I saw your post this morning and you are so right about this, it inspired me to dash off this e-letter to VX. I'll let you know if they respond.

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Hi folks:

Are you following the drama with the devaluation of the UA and DL frequent-flyer programs? Check in on Flyertalk.com sometime. There are literally thousands of aggrieved elites who are furious at big cuts in benefit/recognition. And that's only the ones who are speaking up online. They are in a shopping mood. All these people are conquest opportunities for you right now. They claim they're going to go off and fly B6 or VX, but they need a little nudge. You should be reaching out to angry customers of the legacies in a big way; their mergers and service cutbacks mean opportunities for you.

If you visit Flyertalk.com you might also look in on the Virgin America board, where you will see widespread despair at how such a good product is being so weirdly deployed, priced and marketed . I am rooting for you but I don't understand what you are doing at all. I don't see why you touch off destructive fare wars in the west coast corridor, where your product speaks for itself, but charge crazy prices for ex-SEA transcons, where you sometimes price out at more than 2X the Delta nonstops while forcing people to connect through SFO or LAX. I just bought my son a cheap $76 VX SEA-SFO ticket to visit friends. But when I went to price SEA-JFK flights for upcoming October business trips the cheapest VX RT I could find was over $800 while the DL nonstops are $349. Why? You've got masses of new considerers out there in a sampling mood, but you either give the product away in a way that hurts you, or you charge prohibitive premiums.

I REALLY want VX to succeed and with the "majors" consolidating and acting like Aeroflot I think this is your moment. Now or never, boys. People WANT to fly you because they want to poke UA and DL in the eye. But you have to normalize pricing, fly fewer routes with greater frequency, get out of these cutthroat leisure markets like CUN where you will never make a dime, market your great product to repeat business travelers (a cohort that JetBlue has big trouble retaining because of slim frequencies -- especially to west coast stations -- and weak irrops rebooking / interlining policy that strands people.... learn from them), EXPLOIT the ANGER with the legacies that is spreading now throughout the frequent flyer subculture, and not incidentally upgrade the weak, borderline pointless Elevate program which is no inducement to book VX.

I can't believe how angry airline passengers are with the legacies, yet when I call up VX seatmaps I see all this unsold inventory. Connect the dots!

I live in Seattle, I am a former NW and CO Platinum customer that drifted reluctantly toward UA owing to the merger, but with the news of the UA Mileage Plus revamp I am probably going to adopt an Alaska MP strategy in 2012, booking AS/DL/AA and building the AS account. I would LOVE some incentive to go different. From VX I need to see a combination of competitive transcon pricing, less punitive schedules (not going to fly SEA-LAX-JFK... ever), and a meaningful FF program. You should be going after the many thousands of customers like me with target offers. Don't give away your F product the way the legacies do, but think about coupons, amenity freebies, status matches/challenges, etc... or the only bookings you'll end up getting from my household are the $76 sale tix, which is terrible for VX because it devalues the best inflight products in the US. Your wacky gyrating fares unfortunately teach people (A) the product isn't worth much and (B) to book only when you're holding a fire sale. Don't price your goods like the old General Motors used to price theirs... it made the cars look worthless.

I am serious. The airline experience in this country is mostly horrible. You and Jetblue are our best chance to fix it but you're not winning here. You need to make some damn money; my son is not your high-value target, I am. More humane schedules, more stable pricing, more frequencies between key city pairs, an irrops/interlining strategy that is friendly to the business traveler, less fooling around with low-yield leisure markets, and a clearer FF program with more redemption options. Let's see some guerrilla conquest marketing. Come ON. It drives me crazy that you're not benefiting from all this passenger anger with DL and UA.

And if you don't act in THIS window people will soon forget how angry they are with these appalling anti-customer companies and just trudge back on board the prison planes.

Forward this to your marketing director if you have one. Write me back if you want to talk further. if you scan the VX board on Flyertalk.com you'll probably be able to figure out which posts are mine.

More in sorrow than in anger. Thanks for listening. Do something.

(BearX220)

I like your letter. VX will find it difficult, if not impossible, to be profitable competing on routes where UA, AA, & DL have high frequencies unless they can lure the less frequent business traveler with better perks than the legacies will be offering. Even a simple gesture like sending a coupon for a free drink or snack is better than what the legacies are offering. But, as you point out, VX has to be reliable, high frequency, and no hassles to lure the lower level elites from the legacies.

If VX can fill planes at good prices SFO-JFK, it's probably a bad idea to lose a customer who wants to pay $300 r/t for that for someone who wants to pay $300 for SEA-SFO-JFK. Nonstop traffic generally gets you more of a premium than connecting traffic. VX isn't really set up as a hub/spoke airline.

:confused:

Utilization in the airline industry is measured in hours per a/c per day. Of course longer average stage lengths mean lower yields (and RASM which is the only thing they actually care about) but obviously CASM comes down as well. It's where these curves cross that matter. VX is setup as a premium airline and no one pays a premium in short haul. They need to win business class and higher yielding pax from the legacy in long haul to stay alive.

The claimant said 6 aircraft from 6a to 5p. Overnight hours make sense for domestic aircraft; Daytime do not.

I looked at the VX JFK operation and it looks like they do have some slack in the morning but nothing like what was claimed. It looks like the 1030a SFO, the 1145a LAX and the 129p LAX flights are all sourced from RONs. Every other flight is a standard turn (w/ two slightly slower turns in the morning). No doubt that slots are the issue.

None of this will matter unless VX (or any airline for that matter) offers the key factors high yielding traffic demands: network breadth (going all the places I need to go), schedule (flights at times I need them), and opportunities for redemption (rewards for leveraging all my business with you).

That won't happen until the carrier achieves an economy of scale.

But 5 R/T's even in a short haul market tie up quite a bit of ASM's since their proportion to the overall capacity available in about 100 flights is proportionally larger than say WN, with about 3500 flights.

I know, but they are taking on more aircraft so they'll have the wherewithal. I want see them go deep on a few relevant city pairs instead of thin and useless on a whole mess of them. This has been JetBlue's problem on transcons also. They stake out 12 or 14 west coast stations and do 1X/2X frequencies, one a redeye, when they should cut back to 5 or 6 stations and do 5X/day.

When B6 opened SEA years ago it was many months before the locals even knew it. I remember spending the day at the airport after a bad windstorm and a cancelled flight several years ago, trying to rebook to BOS, and not even remembering B6 until it was almost too late. (Booked my first B6 flight that way.)

Low frequencies and no marketing equal invisibility and no forward progress.

When Southwest enters a market, OTOH, it's like the Allies hitting Omaha Beach; you know they're here.

The third item doesn't likely happen until VX is part of an alliance. The only way VX joins an alliance is if UA or DL buys them (there's no way they'd be allowed to join as an independent, it would be like UA or DL setting cash on fire).

As for going deep on city pairs:

- JFK is not going to happen without more slots.
- IAD, OK
- ORD's barely possible (I don't know how many flights they can squeeze into their gate)
- DFW, sure
- SEA, waste of money against AS with 10-12x, plus there's ALREADY too much capacity on that route
- SAN, suicidal against WN
- LAS, wasting more money, low yielding leisure destination
- LAX, wasting still more money, since you're talking about someplace EVERYONE and their uncle flies: VX/WN/DL/AA/UA
- and MCO/FLL/PVR/CUN/PSP/SJD, you have to be ****ing kidding me. No.

You're realistically left with IAD, DFW and (kinda) ORD out of their current network as places they could add flights to. A UA hub with tons of capacity and frequency, an AA hub with tons of capacity and frequency, and a hub for both with tons of capa-wait, I sense a theme here.

Realistically? I think their best bet is to add some big markets that are further out (PHL, MSP, ATL, IAH) paired with shorthaul (PDX, SLC, PHX, YVR) in a way that maximizes plane utilization. Quit ****ing around with any more Mexico/low-yielding leisure markets. Judiciously add to DFW, IAD and ORD or anywhere else what you can without trashing yields with too much capacity, which is the big problem with dumping 5x daily flights into a market right out: you're going to totally trash pricing in that market if you increase the number of seats in a market that much, which doesn't work so well when you're an airline that has a razor-thin amount of free cash (thanks to blowing through half a billion or so during their initial operations). WN can do that because they actually make profits on the rest of their network. VX? Not so much.

eponymous_coward for CEO of Virgin America please ^

The overall problem to date is that, they have just not grown sustainably.

I have since found out that morale in the pilot body has never been lower, and was described to me as "a horrible place to work". They pay their pilots .... all (just as bad as Skybus used to), most just elope to the Sand pit or Asia and earn four times as much.

I just cannot see how they expect to continue financing these aircraft deliveries when they are approaching -$600m in the Red. They are obviously funding today's expenses with tomorrow's forward bookings. Very risky move in the long term.

It's very sad, but it is really hard to envision any way VA can survive. VA will be going out of business. Only question is when.

oswaldjacoby,

That was something I was thinking last year but put it aside as their CEO and co were very optimistic about turning profit, new orders and a full year net profit were apparently in sight.

That didn't happen. Dosn't look like its going to happen in the near future too.

Something has got to give, whether they axe, defer aircraft deliveries or something else, but its impossible to keep going for too much longer in their current form.