David Cush
Virgin America is embarking on its next growth phase. The carrier this year joined ARC, expanded its participation in the global distribution system channel, announced plans to install the SabreSonic reservations platform and placed an order for 60 Airbus A320s. In late May, it expects to launch daily nonstop flights to Chicago O'Hare from Los Angeles and San Francisco. According to president and CEO Dave Cush, 2011 will be the year the airline achieves "major" carrier classification (defined by DOT as generating more than $1 billion in annual revenue). He told Management.travelthat the carrier will benefit from the new reservations system on "day one" later this year, thanks to "e-ticketing on all of our transactions," but said functions like code sharing and interlining will "take until the new year before we get there." Additional excerpts follow.
After you joined Virgin America, you considered there to be more opportunity in the unmanaged business travel space. What are your plans for the managed segment?
We've made a lot of inroads in the managed sector, especially out here in the Bay Area, where you have a lot of small technology and consulting firms. We think we've done quite well in that space. Where we haven't done as well is on the corporate space--the large, managed agreements. A lot of that has to do with our technology limitations. Up until recently, we didn't have refundable fares. We now do. That's important to business travelers. Secondly, just having something as simple as e-ticketing--as opposed to instant ticketing or ticketless--is also important for corporate travelers. We're targeting more of that business. The technology platform through Sabre is going to be important, as well as ARC participation.
Are there concrete plans for cultivating more corporate accounts?
We have about 150 corporate agreements already. The big kicker will come this year, and that's with e-ticketing, which we've implemented thus far with Worldspan. We will be implementing with Sabre in about 30 days and then afterward with Amadeus. Then, of course, ARC participation. That goes hand in hand with e-ticketing. That will open some additional doors to the corporate side.
Which airlines are candidates for code sharing?
Certainly, the first carriers will be our two sister Virgin carriers: Virgin Australia and Virgin Atlantic. We've deferred that into 2012, pending the implementation of Sabre. Because of our somewhat unique network strengths out of San Francisco and Los Angeles, we've got a number of people who are interested in interlining with us and doing code share with us. In the first half of next year, you will see a handful of carriers that are high-quality, important carriers.
What has to be done between now and late 2011 when you expect to implement SabreSonic?
A tremendous amount of work needs to be done. An internal team of 45 Virgin America employees, and roughly the same number from Sabre, are pretty much working full-time on this. Everyone thinks it is basically a system migration--that it's a database migration of passenger name records and things like that. That's really the easy part. The more difficult part is going in and redesigning processes that will support the new system and vice versa--whether that's in the operations center, in the airport or in res, or having a look at whether Sabre's capabilities will allow us to improve our processes. That's the lion's share of the work for the next couple of months, and then after that it becomes a massive training exercise, really beginning in about August. We have to take everyone in the company and put them through training, because we're doing the ops system and the res.
You have a lot of new aircraft on the way. Where do you see the growth opportunities?
What you'll see from us is about half of our growth going into new markets and half of it going into increasing frequencies in existing markets. I certainly see more into Mexico. We've been quite happy with the results in Mexico thus far.