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Despite stalled growth in China, Brazil and Russia, a wave of newly middle-class travelers from the BRICs and beyond will start visiting international destinations in the coming decades — dwarfing the numbers we’ve seen thus far.
Trading in Philadelphia for service between Dallas, D.C. and New York is a very easy choice for the airline, which is looking to boost profits and attract more frequent flyers.
Virgin America, California’s hip and high-tech airline, is pulling its flights from Philadelphia to Los Angeles and San Francisco, and flying the airplanes instead to more lucrative corporate travel markets — between Dallas and New York City and Washington, D.C.
The airline began Philadelphia flights two years ago. It said the service will end Oct. 6.
The Burlingame, Calif. carrier said Friday that it was awarded two gates at Dallas Love Field by the Justice Department and planned to begin flights in October to New York LaGuardia and Reagan Washington National airports from Dallas.
Virgin America recently won takeoff and landing rights at LaGuardia and Reagan National that American Airlines agreed to divest to settle a government lawsuit seeking to block its merger with US Airways.
The Dallas Live Field gates are also being relinquished by American.
“This came down to opportunity cost, and in short, the chance to expand new service on multiple routes to major destinations on both coasts offered a better network and revenue opportunity for our airline in the short-term,” Virgin America spokeswoman Jennifer Thomas said. “That said, Philadelphia has been a strong and growing market for us, so we are suspending the service for now — but we hope to have the opportunity to come back in future years as our aircraft capacity grows.”
Virgin America, a privately-held airline 25 percent owned by English billionaire Richard Branson, said because its next aircraft deliveries are not until 2015 it needed to reduce flying in other markets given the “longer-term network potential” in Dallas, Washington, and New York.
“I think they had more opportunity to make money in Dallas,” said Jeffrey Erlbaum, president of ETA Travel in Conshohocken. “I’m really disappointed. They are a great airline. A lot of my clients are going to be really upset. From a fare and service perspective, they are a superior product.”
Virgin America began here with two daily round-trip flights to Los Angeles and one daily flight to San Francisco in April 2012. The San Francisco flight was dropped last summer, and the morning departure to Los Angeles was suspended this winter, although it was restored April 1.
“It’s a Catch 22. They see they are not making enough money,” Erlbaum said. “They pull flights. They have one flight a day, and it’s hard, especially for a business traveler, to make the one flight work.”
In contrast, US Airways, with a hub in Philadelphia, operates five daily nonstops to Los Angeles (six return L.A.-Philadelphia flights this time of year) and five daily nonstops to San Francisco. United Airlines offers one nonstop flight to San Francisco.
“US Airways always matches the prices. They have more flights. People want their Dividend Miles,” Erlbaum said.
Dallas Love Field, Washington Reagan National, and LaGuardia airports are slot-constrained airports, with limited gates and takeoff and landing rights. Getting access there is “once-in-a-lifetime in our industry,” Virgin America said. “Historically, smaller, new entrant airlines like Virgin America have been locked out of these major business airports.”
At Philadelphia, “Obviously, we are disappointed. The City of Philadelphia and Virgin America have enjoyed a great partnership. Virgin is one of the finest airlines in the country,” said airport spokeswoman Victoria Lupica.
“We understand that the suspension of service was prompted by a unique opportunity that has been presented to Virgin, and based upon our discussions, look forward to this award-winning airline’s return to Philadelphia in the future,” Lupica said.
When Virgin arrived, flights to Los Angeles and San Francisco saw an immediate reduction in fares, from about $1,200 round-trip to between $300 and $400 on average, Erlbaum said.
Seth Kaplan, managing partner of Airline Weekly, an industry publication, said Virgin America is “a break even airline, meaning they have a fair number of money-losing markets, along with some profitable ones. Any market they cut is likely a money loser.”
“I’m sure they are funding the Dallas expansion by reducing their most marginal markets,” Kaplan said. “US Airways, now American, has probably done a good job of defending the markets, just as they’ve done against Southwest Airlines.”
“Virgin’s product, particularly in economy, is nicer, but when US Airways matches fares a lot of people will fly it to get their Dividend Miles.”
(c)2014 The Philadelphia Inquirer. Distributed by MCT Information Services.