Category Archives: Virgin America

The One Number in Virgin America’s S-1 Filing That Should Concern Investors

Virgin America released its S-1 filing ahead of its IPO, and the headline is something like: Costs are a bit lower than mainline carriers, but revenue isn’t anywhere where it needs to be. Basically, it’s not cheap enough to compete with Allegiant or Spirit, and it can’t generate enough revenue to have a top line that looks like Delta or American. It’s mostly like JetBlue, which has been squeezed in the same way – a decent cost structure, but not low enough to compete on the bottom end (while mainline carriers have reduced their cost structure significantly to where there’s not much difference between the Uniteds and JetBlues of the world), but passengers aren’t willing to pay a high enough premium for the free TV and free checked bag (which is why JetBlue will likely be charging for the first bag soon).

The number that jumped out at me in the filing is around Ancillary Revenue. If your costs are OK, but you’re not getting enough credit from consumers in the form of higher average airfares, then you need to make it up with ancillary revenue. Virgin America’s Ancillary Revenue per Passenger is $19.71, or 8.8% of their revenue. United Airlines, which is not exactly at the forefront of innovation in terms of ancillary revenue streams, earned $21 per passenger in Q4 2013. On the other hand, Allegiant racked up $46.99 in ancillary revenue per passenger in Q1 2014, making up about 1/3 of their passenger revenue.

Virgin America competes on low-fare leisure routes, and highly competitive business routes. They don’t have enough flights or a strong enough premium product (especially on transcons) to generate a revenue premium versus their established competitors. They need to make up the shortfall with ancillary revenue, and unfortunately there doesn’t appear to be a major focus on this (it warranted a half-assed sentence in the filing). Without a major push into additional fees, they will continue to struggle to be profitable.

Where Are the Good Values with the 40% Transfer Bonus from Membership Rewards to Virgin America Elevate?

Amex Membership Rewards is offering a 40% transfer bonus when you move your points to Virgin America’s Elevate program until September 30th. That means that 200 Membership Rewards points translate to 140 Elevate points.

No, I didn’t know what the hell that meant either. But that’s why you’re reading this, isn’t it? I thought I’d post some of the more reasonable uses for this promo:

VIRGIN AMERICA

Transcon flights on Virgin America in coach are roughly 13,000 points roundtrip, which rounds up to 19,000 Membership Rewards points. Not bad. First class are a ridiculous 140,000 points. We won’t even discuss that.

Short-haul (SFO-LAX, for example) are 4,500 or so Elevate points round trip, or about 7,000 Membership Rewards points (even better than Avios!)

They allow redemptions on 4 partners: Virgin Australia, Virgin Atlantic, Hawaiian Airlines, and Singapore Airlines. you can do the calculations for the number of miles you need here.

VIRGIN AUSTRALIA

Redemptions on the 2 Virgins (?) include ridiculous fuel surcharges, so we’ll skip those. Well, except for short- and mid-haul routes on Virgin Australia. Trans-Tasman routes are pretty reasonable: Sydney-Auckland is 16,000 Elevate, or 23,000 Membership Rewards points for round trip in coach (plus $180). Better than the 35,000 that United charges (though they have no fuel surcharges). Flights within Australia are also reasonable: Sydney to Gold Coast, for example, are 6,000 elevate or 9,000 Membership Rewards points (plus $36 in fees) for a roundtrip ticket (the same as it’d cost you for Avios.

HAWAIIAN AIRLINES

Good value on inter-island flights: 5,000 Elevate points, or 8,000 Membership Rewards points for a roundtrip ticket within the islands. I believe this is the best-priced award option within Hawaii. Hawaii to the West Coast is 20k Elevate/29k Membership Rewards (worse than Avios, better than most airlines). Good value to Pago Pago (American Samoa) and Papeete (Tahiti) from Honolulu — 20k Elevate/29k Membership Rewards roundtrip in coach.

SINGAPORE AIRLINES

Great value on Singapore Airlines from New York to Frankfurt: 20k Elevate or 29k Membership Rewards (plus $144 in fees) for a roundtrip coach ticket. Business is 70k Elevate /100k Membership Rewards (nothing special). Houston-Moscow, though, is much more expensive. Flights to Asia are about on-par (perhaps slightly more expensive) than you’d find on other airlines.

Will JetBlue have an EOS/MAXjet/SilverJet Problem with Their New Premium Service?

Much digital ink has been shed about jetBlue’s announcement that they’ll be adding (essentially) business class seats (similar to what SWISS has) to a handful of their new A321 aircraft for transcon flights between New York and LAX/SFO. Reactions ranged from apoplectic that these (incorrectly it turns out) seats could be ANGLED LIE FLAT – HOW COULD SOMEONE ENDURE THAT HORROR FOR 4 HOURS AND 27 MINUTES??????? To Cranky’s more down-to-earth overview, which I’ll link to here rather than regurgitate.

I just thought I’d throw this out there:

jetBlue is putting these seats in because they believe that they can’t compete for the business traveler unless they offer a premium cabin. Delta, American and United have all been upgrading their premium cabin on Transcons (or are in the process thereof) offering lie-flat seats on the 4.5-6 hour journeys. Their front cabins on transcons are filled with people flying on corporate deals (where they have to choose that airline), Elites who have upgraded themselves (free upgrades are difficult to come by — or are not offered at all — on these routes), with much of the remainder going to airline loyalists who choose to fly a given airline because of the miles.

jetBlue will have a difficult time grabbing many of these travelers. Corporate contracts are already in place, with banks, movie studios and others who fly those routes frequently tied in with legacy carriers. Loyalists pooh-pooh jetBlue’s frequent flyer program (rightfully so) because of the lack of international redemption options (among other reasons).

Lots of articles I’ve read about this suggest that jetBlue is going after legacy carriers on these routes with the new product. But I don’t think that’s true. I worked for EOS Airlines, which was competing (on some level) with MAXjet and Silverjet to offer all-premium-service flights between New York and London. They had a good product at a great price. And they all failed. Why? Lots of reasons, but in large part because business travelers were locked in with legacy airlines, and those arrangements (plus the pull of their frequent flyer programs) made it difficult to compete. Plus – they were constantly being matched on price, taking that advantage away because legacy airlines had deep pockets. If jetBlue’s plan is to compete with AA, UA, and Delta for those same customers, I think they lose.

But jetBlue is run by smart people, and I suspect they have a different target. Virgin America’s much-beloved product (if you have tech-y friends, you’ve been probably endured listening to them blabber about it nonstop) offers just a recliner seat up front on their transcons. Oh, and they’ve lost money hand-over-fist. And they share a similar, younger demographic with jetBlue. Is jetBlue thinking they can off Virgin America, by offering a wayyyyyy better front cabin for the same price that Virgin America offers their suddenly-crappy product? And Virgin America couldn’t really handle a price war for a prolonged period because they’re a bit cash strapped for that. Nor will they likely be able to make the investment in lie-flat beds in their planes.

If that’s their strategy (and I’ll assume it is), then bravo to jetBlue. Well played. Good luck competing with that, Virgin America.

The One (and Possibly Two) Reason(s) to Grab the Higher Bonus on the Virgin America Elevate Credit Card (You’re Headed to American Samoa!)

LINK: Virgin America Elevate Visa Credit Card

The Virgin America Elevate frequent flyer program is pretty useless with its distance-based points redemption program. I’ve really paid little attention to it – I generally can’t be bothered with programs that don’t have a chart.

Until today – I saw a release this morning touting a new not-quite-codeshare partnership between Virgin America and Hawaiian Airlines. Whatever. If you want to redeem Hawaiian Airlines miles on Virgin America it’s a joke – flights under 750 miles each way are 20,000 miles roundtrip. Flights over 2,000 miles (transcons) are 40,000 miles round trip. Seriously.

Except – if you want a roundtrip ticket from the West Coast to Hawaii on Hawaiian Airlines it’s only 20,000 Virgin America Elevate points.

I have no idea how much flying you’d have to do to earn that many points, but I do know that it would take 40,000 Membership Rewards points to get 20,000 Elevate points. Bleh.

However, Virgin America just increased the bonus on their credit card to 20,000 miles after first purchase. Sure, there’s an annoying $49 fee that they don’t waive the first year, but hey – remember it’s only 20,000 miles for a roundtrip ticket to Hawaii. No, it doesn’t include connecting service on Virgin America. But if you’re in a Hawaiian Airlines city, it’s a free ticket.

Oh, and the other reason: they only charge 6,000 miles for inter-island roundtrip flights on Hawaiian (less than anyone else out there), and you can redeem a one-way for 3,000 miles. If you fly frequently inter-island, that may be a reason to grab the card (for 3 free interisland flights).

Just a thought…

(ADDITIONAL INFO I JUST DISCOVERED:) This Hawaiian Airlines thing is actually sort of interesting. Honolulu to Pago Pago (American Samoa) is also 20,000 points round trip – that costs about $900 in coach normally. And Honolulu to Papeete, Tahiti, is just 20,000 points (though Tahiti is just once a week). That’s a shame because you could use 20,000 25,000 Avios points to get to Honolulu from California and just another 20,000 Elevate points to get to Tahiti — 40,000 points from LA to Tahiti roundtrip. Not too shabby. Perhaps it’s time to consider Pago Pago…(or not)

(Disclaimer: those are affiliate links…feel free not to use)

Gilt City Offers 40% Off Virgin America Main Cabin Select

Gilt City is offering a deal where they’ll sell you a coupon for 40% off Main Cabin Select tickets on Virgin America for $99.

Transcon tickets in their “Instant Upgrade to Main Cabin Select” class run around $1100 on the low end, so with 40% off (+$99), tickets will be about $750 or so. Not exactly giving it away, considering regular coach tickets are running about $260 round trip at this point. Also slightly ridiculous considering “Main Cabin Select” is basically premium economy, with 38″ of pitch. You can fly on JetBlue and get pretty similar legroom for a just a few dollars over the price of their regular tickets.

But if you’re a Virgin America fan and want some extra legroom, that 38″ of pitch is about what you get in most domestic first class on other airlines.

Virgin America Coupon Code: 20% Off Fall Flights

Looking to save on your next Virgin America flight?

Get 20% off a Virgin America flight August 22nd through November 14th when you sign up to get a Virgin America coupon code here. You must book by August 15th, and the code can’t be used for travel August 31st or September 3rd. The code is good for you and a guest.

Virgin America Coupon Thru Google Offers: 50% Off Select Tickets for $50

Through Google Offers has a Virgin America coupon that costs $50 for 50% off select tickets to or from Los Angeles or San Francisco. Book by April 30th for flights between April 11th and June 13th.

The offer is only good for flights between LAX/SFO and Chicago, Dallas, DC, Philadelphia and Seattle. That equates to about a $50 saving on that $200 round trip ticket to Seattle, or about a $150 saving on flights from Philadelphia to the West Coast.

Limit one per person.

Virgin America 20% Off Coupon for Spring Travel

Virgin America is offering a coupon for 20% off a flight Between April 11 and June 13. Here’s how you get the Virgin America promo code sent to you:

1) Go to this page

2) Fill out the short form

3) Get promo code in your email

4) Book your trip

Offer is good until February 29 or until they’ve sent 35,000 codes.

New York to San Francisco, $194 round trip on Virgin America

Remember this post from last week about getting 20% off a Virgin America flight in February? Here’s a good way to use it:

Flights between JFK and San Francisco on Virgin America are just $194 round trip in February when you use that 20% off coupon. Los Angeles and Vegas are about $40 more. Anytime you can go transcon for under $200, it’s a steal.

Yes, that link for a 20% off coupon is still good. Enjoy!

20% Off Coupon for Virgin America

I know – I’m not the first person to post this, but somehow I missed it: Virgin America is offering a 20% off coupon good for flights between now and February 29th; and between April 15th – June 15th.

- Go to this site
- Enter your email
- Enjoy 20% off your flight

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