CEO David Cush of Virgin America made statements this week saying that he was the latest wave of consolidation as an opportunity to preserve and even extend competition on the government’s part.  Cush noted that the obstacles to a new airline entering a market are A) gate space B) landing and take-off slots and C) frequent flier programs. 

It is notable that Virgin America has been essentially shut out of routes that it not only wants to fly but which it was designed to fly.  These are trans-continental routes to destinations such as Chicago and Newark. 

He states that VA’s position is that those landing slots are public assets and greater access to them is good for everyone.

I couldn’t agree more and I’ve said so before.  Allowing dominance at gateway and/or hub cities is a bad idea.  There should always be a mechanism for a new airline to enter a market if only to offer a toehold opportunity.   I’ve supported seaonal auctions for those slots at slot controlled airports and I believe airports could do a far better job of allocating assets such as gate space too.

However, I also take note that Virgin America has so far avoided any opportunities at destinations that are dominated by one airline and, in particular, dominated by American Airlines.  (Cush is a former AA executive.)  I would point out that VA could be flying routes from California to Dallas, for instance and they have so far studiously avoided that and instead chose to explore options like California – Florida (a notoriously low yield set of routes). 

An Dallas isn’t the only place.  VA has had opportunity to fly to Chicago but has refused to enter the market because the gate space that is available is less than perfect.   Another opportunity might be California – St. Louis:  there are huge aerospace and defense industries with ties to each other in both locations.  It’s also notable that, again, St. Louis is an AA and SWA city. 

I would love to see middle America experience an airline like Virgin America or jetBlue.  I think it contains some greatly overlooked opportunities.  There couldn’t be a better time to explore those opportunities while legacy airlines are otherwise occupied in managing cash and stemming losses. 

Yes, let’s open the markets up.  However, if you’re going to talk to the talk, please walk the walk.

Filed under: Airline News by ajax