Interview: Virgin America Senior Vice President Of Planning And Sales John MacLeod

Southwest Airlines isn't the only beneficiary of the end of the Wright Amendment, which limited interstate flights from Dallas Love Field. Virgin America also has seized it as an opportunity to boost its network and its share of corporate travel business. John MacLeod, the carrier's senior vice president of planning and sales, recently spoke to Business Travel News transportation editor Michael B. Baker about Virgin America's growth plans, the nature of its relationships with corporate clients and merchandizing plans with Sabre that are set to launch during the first half of this year. 

Where are you focusing network growth?

There's a lot of action in Dallas right now. In October of last year, we moved over from [Dallas/Fort Worth International Airport] to Love Field, and we started two new routes from Love Field to LaGuardia and DCA [Reagan Washington National Airport]. We moved our Los Angeles- and San Francisco- DFW service to Love Field. That had us serving four of the largest business markets from Love Field. That opportunity became available because of the lifting of the Wright Amendment, and we were fortunate to be in the position to acquire two gates there. Recently, we announced that we were going to move another airplane into the Dallas market and service Austin with five flights per day. That's complementary to our service at LaGuardia and DCA. The Austin market has a monopoly and, believe it or not, has quite high fares. We don't need such high fares to make a good business case, so it's an opportunity for us to go in and lower the fares and stimulate demand, so we can get some folks out of their cars and onto airplanes. Future growth in Dallas is limited by the two gates. Our gates are completely full now, so we'll have a tight operation there. If we have any more flights, it will be shifting capacity around rather than adding.

Where will you grow outside of Dallas?

We start taking more deliveries [of Airbus A320 aircraft] in 2015. Our first one comes in July, the first of 10 in the next two years, and those will be focused on growing our markets from San Francisco and Los Angeles.

What have the challenges been in building service out of Love Field?

Sabre has this obscure metro city code called QDF, which is the code for Dallas area airports, so it will search for Love Field as well as DFW. That would be like putting in NYC for going to LaGuardia and JFK, but not many people or agents know QDF, because they've never had a need to search Love Field before for business travel. We have agents with online booking tools, and they don't actually give you the comparative shopping for customers between Love Field and DFW. We've brought lower fares to these business markets at Love Field, and a lot of business travelers are having difficulty finding these low fares. As an example, a round trip on us, Virgin America, tomorrow coming back two days later from LaGuardia, you can get the fare for around $300. If you do the same from DFW, it's nearly $1,000. It's two-pronged: One is to teach agents using the Sabre system that they should use QDF because the natural inclination is to search for DFW. The second is for corporations using online booking tools like GetThere to make sure they have it set up so it does comparison shopping for both airports.

What sort of corporate agreements are you pursuing?

We have a very broad distribution strategy. We distribute our product through all channels that are available to any airline: the global distribution systems, travel agents, online agencies and we have our own very slick and popular website. Part of our distribution strategy, aligned with going through the GDS, is we have agreements with corporations and with travel agents. Being small, our main focus and strategy is to be easy to do business with. Different corporations have different needs. Some of them have very stringent share requirements with other airlines, so it's difficult for them to make commitments to us. Others don't have the same requirements. All of our agreements tend to be unique and fit with the particular corporation in question. We are always clear about our expectations of revenue and share with an agreement. The reason for doing the agreement is to improve our revenue and share with that corporation, so there's always an expectation included in our agreement. Sometimes it's actually a specific share commitment, and other times it will be an understanding between us and the managers of that corporation.

Has the size of your sales force increased?

In the last couple of years, it's remained static. The revenues that they've been responsible for have been growing substantially, and we will be mindful as we continue to grow in the future whether to increase our sales force.

Do you offer negotiated corporate fare bundles?

Not really, though not to say there won't be in the future. Our agreements with corporations tend to be more pricing-focused. There are elements in the agreements that are not only price-related, but they're not specifically bundles. Our Main Cabin Select product, for example, is a specific fare product, not a bundle, with its own defined cabin and product that you purchase. We do sell that to corporations, and it's quite popular.

Have you been adding more agreements with travel management companies?

We distribute our products through all the TMCs. We haven't really grown the number of TMCs we work with. We like to think we work with everybody that's important in the domestic market.

What new capabilities are you pursuing with Sabre?

The first element of our changing ability to merchandize our products differently is the implementation of Electronic Miscellaneous Documents. That has to be implemented not only in our own reservation system, which is hosted by Sabre, but also eventually to the GDS. What that will allow us to do is price different components of the product [like] ancillaries more dynamically. That might be by time of day, day of week, route or flight. It will enable us to price products differently. That's the underlying technology. The next steps are to be able to sell that more productively to our guests and make more appropriate offers to our guests of things they might be interested in. We haven't really announced anything yet. We're working toward being more effective at merchandizing and using this technology.

What are you doing with your onboard product?

We're always tinkering with the product. We have changes in terms of the food offering in first class. We've been doing some work in terms of blankets and pillows. More importantly, we recently have completed our ATG-4 [Wi-Fi] upgrade. We are the only airline in the country that has its entire fleet equipped with ATG-4. This one is three times as fast as the old Gogo Wi-Fi, with 9.8 megabits per second rather than 3.1 on the old services. Going forward, we'll be looking at future announcements to Wi-Fi and content on the aircraft. It's a bit of a moving target right now with the different capabilities and technologies that are not proven yet but are out there. In staying the same, we're getting ahead. We're not putting more seats in our airplanes or crunching the pitch in the economy cabin to 31 inches. That's because of our focus on business travelers. They expect and need the comfort, so we plan to stand out by offering a more comfortable experience.