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At The Gate: Poised for growth

With the introduction of service to Toronto on June 29 from Los Angeles and San Francisco, Virgin America marked the launch of its first international city.


July 14, 2010
By Brian Dunn

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With the introduction of service to Toronto on June 29 from Los Angeles and San Francisco, Virgin America marked the launch of its first international city.

growth  
Virgin America is like a hybrid model, positioned between legacy airlines and low-cost carriers.


 

“Today is a great day for airline competition, for our teammates and for travellers,” said Virgin America president and CEO David Cush. “When more airlines compete, consumers win with lower fares and better service. At a time when most airlines are contracting and consumers expect less and less, we’re proud to be growing, operating responsibly and offering travellers a very different kind of flight experience.”

Virgin America is one of the fastest growing start-up airlines of all time. The San Francisco-based carrier launched in August 2007, and now serves 11 destinations including Toronto, has 1,500 “teammates” or employees and plans to grow to 30 to 50 cities in the next three to five years. It is adding six more aircraft this year to its current fleet of 28 Airbus A-319s and A-320s and three more in the first quarter of 2011. By this time next year, the airline’s fleet will have grown by almost one-third and five new destinations added. Toronto also marks the first international destination for Virgin America, with a daily non-stop flight and a through flight to both San Francisco and LAX.

The airline reported its first operating profit in the third quarter of last year, although it had an operating loss of $48 million for the full year on revenues of $548 million, a $140 million year-over-year improvement over 2008. Virgin averaged an 84 per cent load factor in the fourth quarter of 2009, a 3.1 point improvement over the fourth quarter of 2008, despite a 47 per cent increase in scheduled service capacity for the quarter.

“With a strong financial performance, a new ownership structure and growth in fleet size, we’re pleased to be able to expand to world-class destinations like Toronto, and Vancouver will probably be our next Canadian destination, although no time line has been set,” says Abby Lunardini, director of corporate communications at Virgin America. She says more flights between Toronto and California could be added if the demand is there.

Toronto has been on Virgin’s radar screen for a long time, because it’s a huge travel market, explains Lunardini. There is also strong high-tech and media traffic between Toronto and L.A.

“That was the business rationale behind the launch. We feel what the Virgin brand stands for will resonate with the Toronto business and vacation markets.” Service to Toronto is being promoted with a one-way introductory fare of $199 from LAX and $209 from San Francisco. The new service is backed by online ads along with a billboard and newspaper campaign. The route will be served by an A-320 with eight First Class seats, 12 Select Class seats and 130 seats in Economy.

Virgin America is like a hybrid model, positioned between legacy airlines and low-cost carriers, explains Lunardini. It is price competitive with the budget airlines, but with a major focus on corporate and business travellers.

“Our business model is built around reinventing flying and offering travellers more for less, so low-fares plus a host of different upscale/high-tech amenities. We were the first airline in the world to offer in-flight Wi-Fi fleet wide as of May 2009,” says Lunardini.

Virgin’s new A-320 fleet offers custom-designed mood lighting, deeper and more ergonomically correct leather seats, power outlets at every seat and the most advanced touch-screen in-flight entertainment platform in the skies, says Lunardini. In addition to movies, live TV, video games, an MP3 library, music videos, Google maps and more, its Red system allows travellers to order food and drinks right from their seatback screen and pay with a swipe of a credit card at their seat. The flight crew then serve guests on a tray, as opposed to the traditional cart service.

“As a start-up airline, we’ve been shaking things up in the U.S. by injecting healthy competition into new markets, with lower fares and better service. Once people try us, they tend to stay with us. That will be the focus of our Toronto marketing.”


Brian Dunn is a Wings writer and columnist.