Virgin America has been flying since 2007 and by all accounts is an excellent experience for travelers.  By many accounts, the airline sees very good load factors as well.  Their airplanes are new, their entertainment appears well done and their executive team is experienced.

But they still don’t make money.  Each quarter we hear about how profit is just around the corner.

Now we’re hearing that by deferring aircraft deliveries and restructuring debt, Virgin America will make a profit and enjoy an IPO immediately thereafter.

I think maybe not.  There is something wrong here that I fear is not going to be fixed by restructuring debt or deferring aircraft deliveries.  Airlines are earning exceptional profits at this point and Virgin America still can’t get its act together enough to get close to a profit.

Is it the debt side?  I’m sure there is some drag there but I more strongly suspect that the revenue side isn’t being addressed appropriately.

What I suspect is that Virgin America is lowering its prices on routes to get market share and isn’t earning enough revenue to be profitable.  And that’s shame.

The airline has a problem in marketing, I think.  It’s a flash airline.  It looks like it’s for thin people who are actors and models.  It doesn’t look like an inviting airline for the everyman who needs to fly from Los Angeles to Dallas.

So what does Virgin America need to stay alive?

It might need a new CEO and a new marketing person.  It might be important to be “flash” to Virgin Brands Richard Branson but even Virgin Australia / Virgin Blue doesn’t ignore the common man in its marketing.

Filed under: Airline News by ajax
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