Is Virgin America Flying Without a Map?
Other than a long ground delay in New York, Virgin America has been pretty quiet lately. Apparently they've been building their plans for future growth, because yesterday they announced a number of changes. There will be some new cities, one canceled, and a whole lot of new airplanes. The moves don't make a ton of sense to me on the surface.
The number of planes in the Virgin America fleet has been holding steady at 28 for quite some time. Now they've signed a deal for an additional 6 planes this year and 3 next year. That's a lot of airplanes coming in, and if they've arranged financing, that bodes well for their current financial state. But how are they going to use those planes?
First, they've announced that they'll start flights to Orlando from both LA and San Francisco on August 19. Forget that they're starting this flight during the absolute low season in Florida and let's think about this in the longer term. These flights will face heavy competition in LA. Delta, American, and United all fly it. In San Francisco, it's just United and they'll be running an opposite schedule. Virgin America flights will leave from both LA and SF in the morning and return from Orlando in the evening. So they're effectively spending an entire aircraft day on each of these markets.
My problem with Orlando is that it's a leisure market and long flights with low fares in leisure markets aren't ideal for anyone. Sure, there's Disney and Universal traffic between LA and Orlando, but that's all tied up in corporate contracts. Virgin America will be looking at leisure, and I don't know that will work. Then again, Orlando has done a stellar job of attracting new service lately, so maybe they see something I don't. Then again, that new service is primarily from the east and midwest; the bread and butter markets that make a lot of sense.
Virgin America will also launch flights from LA and San Francisco to Toronto as early as June, if they get final approval by then. This is a totally different story. In LA, Air Canada and American combine for a few flights per day. In San Francisco, it's Air Canada and United. Toronto is likely to be more of a business market, I would think, but it's just an incredibly expensive place to fly.
As recently as 2005, Toronto's cost per enplaned passenger topped $40 Canadian. They have done a good job of reducing costs since then, but it's still not a cheap place to fly. In addition, the taxes and fees that get slapped on each ticket when you cross the border add up as well. But hey, fares are high on that route, so maybe this will work for them. I just don't see why you'd want to add the complexity of international flying if you still had good opportunity within the US (ahem, Chicago, Dallas).
Lastly, Virgin America has decided to drop Orange County. This is one move I applaud. The fares were low, the competition was high, and they just weren't filling enough seats at last check. An hour-long flight isn't worth it for them, so this is a good move in my mind.
But everything else doesn't seem to really show a true strategy. I mean, I guess flying to big cities from the west is a strategy, but they don't seem to follow a pattern in terms of market type. Maybe they're still trying to see what works and what won't.