A Virgin interlining agreement

photo courtesy flightglobal

'Virgin' airlines Virgin America and V Australia (part of Australian carrier Virgin Blue) announced that they're going to start a US-Australian 'interline' agreement that allows travelers to book travel on both airlines between the US and Australia. For example, if you lived in Boston, you could fly from Boston to Los Angeles on Virgin America and then from Los Angeles to Sydney on V Australia, all on a single ticket.

Despite the press releases heaping praise on "a seamless "Virgin" experience," an interlining agreement really doesn't make the relationship between the rather disparate Virgin brands any closer. Most airlines have various interlining agreements; for example, United and American have an interlining agreement with each other, and V Australia and Delta announced one back in March. For the traveler, this usually means that you don't have to retrieve your luggage in the stop-over airport and check it in again for the next flight, as you would have to do if you were traveling on two airlines that didn't have an interlining agreement.

An interline agreement shouldn't be confused with a code-share agreement. That's when an airline can issue a flight number for a given flight, even if its code-share partner is actually the one operating it. (This is a common practice among airline alliance members. For example, US Airways flight 5947 between Spokane, WA and Denver is really operated by United Airlines flight 812.) Both airlines can then sell tickets on the same flight.

As of yet, there's been no announcement of any code-sharing between Virgin America and V Australia. But fellow 'Virgin' companies Virgin Atlantic and Virgin Blue already codeshare.

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Virgin America's top 10 requested cities

photo by Johnny Vulkan

Virgin America recently released a list of the ten cities that are most requested for new VA service. The survey is still up, so if you don't see your preferred route listed below, you can still vote.

1. SFO- Chicago
2. SFO- Honolulu
3. SFO- Miami
4. LAX- Miami
5. SFO- Portland
6. LAX- Chicago
7. SFO- Phoenix
8. JFK- Miami
9. SFO- Denver
10. LAX- Portland

Many of these routes are currently flown only by a few legacy carriers. The San Francisco - Chicago and Los Angeles - Chicago routes, for example, are currently flown only by United and American. JFK - Miami is flown only by American and Delta, and American has a monopoly on the San Francisco - Miami and Los Angeles - Miami routes. Even though Virgin America would certainly be taking a risk by flying into the fortress hubs of legacy carriers (United in Chicago, American in Miami, etc.), their relatively premium product would probably attract quite a few unsatisfied AA and UA customers. Those are the routes (LAX-MIA, SFO-ORD) that would be best for Virgin America to fly, especially as they would avoid head-to-head competition with other low cost carriers (i.e. Frontier on SFO-DEN).

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Virgin America gets more support

photo by Drewski2112

Even after a wave of airline bankruptcies has recently shaken the US airline industry, Virgin Group chairman Richard Branson said on Thursday that he is "extremely pleased" with the airline's performance and that it is "well ahead of budget". He was also predicted that "in three or four years time, it'll be flying to all the major American cities."

In addition, the Wall Street Journal reported today that British and American investors in the airline are planning to infuse approximately $100 million of new capital as the airline plans to expand. The money will certainly help Virgin America stay afloat amid high oil prices and a weak economy.

CEO David Cush has said that Virgin America is on track to become profitable by 2010, although the airline is currently losing money. He also said that the airline might be able to take advantage of some of the recent turmoil in the industry, which has caused other airlines to scale back service and reduce capacity in some markets, to gain a foothold in markets where it doesn't currently operate.

In January, Virgin America was able to sell 65% of its seats - significantly lower than the 80% industry standard. Cush has recently said that this figure has improved to just over 70% - still below average. Branson, however, stated that the low figure is not surprising, given that the airline started operations eight months ago.

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Branson to start Virgin Russia

photo by Cubbie_n_Vegas

The man that brought you Virgin Atlantic, Virgin America, Virgin Blue, Virgin Nigeria and others is preparing to do it again.

Billionaire Richard Branson has announced plans to start an airline in Russia, tentatively called Virgin Russia. He plans to take advantage of the oil-fueled Russian economy, which has given the average Russian more money (and an airline market that's growing at around 10 percent a year). "We hope to offer the Russian people a really good airline. We may be able to do it a little better than is being done at the moment," said Branson. "We're in discussion with two or three partners." Branson also noted that there are "150 million people here within a three-hour flight from Moscow."

Branson certainly faces some challenges in his new endeavor. He'll be taking a swipe at state-run carrier Aeroflot, and is seeking "two or three" Moscow-based local carriers to team up with him, although he has said that his partners don't necessarily have to be airlines - "what we are looking for is people we can trust, people we could work with," he said. The Moscow Times identified several possible partners as Russian startups SkyExpress and Red Wings.

And Aeroflot is currently dominant in Moscow, which isn't planning that to change. Aeroflot Deputy CEO Lev Koshlyakov said that the "Russian market is competitive and is attracting more and more interest, with various business models... A new player coming in will make everyone mobilize their resources." And Aeroflot CEO Valery Okulov asked, "Why should we fear competition? We have always struggled with competition, so what do we have to fear?"

The Russian government also has to be dealt with. It has been notoriously hostile to certain foreign investment (e.g. some oil projects), and although there's no indication that the government would block a Virgin investment, Branson should definitely keep this in mind.

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Virgin America gets final go-ahead

Richard Branson's newest airline project, Virgin America, has finally received approval last Friday from the FAA to start operations this summer. The airline, however, had to make quite a few concessions in order to recieve the OK - the chief executive, Fred Reid (an ex-Delta president), was replaced. Regulators in the US were concerned about foreign ownership (after all, Branson's Virgin Group is based in the UK), and the laws in the US state that the most that a foreign corporation can control of a US-based airline in 25%. Virgin America also has to report any loans that it recieves from the Virgin Group and that US trustees on Virgin America's board have to appoint a trustee to represent the Group's 25%. The Virgin Group also financed $88.4 million in equity financing and debt, which is just under half of the airline's overall financing amount of $177.3 million. Virgin America is planning to limit future investors to US citizens only.

The airline is planning to start services this summer from a hub at San Francisco and fly to New York-JFK with a fleet of new Airbus A319s and A320s. Later, it's planning to add Washington-Dulles, San Diego, Los Angeles, and Las Vegas. Not surprisingly, a lot of the major US carriers have tried to argue that Virgin America shouldn't be allowed to fly (for an assortment of reasons).

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