VAI Partners, the controlling shareholder of airline startup Virgin America, last month appointed as chairman former AMR chairman and CEO Don Carty.
Still awaiting Department of Transportation and Federal Aviation Administration approvals, Virgin America is scheduled to take flight this fall, yet Carty last week told Business Travel News the embryonic carrier still is working on the details.
"We know what we're doing on the operating side," he said, "but we've got a lot of commercial details as to where we go with this airline, what the pricing structure looks like, what the route map looks like, what the distribution looks like and so on. That still has to be finalized."
The airline has yet to announce which markets it will enter later this year. While Carty didn't give specifics, he said Virgin America prefers large cities and long-haul routes in the United States.
"In the big urban centers of New York and San Francisco and Los Angeles and Miami—these are the cities where this brand is best known," he said, noting that Virgin America also will offer an amenity-rich airline product. "Showing off that product in long-haul markets is easier to do than in a 45-minute flight. We're going to be kind of biased toward long haul because of our brand and our product." Carty said San Francisco—also the headquarters of Virgin America—is an ideal market, as it also is "underserved" by a low-cost carrier option.
Carty said the executive team led by Delta alum Fred Reid, the most funding for a startup in airline history and Virgin's recognizable brand name all contribute to a successful startup. While observers said Virgin America enters a domestic airline market in need of consolidation and less—not more—low-priced capacity
(BTNonline, Dec. 8, 2005), Carty's pleased with Virgin's timing. "Our timing is good, not only in the context of supply and demand but also in terms of airline pricing having firmed a little bit," he said. "Demand continues to grow and capacity, particularly domestic capacity, continues to tighten up. I'm not even sure we know yet the final contraction amounts of both Delta and Northwest, which are still in bankruptcy. There's a lot of capacity coming out of the system as airlines go through bankruptcy and as legacy carriers reallocate airplanes from domestic to international."
Carty left AMR in April 2003, but not the industry that he's been in since the 1970s. "I never really left the industry. I've been poking around the edges of it the whole time," he said of the interim between leaving AMR and joining Virgin. "I've been involved with the folks out at Hawaiian Airlines and I'm involved in starting this other airline in Canada."