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Virgin America – Secrets Behind its Winning Streak Part 2

Virgin America Check In at SFO

Virgin America

In part 1 of the series, we introduced Virgin America and focused on its history, current operations and fiscal year 2013 results. Part 2 will put the emphasis on the pre-flight experience.

Analysis

Virgin America encourages its passengers to use its online facilities to book flights. We will focus this part of the series on how passengers interact with Virgin America to book and confirm an ticket.

Experience Spheres

Pre-Flight

Virgin America passengers can purchase their tickets through the reservation hotline, at the airport or use online tools. As with other lower cost carriers, online services are free while other methods may incur a cost.

Booking Flights

Strengths

Virgin America has a streamline reservation system that allows passengers to book online in 5 easy steps. Once a passenger goes online to the airline’s website, they can click the BOOK link which will take them to the Select departure city screen.

Image taken from Virgin America's website on November 20, 2014 (All Rights Reseved)
Image taken from Virgin America’s website on November 20, 2014 (All Rights Reserved)

Unlike other low cost carriers, all fares allow for advanced seat selection. The seat map also includes visual design elements (shown below) to entice passengers to buy get a better seat in advance.

Image taken from Virgin America's website on November 20, 2014 (All Rights Reserved)
Image taken from Virgin America’s website on November 20, 2014 (All Rights Reserved)

Virgin America is also transparent in publishing all the auxiliary fees associated with different fares in one location (Refer to think link for the information). This makes it easy for passengers to budget their costs .

Weaknesses

Unlike other airlines like Delta Air Lines (DL) and Air Canada (AC), Virgin America is missing out on potential auxiliary revenue by not offering passengers the options to buy additional amenities like food, priority security, and transportation at the time of booking.

Although VX has a few code-sharing arrangements in place with international airlines, passengers cannot purchase one ticket for destinations not directly served by the airline. This may limit additional revenue that can be shared.

Finally, Virgin America does not have a dedicate mobile application which allows passengers to book tickets. Given the airline is selling a hype and modern experience, creating a mobile application should be top of its priorities.

Frequent Flyer Program

Strengths

Virgin America has it own frequent flyer program called Elevate which is one of the first major US airlines at the time to earn status points and redeem for flights based on the fare value of the ticket. Southwest Airlines, Delta Air Lines and United Airlines are also ones that are using or will be using this method starting March 1, 2015.

The program itself is easy to navigate and it is very clear what the benefits are for each level of membership (Red, Silver and Gold).

There are a variety of options for members to earn and redeem points (e.g. flying, hotels, car rentals). Virgin America also have its own branded credit cards issued by Comenity Capital Bank that have perks like free baggage and no change fees which are convenient for loyal travellers.

https://www.youtube.com/watch?v=u_4T2ieiVZI

Weaknesses

Many passengers may not be familiar with Elevate’s earning and redeeming system as it is not the same as most of the legacy airlines currently. Further, as Virgin America is not part of the big three airline alliances, its earning and redeeming travel partners are more limited currently.

Also, members with the highest tier (Gold) do not have automated upgrades to First Class domestically. This is a perk offered by many full service airline.

When redeeming for award flights, Elevate members have to pay the high fuel surcharges.

Scheduling

Strengths

Virgin America’s major hub is located at San Francisco International Airport (IATA Airport Code – SFO) which has direct train service linking the airport to downtown in about 50-60 minutes.

Image taken from Virgin America's website on November 20, 2014 (All Rights Reserved)
Image taken from Virgin America’s website on November 20, 2014 (All Rights Reserved)

The airline currently serves 20 destinations in the US and Mexico with a plan to expand further in the next 2 years from Dallas Love Field Airport (DAL) and New York City LaGuardia International Airport (LGA) with gates divested from the American Airlines (AA) and US Airways (US) merger.

Frequency on many routes are still being built out with SFO and Los Angeles International Airport (LAX) having the best schedules. Virgin America is using DAL as a secondary hub and is running as the no.2 airline there behind Southwest Airlines (WN).

Weaknesses

VX wants to cater to both business and leisure travellers. However, their schedule may not always cater to both. From the business traveller perspective, flight frequency is not strong outside of the trunk transcontinental routes from San Francisco / Los Angeles to New York City. Timing may not always be ideal for business travellers looking to start the day earlier or wrap up sooner.

Of the 20 destinations it serves, VX does not currently operate to some major North American business centers such as Toronto*,  Mexico City, and Houston.  Other top 10 populated cities in North America that do not have VX flights include Montreal and Phoenix. (* Virgin America served Toronto previously but dropped the route after 6 months).

Overall

As a low cost carrier with a twist, Virgin America has built a good pre-flight experience from an easy to use booking system to a good selection earning and redeeming opportunities with the Elevate frequent flyer program and scheduling options.

The airline can benefit greatly by creating a mobile application solution to cater to younger demographics that it is courting. Additionally, schedule can improve on trunk routes to provide business travellers with more options.

Following this link for part 3 of the series focusing on the airport experience.

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