Virgin America has decided it will fly from both Los Angeles and San Francisco to Philadelphia as its next routes.  Philadelphia isn’t the coveted route into Newark that Virgin America wants so much but these routes do fit into its value proposition quite nicely.

Virgin America’s value comes into play the most when the flights are longer.  Why?  Because passengers value the inflight entertainment, inflight internet and on-demand food service on a flight where the duration is longer rather than a shorter hop.

Philadelphia makes for a good fit and I do think we’ll continue to see routes added that are of this nature over time.  In my mind, Virgin America’s service works better on flights of a duration that is greater than 2.5 hours.  I also expect we’ll see more mid-continent routes over time as well.  However, many of those mid-continent routes stretch to the East Coast and that means acquiring slots at many airports that are very, very hard to come by.

It’s possible that airlines will have some opportunity to acquire those slots as a function of American Airlines’ bankruptcy.  The problem is that those slots are extremely expensive to acquire.  We certainly saw that on the recent sale of slots (ex-Delta/US Airways) from both the NYC area and Washington D.C. National airports.  Airlines such as JetBlue were willing to bid exorbitant prices to get them. 

Airlines need those slots and most particularly Southwest Airlines and Virgin America.  The question is, will they be willing to invest the money to win them?  Southwest has the cash but likes a value purchase.  Virgin America doesn’t have large cash reserves and has to focus on earning a profit some time soon.

Filed under: Airline News by ajax