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TBT (Throwback Thursday) in Aviation History: Virgin America
Over the years Richard Branson and the Virgin Group have built an empire that spans the globe. Included in his empire has been multiple airlines, including the group’s flagship airline Virgin Atlantic. In the early 2000s, the Virgin Group and Richard Branson set its sights on conquering the skies above the United States. In 2004, the announcement was made that the group intended to launch “Virgin USA,” based in San Francisco, with flights beginning in mid-2005.
However a combination of U.S. regulations and doubt from potential investors caused the airlines start to be delayed. Pushback from competitors and unions over the ownership structure of the airline caused its initial application to the Department of Transportation to be denied. However, after a change in corporate structure and a reduction in the foreign ownership of the airline to 25 percent, the DOT approved the airline’s application in March of 2007. The newly named Virgin America would begin selling flights in July of that year.
The new airline would be based in San Francisco and start with initial routes to Los Angeles and New York using the Airbus A320. The first flight was on August 8, 2007. Virgin America strove to differentiate itself from other airlines. This included seatback entertainment, seatback ordering of beverages and food, and unique uniforms for crew members. In 2009 the airline became the first in the United States to offer inflight Wi-Fi on all of its flights.
The airline was slow to expand and primarily focused on west coast cities and transcontinental flights. Early destinations included Portland, Las Vegas, and Toronto. Toronto was dropped shortly after launching in favor of starting service to Dallas/Ft. Worth. The airline failed to make a profit for its first three years, finally turning a profit in the third quarter of 2010. In January of 2011, the airline announced an order for 60 Airbus A320s, including 30 Airbus A320neos, with deliveries starting in 2016.
The same year as their large order the airline moved to a freshly renovated terminal 2 at San Francisco International Airport. The airline also switched reservation systems to Sabre.
The transfer caused issues and delays causing numerous passenger complaints. The airline continued to expand, primarily transcontinental flights, adding cities such as Ft. Lauderdale, Chicago O’Hare, and Boston Logan. The airline also expanded international, adding flights to holiday destinations in Mexico.
In 2014, the repeal of the Wright Amendment saw Virgin America switch from Dallas/Ft. Worth to Dallas Love Field. The airline established a focus city at Love, offering flights to both the East and the West Coast. The same year, the decision was made to take the airline public. An initial public offering was offered on the NASDAQ exchange for 13.3 million shares, raising $307 million for the company.
By 2015 the airline was continuing to grow and maintain a steady profit due to the low cost of oil. The airline started to become the subject of rumors of a takeover from other airlines in the United States. The two main groups interested were the Alaska Air Group and JetBlue Airways. A bidding war was started between the two competing airlines, ultimately leading to an announcement that Alaska Air had agreed to a merger with Virgin America in a deal worth $4 billion.
The announcement was made in July of 2016 that Virgin America shareholders had approved the merger. Founder Richard Branson expressed his disappointment in the merger and demise of his airline. The last hurdle for the merger, DOT approval was achieved on Dec. 14, 2016, sealing the fate for Virgin America. The merger would take at least two years to complete.
In the process of the merger Virgin America became the launch carrier for the Airbus A321neo, putting the first aircraft into service on May 31, 2017. The merger presented several challenges for the two airlines. The biggest being the two completely different fleet types the airlines operated. Alaska was all Boeing and had been since the early 2000s, while Virgin America had been all Airbus since their founding.
Alaska Air had negotiated the cancellation of the delivery of multiple Airbus orders during the transition period. In a presentation, Alaska’s chief financial officer announced that the merged group would keep Virgin America’s current fleet of Airbus aircraft until at least 2024. On Jan. 10, 2018 the final revenue flight under the Virgin America “Redwood” callsign was flown.
The next day, the Department of Transportation issued a single operating certificate for the two airlines. The Virgin America brand would remain until April 25, 2018 when the airline merged passenger service systems. The final revenue flight operated that evening from San Francisco to Los Angeles, while the return flight was an employee only charter flight that used the original “Redwood” callsign. That night all passenger facing signage and advertising was changed over from Virgin America to Alaska Airlines.
The Virgin America livery is expected to continue into 2019 as the Airbus fleet go through the repainting process. Although the Virgin America name has flown into the history books, a possibility for the Virgin name to return remains. Richard Branson has expressed interest in starting another U.S. airline with the Virgin name. However, the tight aviation market in the United States may prove challenging to the entrepreneur.
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