Virgin America (http://www.virginamerica.com) plans to apply for its operating certificate today, after filing its business plan with the Department of Transportation in December. The "paper" airline has its headquarters in San Francisco, and its major shareholder is British tycoon Richard Branson, who also owns Virgin Atlantic (http://www.virgin-atlantic.com) and Virgin Records (http://www.virginrecords.com/).
The airline says it plans to offer low-fare, "with-frills" service from its base at San Francisco International, beginning before the end of 2006. It's already secured $177 million in financing... with 49% of the money coming from Branson (he's not allowed to invest any more than that due to US foreign ownership laws). Virgin America has already ordered 33 Airbus A320 aircraft (http://www.airbus.com/en/aircraftfamilies/a320/a320/). Its CEO says the first route will be SFO to New York (probably Kennedy airport).
Virgin America is not unlike jetBlue (http://www.jetblue.com/), which started in an almost identical way back in 2000. It was highly financed before it ever took off ($130 million in pre-certification funding), went with an all Airbus A320 fleet, and chose a major coastal city (New York) as its first base.
The difference: when jetBlue arrived on the scene, low-fare, "with-frills" service was a new idea. It innovated live TV on-board and all-leather seating. It also chose a major city, which at the time, was still underserved.
Virgin America's challenge begins with convincing passengers it's different than other airlines. Especially here on the West Coast. On our side of the country, we enjoy a high-frequency of flights, at relatively low fares. Southwest, Alaska, and a newly trimmed-down United, offer a lot of flights, for cheap. Virgin America will immediately be competing against those well-established carriers here in the west... and it's going to be a tough battle since so many of us are loyal to those airlines.
San Francisco, unlike New York Kennedy in 2000, is not underserved. It is home to a huge United hub. And nearby, in San Jose and Oakland, Southwest offers hundreds of daily flights. Plus, Oakland has jetBlue service to New York Kennedy already.
Portland, meanwhile, is still considered a prime market by a number of US airlines. It's growing faster than almost any airport on the West Coast... up to a record 13.9 million passengers in calendar year 2005. PDX beat out Seattle for Lufthansa service to Frankfurt and Mexicana flights to Guadalajara and Mexico City. So it's likely Virgin America will try to get a foothold here. But will Oregonians choose it over our "hometown airlines," Alaska and Horizon? Virgin America's future might depend on it.
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