Virgin America is known for providing a unique level of service at a competitive price. However, they haven’t been known to make a profit. With today’s announcement, that has now changed.
When Virgin America first started up, many questioned if an airline with so many frills at a time of cutting back, could survive in America. As the airline kept growing, other airlines started to take notice. Could an airline with an attitude, awesome infight entertainment and competitive prices really survive against the establish carriers?
Today, Virgin America announces they have made their first profit ever, a total of $7.5million during third quarter. Now, $7.5 million is not huge a profit compared to other airlines, but it is sure a heck of a lot better than losing money. To compare, Alaska made $118.1 million, Delta made $363 million and United made $473 million. Those are some impressive numbers, but I don’t think such huge numbers make VA feel any less proud about making their first profit.
’œAs a young airline fueling growth in a tough economic climate, we’re exceptionally pleased with our performance to date,’ said Virgin America President and CEO David Cush. ’œAlthough the revenue climate improved as a whole during the quarter, our unit revenue performance still outpaced much of the industry. Our progress toward profitability in just our third year of operations remains impressive, especially given both a global recession and a historic run-up in oil prices since our August 2007 launch. The credit is due to a growing base of flyers who expect more from an U.S. airline ’“ and our teammates, who continue to deliver the best service and product in the industry.’
Virgin America has great momentum. They aren’t stopping with just making profit; they will continue to grow. They plan to expand to Dallas-Fort Worth (starting in December 2010), Los Cabos (starting December 16, 2010) and Cancun (starting January 19, 2011) along with order for an addition 40 new aircraft with options for an additional 20. If larger airlines weren’t taking Virgin America serious before, they better start paying attention.
If you are an airline geek or have a TV you probably have a good idea that bags fly free with Southwest Airlines. As airline after airline started to charge for bags, Southwest stuck to their guns with no fees. More recently they have started a large advertising campaign hoping that passengers are angry at the fees and will change airlines.
Although personally I do not like paying bag fees, I understand them; weight costs money. The heavier the plane, the most it costs to fly and for now, fees are generating a lot of money for airlines. Passengers will complain about them, but are they changing airlines?
Southwest is making the bet that additional fees will not work in the long run and they will make more revenue earning more passengers than they are losing by not charging bag fees. It is a big bet, but if they lose, Southwest can always start charging bag fees.
In May 2010 Southwest completed a survey of 3900 business and leisure passengers where they could pick from 55 choices what aspect is most important to them when choosing an airline. Here are the top five “needs” for business travelers:
1. Has good safety record
2. Offers non-stop flights where I want to go
3. Has convenient flight times
4. Provides good value
5. Does not charge fees
And the top five for leisure travelers:
1) Has good safety record
2) Provides good value
3) Does not charge fees
4) Offers non-stop flights where I want to go
5) Has sales on fares
The fact that charging fees made it on the top five for business travelers is surprising to me. Most business travelers do not have to worry about the fees, since their company will pick up the charges. However, Southwest stated that even though business travelers don’t have to pay, some will have to process an expense report and explain why the additional charges are on the trip. That is annoying and takes time.
Southwest’s next step is to advertise they do not have ticket-change fees either. This won’t be as easy to get across to customers as the no bag fees. It is more obvious for a passenger to know if they have to pay for a bag. It is more difficult for passengers to know if something will come up and they will need to change their flight. Southwest feels confident they can get the message across with a series of new creative ads.
Gary Kelly, Southwest’s CEO and President, wondered out loud at their recent Media Day event, why airlines would do something passengers hate. He stated that Southwest feels lucky that almost every other airline is charging for bags and they are not.
We won’t know how successful no fees will be, but so far Southwest is reporting both growth in leisure and business travelers. I have previously stated it is not an airline’s fault for charging fees… passengers choose to pay them. If passengers are willing to pay fees, airlines will continue to charge them. If passengers rebel against the fees and choose airlines that do not charge them, you will see fees start to go away (although ticket prices will most likely go up). It is a great experiment and I think so far it is working well for Southwest.
The Boeing 747-8 Intercontinental is one step closer to taking flight. The 747-8I has 133 miles of wires and a heck of a lot of power systems.Although the aircraft might look similar to the Boeing 747-400, Bernard Choi on the video reminds us that, “beneath the familiar exterior lies a suite of new technology, all of which need power to function. For example, the Intercontinental features a more powerful flight management computer, the option of dual electronic flight bags, and a new wing with control services that are fly-by-wire, all features that make it easier to pilot the airplane. At the same time, a new cabin services system, including LED lights, will make the 747-8 Intercontinental a more comfortable space for passengers.”
United Airlines Boeing 757 (N542UA) with special Oprah livery. Click for Larger.
Man, United Airlines and their new livery has made a lot of blogs on here recently. Oprah has been making pretty good airline news as well. She gave her entire audience a trip down to Australia with Qantas and now she has her name on a United Airlines Boeing 757.
When I first received the press release all I could do was laugh, but okay I guess it makes sense. United is based out of Chicago and so is Oprah. But doesn’t Oprah always say “travel accommodations provided by… American Airlines?” I dunno, I haven’t watched it in years. Anyhow, United wants to help celebrate Oprah’s final season by creating a special livery.
Not only does the exterior have Oprah stuff, but the interior does too. On the inaugural flight, passengers had a special video message from Oprah and one lucky passenger won enough United Mileage Plus miles for a trip around the world. Everyone else got a special fleece blanket.
Delta's new kiddie wings. Which one will you choose? Click for larger.
If you follow the blog, you know I hate it when people say, “In the good old days of flying,” because most of the changes are from passenger demand, not airlines acting evil. Well, I am going to be some-what of a hypocrite and reminisce about the good ‘ol days when I was a kid. Back then I would get wings all the time from from airlines. Then as I got older, I would still ask for them, but many airlines stopped offering them.
Well guess what kids (and avgeeks)? Delta Air Lines is bringing back the kiddie wings! There are two variety that are available: silver that will come from the flight attendants and gold which would come from a pilot.
Delta started handing out the wings back in 1958 on their Royal Service DC-7s. Since times were a bit different back then, boys would be given “junior pilot” wings and girls would be given out “junior stewardess” wings. Today anyone can have either wings.
Morgan Durrant with Delta communications explained, “Kiddie wings are one of the most asked about items by our customers to crew members and we know kids and kids-at-heart will enjoy this iconic memento.” Heck yes we will. Now who will get theirs first?
