in all directions, most travelers went through there.

Now, you can fly nonstop out of Austin to Boston, Portland, even London. Far less need to connect through DFW, or Love on Southwest.

Another factor is Southwest’s transition over time from an airline that did a ton of cheap short hops to a more traditional long-distance carrier. They used to price those hops low to keep traffic on them. Over time, they’ve moved away from that.

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1. CF
  
  Feb 23, 2015
  
  John G – Those numbers are people traveling nonstop in the Dallas-Austin market. It doesn’t include connections beyond.
  
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  1. John G
    
    Feb 24, 2015
    
    How do they tell the difference? Wouldn’t they simply be counting the number of passengers on a flight between the two? There are local market travelers and connectors on the same flights.
    
    Is DOT counting tickets sold, or bodies on planes? Not challenging you, just wondering how they would do that.
    
    When DFW reports traffic, it reports all of the bodies on the plane, regardless of whether they initiate here in Dallas or if they connected from somewhere else. Wondering how DOT does it.
    
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    1. CF
      
      Feb 24, 2015
      
      This is DB1B data which is a ten percent ticket sample. This is not counting people on airplanes but looking at tickets.
      
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      1. Nick Barnard
        
        Feb 26, 2015
        
        Ahhh.. Good old old school data methods.
        
        I’m surprised they just don’t require that airlines report all of their ticket sales and be done with it.
        
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Texas Bill

Feb 23, 2015

Crank, have you ever driven between Austin and Dallas on I-35? I’ve celebrated birthdays driving it. This does make sense if you have to be in downtown Dallas. DFW/Dart takes way too long. There has been talk of a high speed rail line. I know that there will be one built connecting Houston and Dallas that is in the planning stages.

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1. John G
  
  Feb 23, 2015
  
  There’s not a snowball’s chance in hell that high speed rail actually appears in Texas in the next decade. I would say not a snowball’s chance in Texas…but as we are having an ice storm with “thundersleet” here in Dallas today, maybe not the best timing for that…
  
  HS rail is really damned difficult to put in after an area has developed. A true high-speed rail connecting Dallas, Houston, Austin, and San Antonio might cost $50 billion or more. Plus you’d have condemn the properties of thousands of landowners.
  
  This is Texas, not California. The lawmakers here make Rush Limbaugh look like a big government liberal. State tax money spent on some rail boondoggle? Uhh…no. Not happening.
  
  California is showing why this doesn’t work. The price tag is enormous, so they start to save $$ by making some of the line regular rail, with grade crossings. And communities away from the primary line start crying that they are left out, so they route the line through them, with stops. Suddenly this “high speed” rail isn’t any faster than driving, yet it costs billions and billions.
  
  Anyway, back to our regularly scheduled discussion about Love Field and VX.
  
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David SF eastbay

Feb 23, 2015

It just could be to show they use the gates at DAL all day so can’t give any time up to another carrier. Flight times could be when they would have had aircraft sitting on the ground for a few hours doing nothing anyway. It’s nothing US doesn’t do a DCA to hold slots by flying to places no one is really traveling to.

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drybean

Feb 23, 2015

If you live in Texas and have no air service to AUS you have got to “LUV” VX’s effort. For years when Airports would beg airlines to provide air service to Austin and other cities WN monopolizes, the answer was always “Are you crazy? WN would squash us like a bug!” Now that WN’s fares are higher there is a glimmer of hope. VX is first,others may follow, at least in Texas we hope so.

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Wandering Aramean

Feb 23, 2015

Don’t forget trying to increase LFs on the DAL-LAX/DCA/LGA routes by adding feed from AUS. Not that it is likely to be financially successful rather than just pushing down yields overall, but the connecting flow likely has at least a little bit to do with the decision. AUS-DCA/LGA are both outside the perimeters for those airports so well timed connections via DAL could be a decent trip (though it does look like WN uses one perimeter exemption slot for DCA-AUS 1x daily).

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1. Joe
  
  Feb 23, 2015
  
  Aside from the DCA nonstop, WN also flies to BWI 2x and UA flies IAD 2x.
  
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Nick Barnard

Feb 23, 2015

I wonder if this works out as a utilization issue from the AUS side? Would that plane be sitting there from a SFO-AUS turn, or at least have better times than the current SFO-AUS if they did SFO-AUS-DAL-AUS-SFO?

It might be a lot of little things that add up that might not make this huge winner, but all the little bits ontop of each other make sense and make it work.

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1. CF
  
  Feb 23, 2015
  
  Nick – It doesn’t really look like it. Looking in the future, it seems that the first flight leaves SFO at 1130a and arrives 5p. Then it leaves Austin at 545p and gets back to SFO at 720p. The second flight leaves SFO at 515p and arrives 1045p in Austin. It leaves in the morning at 7a and gets back to SFO at 829a. So these airplanes appear to be coming from Dallas.
  
  Here’s what it really looks like is happening. One airplane is doing:
  DAL 850a-940a AUS 1020a-1115a DAL 1155a-1245p AUS 240p-335p DAL 430p-530p LAX
  
  Then another does:
  DCA 1150a-155p DAL 250p-340p AUS 425p-520p DAL 6p-650p AUS 730p-825p DAL 905p-955p AUS
  
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PiedmontFH227

Feb 23, 2015

When ever I drive to Austin from Dallas I literally fear for my life. It’s only going to get worse. While I don’t understand their move….I mean you have mood lighting and inseat entertainment for 15 minutes…I welcome another option to get there.

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Grizzle2640

Feb 23, 2015

You can drive SEA-PDX in less than 2 hours yet Alaska will have 27 daily round trips on that route with a pretty solid load factor using Q400.

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1. CF
  
  Feb 23, 2015
  
  Grizzle2640 – Sure, and that’s why I think that Southwest does well in Dallas-Austin. But how do you think Delta is doing with 5 daily in Seattle-Portland? It has to be all about connections. And Virgin America doesn’t have much of that in Dallas or Austin.
  
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CelticSmackdown

Feb 23, 2015

Should have offered nonstop between OKC and Austin, instead. OKC is a growing market, as evidenced by the new non-stop service between OKC and SEA on Alaska due to roll out this year.

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1. Eric
  
  Feb 23, 2015
  
  OKC isn’t ‘hip’ enough for VX
  
  Hahaha. .. I’m totally kidding.
  Solid growth market, yes. They are not interested in the cost of opening a new station at this point. This is slot squat 101 folks.
  
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Jeremy McMillen

Feb 23, 2015

I wont be surprised when we see similar flights like this to Places like ABQ from SFO or shorter hall 45-1.5 hour flights to get more use out of gates such as there gates in SFO or in this case Dallas

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Jim

Feb 23, 2015

@Grizzle, I’ve had it take almost two hours to get from Seattle (UW area) to Olympia in heavy traffic. Your point is valid, but it is a rare day indeed when someone drives from Seattle to Portland in two hours.

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stewart.smith

Feb 23, 2015

While I agree that at face value it looks like a questionable move, where I reckon this might payoff is for the thru traffic and connection traffic that they can piggyback onto these flights.

Several Virgin flights into Dallas will either be able to take passengers, or take connecting passengers onto Austin. Same in reverse. Virgin flights from Austin can then go onto destinations that Virgin don’t fly to from Austin or provide connections in Dallas to do so.

Not all of these routes and times will have direct competition from Southwest.

Southwest frequently price their direct flights quite expensively when load factors are high, but discount connecting flights to the same destinations even if on one of those sectors the load factors are equally high. This practice means that they maximise revenue on their most desirable direct flights, but still mop up the discount only passenger market via the connections alternative. So, perhaps Virgin are also taking a page out of the Southwest playbook?

SSmith3104

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1. MeanMeosh
  
  Feb 24, 2015
  
  “Several Virgin flights into Dallas will either be able to take passengers, or take connecting passengers onto Austin. Same in reverse. Virgin flights from Austin can then go onto destinations that Virgin don’t fly to from Austin or provide connections in Dallas to do so.”
  
  Problem is, the schedule really isn’t set up to accommodate connections. I put together a graphic on my blog illustrating this issue; there are a couple of easy connections to DCA/LAX/LGA via DAL, but otherwise, you’re looking at 2+ hour layovers, which are a hard sell in any environment. As for funneling DAL traffic via AUS, the only route from AUS is to SFO, which is already served nonstop from DAL. VX could possibly have timed the flights a little differently to facilitate connections at DAL – which will be incredibly easy given that their operation there is all of two gates – but they didn’t do it that way.
  
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Billy S

Feb 24, 2015

Always a nice idea to make a prime route of a competitor slightly less prime.

They can also be the plucky underdog to American (and Southwest) : in essence, being what SouthWest was all those years ago.

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PiedmontFH227

Feb 24, 2015

The lawmakers here make Rush Limbaugh look like a big government liberal. State tax money spent on some rail boondoggle? Uhh…no. Not happening.
John G is exactly right. Our legislators are busy trying to use that money to ensure everyone has an Uzi and has the right to wave it over their heads as they go through WalMart. A train is not a high priority, unless they figure out some way to use it as a weapon.

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southbay flier

Feb 24, 2015

DAL – AUS is a route where VX’s product differentiators (F cabin, IFE, etc.) don’t draw people to their planes because the flights are too short. Also, with WN having double the frequency as VX, it would be hard to come up with a reason why to fly VX over WN.

As for connecting opportunities, the only place that VX flies to from DAL where you can’t go non-stop from AUS is LGA and that’s due to the perimeter rule. If a traveler wants to go to a Dallas hub to connect, WN has more opportunities at DAL, AA has better opportunities at DFW, and UA has better opportunities at IAH.

I don’t get what VX is thinking here. But, then again, I really don’t get what their business plan is.

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One day agra tour

Feb 25, 2015

Virgin America build entryway use in Dallas. This is really better opportunities to other tourists trip in this place thinking is brand new……..Thanks

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JohnG

Feb 25, 2015

Other JohnG (no space) here – how about this in addition to the operational reasons: Each passenger who currently uses another airline as their primary choice (AA or WN) must have a tipping point at which VX makes sense. For many, that is going to be based on “do they fly to enough places I want to go?” When I was travelling heavily, I recognized that the VX product was better than AA, but it didn’t make sense to divert trips to VX (at the expense of EQM and RDM) since out of Dallas, they only flew to SFO and LAX. But with each destination they add, it makes VX that much more attractive – for the trip you’re taking today, you get a nicer product, and for the miles trip you might take in the future, you’re getting more potential destinations. Yeah, you don’t earn much on a Dallas to Austin flight, but a good number of folks who make that trip do it at a regular interval – 2 times a month can add up pretty quickly.

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PF

Feb 25, 2015

It will be interesting to watch this play out. How long will VX maintain the initial frequency AUS DAL before moving the equipment to another route. My hunch is they won’t increase frequency, and won’t maintain the initial frequency for long.

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