Virgin America a no go????

[Mercutio]

How do you figure competition doesn't exist in the USA market for air travel? We've finally hit a balance were airlines are starting to make money again and employees are getting bonuses. So rather than build on this sucess, we'll go back to bankruptcy.

What the US really needs to do is allow some of its' airlines to actually go bankrupt instead of endlessly protecting them from competition via Chapter 11 or other protectionist rules.

[David747]

Despite the calls that competition is not needed

How do you figure competition doesn't exist in the USA market for air travel? We've finally hit a balance were airlines are starting to make money again and employees are getting bonuses. So rather than build on this sucess, we'll go back to bankruptcy.

I didn't say competition doesn't exist, I said that more competition should be allowed. As a person who believes in capitalism and the market economy, we don't need less companies competing but more, and one lonely little airline like Virgin America will not be the end of US Air, Southwest, Continental etc.

[cageyjames]

They are not based in California. Virgin America will be.

Neither is WN.

Sorry but Ryanair is much cheaper than Southwest and yet EasyJet (which may also be cheaper than Southwest) have managed to compete with them and found space in the market between BA and Ryanair.

Different marketplaces I already said that. EasyJet is no B6 anyway.

You are too confident of your own forecasts. Have you ever run an airline? No. However Virgin have founded profitable airlines all over the world.

No but I work for one. *rolleyes*

But Virgin American can take business from the established carriers. And neither United or American have California as their main base.

Uh UL is the second largest carrier in California and near WN's marketshare.

Why not? American and United have ageing fleets and union problems.

The fleet ages of AA and UL aren't an issue and are well cared for. Also what union problems do AA and UL have? None.

I don't see them as being omnipotently competitive. Virgin Atlantic certainly takes them on over the Atlantic.

VA is not Virgin Atlantic

So what? The model might succeed in the US too. Europe's aviation industry has become very innovative and competitive and EasyJet is an example of that.

How is EasyJet innovative? They just copied what was being done in the USA.

If Virgin replicate their model in the US then it will likely succeed.

What model is that, high prices and luxury? As I said the driving force is cost, not in flight bars.

Like I said before I wish to see the market decide what airlines go away or succeed. If Alaska, Fronteir, ATA etc can't hack competiton from Virgin then they should go out of business. That's how competitive markets work to deliver the choice that customers want.

Huh? What does easy access to capital have to do with competition. Virgin America won't have to be profitable and can eat away at existing profits and then go bankrupt. Just because people are loaning VA money has nothing to do with free and open markets.

No it's not. Passengers want more or less the same things everywhere.

Price is paramount, not features.

Virgin Atlantic already use SFO and the Virgin stable operates profitable airlines in all manner of weather conditions all over the world.

Uh how many daily flights does Virgin America fly out of SFO? Frequent fog at SFO had always caused flight delays. These delays became compounded with UA and WN's high frequency schedule. If VA only plans a couple flights than sure. Look up the reasons why Shuttle by United failed and why WN abandoned SFO.

As I said before I think Virgin America will offer a differentiated product from Southwest.

Where have you seen this because all the marketing materials that I have read say VA will be a B6/WN clone.

How about Virgin being allowed to choose their own strategy?

At what cost to everyone?

Absolutely yes. That's a fundamental rule of free and competitive markets. The market chooses the winners and losers. Incumbants should not be protected from competition.

Except does an airline like mine have access to the same captial that VA has? Of course not because we don't offer the potential of return that VA could. That is the risk VA is taking. I'm not saying protection is needed, where did you see that. I'm talking about self control of investors here for the greater good of all.

Sorry but your arguments are just thinly disguised justifications for protectionism.

Then you aren't reading what I'm writing. I've already said no caps on foreign investments and open skys. What more do you want? My argument has to do with investors, not VA or any other airline. Just because someone gives you money doesn't mean you should destroy other airlines. Believe me when I say some at my airline would love to see VA take down Southwest, Alaska, Frontier and UAL. I just know that airline workers have taken huge pay cuts and further entries into the marketplace will encourage more cutbacks.

What are we going to get for all this? Flights from SFO to LAX will go from $49 to $46? Why is that so important?

[Mercutio]

Cageyjames I am not going to go through your comments line by line. Most of them are not worth responding to anyway - especially comments like "VA is not Virgin Atlantic".

However I will respond to a choice one or two. EasyJet did not merely copy what was happening in America. They were one of the first airlines to unlock the potential of the internet bookings, offering discounts for online bookings, so that now they receive the highest percentage of internet bookings of any airline in the world. EasyJet also pioneered a very different price model from that used by US low cost carriers such as Southwest. In the last couple of years they have pioneered automatic check-in and incentives such as priority boarding for an additional fee. EasyJet is Europe's largest low cost airline by revenues and carries 33.5 million pa (so 3 x larger than JetBlue) and achieves 80%+ load factors (~10% higher than Southwest). EasyJet is both innovative and a formidable competitor.

You also seem to be under the illusion that Virgin's experience of the airline industry is restricted to Virgin Atlantic with your chippy comment that price, rather than luxuries and inflight bars, will win the market. You are clearly unaware that Virgin group already runs three low-cost airlines on three different continents (Virgin Express, Virgin Blue, Virgin Nigeria).

[cageyjames]

Cageyjames I am not going to go through your comments line by line. Most of them are not worth responding to anyway - especially comments like "VA is not Virgin Atlantic".

Uh explain to me how Virgin America is Virgin Atlantic. I'd like to know how you come up with that one.

However I will respond to a choice one or two. EasyJet did not merely copy what was happening in America. They were one of the first airlines to unlock the potential of the internet bookings, offering discounts for online bookings, so that now they receive the highest percentage of internet bookings of any airline in the world. EasyJet also pioneered a very different price model from that used by US low cost carriers such as Southwest.

I disagree, but EasyJet is irrelevant to this discussion

In the last couple of years they have pioneered automatic check-in and incentives such as priority boarding for an additional fee.

If we didn't have to deal with the TSA in the USA, we'd have this here, believe me. We are held back by the poor decisions in Washington. If EasyJet flew in the USA, they couldn't offer automatic check in. We offer priority boarding and have competed with WN for years (I'm an HP employee so I know about beating WN at their own game).

EasyJet is Europe's largest low cost airline by revenues and carries 33.5 million pa (so 3 x larger than JetBlue) and achieves 80%+ load factors (~10% higher than Southwest). EasyJet is both innovative and a formidable competitor.

Except they don't compete against WN so it doesn't matter what they do over there. WN has 3 times the passengers so I'm not sure what you are going after with that. WN isn't invincible, we've competed against them for 25+ years at PHX with great success.

You also seem to be under the illusion that Virgin's experience of the airline industry is restricted to Virgin Atlantic with your chippy comment that price, rather than luxuries and inflight bars, will win the market.

I'm clearly aware of that, but you keep bringing up Virgin Atlantic which I don't understand how it is relevant to a LCC operating in SFO. I know VX got sweetheart deals from the state of California (ignoring companies such as mine that have invested millions into the state). Everyone criticizes US subsidies and this is clearly a case of them.

You are clearly unaware that Virgin group already runs three low-cost airlines on three different continents (Virgin Express, Virgin Blue, Virgin Nigeria).

Again none of those compete in the US domestic market. Stop trying to make this about what is happening in Europe as the markets are two different to even analyze. I've never argued that VS, U2 or even FR aren't successful. I'm not sure why you keep bringing them up as they are irrelevant to the point that I'm making that Virgin America will fail because they are focused on SFO as a base, rather than some place that makes more business sense. Maybe VX knows something that WN and UL don't about flights out of SFO, but I'm guessing they don't.

[Zenfookpower]

...............Again none of those compete in the US domestic market. Stop trying to make this about what is happening in Europe as the markets are two different to even analyze. ................

This is what Europeans don't seem to understand..This discussion is a waste of time.
As an old (ex) European I cannot understand anymore their today's mentality and arrogance ...

[Mercutio]

Uh explain to me how Virgin America is Virgin Atlantic. I'd like to know how you come up with that one.

I didn't "come up with that one". You did. And like I said before it's not worth respondong to.

And the rest of your points are just the same as before - lazy and unconvincing. I have responded to all of them already.

[cageyjames]

Uh explain to me how Virgin America is Virgin Atlantic. I'd like to know how you come up with that one.

I didn't "come up with that one". You did. And like I said before it's not worth respondong to.

You said "Virgin Atlantic certainly takes them on over the Atlantic.". WTF does Virgin Atlantic's daily flight out of SFO have to do with Virgin America flying hundreds of flights out daily?

And the rest of your points are just the same as before - lazy and unconvincing. I have responded to all of them already.

Please, you never responded to any of them. You keep putting words in my mouth.

My points are valid.

1. The USA should allow foreign ownership of airlines up to 100%
2. Open Skies
3. SFO is a horrible place to base an airline

You have not responded to any of those points at all. You skirt around the issue left and right.

[Mercutio]

^ 1 and 2 have not been seriously debated here. It's obvious that I do not dispute a commitment to either open skies or foreign ownership of US airlines. However point 3 is less certain. Virgin have already been using the airport for years (as Virgin Atlantic) and everyone in the US industry (including all the very experienced American aviation people that Virgin have employed....) are aware that SFO's many advantages are offset by problems with fog. However no airline group in the world runs airlines on three different continents (Virgin America will make that four continents) and no other airline group has to work with such a variety of regulatory regimes. The idea that the US market is somehow so extraordinary and its' hurdles so immense that Virgin cannot possibly succeed there is to belittle the challenges that Virgin has faced in all of its' other markets. Many pundits wrote off Virgin Atlantic, an airline with no short haul feeds or hubbing, and doubted that it could take on the leviathon of BA in its home market (espcially given BA's stranglehold of Heathrow and history of dumping prices to drown competitors). But Virgin did take them on. Many Australian pundits didn't fancy Virgin's chances in Australia against the likes of Ansett and Qantas. Now Ansett are out of business and Virgin Blue have swept the board. And methinks the challenges of the US market and SFO are absolutely trivial compared to the challenges of setting up an airline in Nigeria with its massive corruption, broken runways, political games etc etc. To me the US market looks to be full of poor competitors (including, I'm sorry to say, US Airways - terrible!). The fleets operated by American and United are very dated by international standards. Their maintenace costs and efficiency are gonna be poor. I personally think Virgin America could definitely carve out a space for themselves over there and you grossly underestimate their abilities. They have more global expereince than any other airline group in the world. They almost always turn a profit. Underestimate them if you will but you could be in for an unpleasant surprise.

[CXRules]

Virgin Group makes concessions :

http://www.atwonline.com/news/story.html?storyID=7651

[Avro]

Virgin Group makes concessions :

http://www.atwonline.com/news/story.html?storyID=7651

It's amazing to see how the US is indirectly forcing airlines such as Virgin America to make those changes!! Just because of those stupid rules and the protectionism attitude of their market.

I find it really a pitty that so many people are trying to force Virgin America not to start its operations.

Above all I'm sure Virgin America will have a nice concept. Some rumours say that the new cabin layout will be revolutionary as well with a totally new layout and concept.

Chris

[David747]

It is a pity about Virgin America, but after seeing an analysis of Virgin America coming to the market, I beginning to side with American carriers, another company could eat away at domestic routes for companies that are emerging out of bankruptcy protection. I favor more competition, but if it comes at the expense of American carriers emerging out of bankruptcy, I would be against Virgin America starting up.

[cageyjames]

It is a pity about Virgin America, but after seeing an analysis of Virgin America coming to the market, I beginning to side with American carriers, another company could eat away at domestic routes for companies that are emerging out of bankruptcy protection. I favor more competition, but if it comes at the expense of American carriers emerging out of bankruptcy, I would be against Virgin America starting up.

Thank you.

[Mercutio]

It is a pity about Virgin America, but after seeing an analysis of Virgin America coming to the market, I beginning to side with American carriers, another company could eat away at domestic routes for companies that are emerging out of bankruptcy protection. I favor more competition, but if it comes at the expense of American carriers emerging out of bankruptcy, I would be against Virgin America starting up.

That's just protectionism pure and simple. How can you say you "favour competition" and then conclude that new competitors should be barred?

[b-west]

It is a pity about Virgin America, but after seeing an analysis of Virgin America coming to the market, I beginning to side with American carriers, another company could eat away at domestic routes for companies that are emerging out of bankruptcy protection. I favor more competition, but if it comes at the expense of American carriers emerging out of bankruptcy, I would be against Virgin America starting up.

Hey, if those American carriers can't make it, too bad for them... that's the free market for ya. The US has always been promoting the liberal free market, with strong competition. But apparently it can only go one way?

[tsv]

Many Australian pundits didn't fancy Virgin's chances in Australia against the likes of Ansett and Qantas. Now Ansett are out of business and Virgin Blue have swept the board.

True Virgin Blue put Ansett out of Business quickly enough and Impulse as well for good measure. As (QF boss) Geoff Dixon commented at the time they "did a pretty good job of establishing themselves".

But I'm not sure I agree they "have swept the board". Dixon now has them cornered nicely between Qantas and Jetstar and their profits are currently pretty modest. The next downturn in the industry could yet find them wanting.

It will be very interesting to see how they go in the US. Most major US airlines have flawed business models which would have led to their extinction if not for Chapter 11. So in that sense the competition is not so tough. On the other hand it's a bit hard to kill off your competitors when the government keeps handing them lifelines. IMO suceeding in the US is a big challenge but not beyond the capabilities of the Virgin Group. They are good at business.

SFO seems like a strange place to base an airline but I wouldn't read too much into it. They put their head office wherever they get the best deal. For Virgin Blue it was Brisbane, which raised a few eyebrows at the time, but it hasn't really been a problem for them. Ultimately the flights will travel between whichever cities demand dictates and the executives will plonk their bums where they are most welcome.

[cageyjames]

Hey, if those American carriers can't make it, too bad for them... that's the free market for ya. The US has always been promoting the liberal free market, with strong competition. But apparently it can only go one way?

Typical small minded response.

In truth people only promote free markets only when it suites their needs. Just like farmers in the USA and Europe are protected from 3rd world goods so a way of life can be protected. Lets not get on the free market high horse because something like that doesn't truly exist.

The commercial airline world is VERY highly regulated EVERYWHERE.

[David747]

It is a pity about Virgin America, but after seeing an analysis of Virgin America coming to the market, I beginning to side with American carriers, another company could eat away at domestic routes for companies that are emerging out of bankruptcy protection. I favor more competition, but if it comes at the expense of American carriers emerging out of bankruptcy, I would be against Virgin America starting up.

That's just protectionism pure and simple. How can you say you "favour competition" and then conclude that new competitors should be barred?

Yes, I favored competition, but not coming at the expense of American carriers coming out of bankruptcy. This is not a free market, free market requires equals to compete, companies emerging out of bankruptcy competing against established foreign carriers not in bankruptcy is about unequal as it gets. If you call that protectionism, so be it, we have to protect our domestic industries before the free market takes a hold.

[fleabyte]

The big US carriers are tired, and encumbered with liability to angry employees with contempt for the customer.

I say let Virgin breath some fresh air into US domestic service - currently filled with frowns, brown bag lunch of preservative laced junk food for USD 5.00, and old planes.

Come on Virgin, get your approval, order those 787-3 and finish the job of killing the dinasaurs, and help us who love airplanes to once again feel that we are going flying, not taking a greyhound.

From a simultaneous:

United 1K million mile flyer
American Executive platinum
Continental Gold

so I have plenty of perks to lose with what I am saying

[cageyjames]

I say let Virgin breath some fresh air into US domestic service - currently filled with frowns, brown bag lunch of preservative laced junk food for USD 5.00, and old planes.

You do realize that CEO of VX was part of the team that destroyed DL? There isn't anything new here other than money chasing a problem that can't be solved. Consumers in the USA want the cheapest tickets they can get, but full service.