Virgin America, the brainchild of maverick British airline mogul Richard Branson, is bringing its low-cost, luxury-minded brand of flight to San Diego early next year.
The San Francisco-based air service will begin offering three daily flights between San Francisco and San Diego on Feb. 12, and will expand to five daily flights March 9, Virgin America announced yesterday.
The airline, which debuted in August, has earned initial rave reviews among business travelers and high-tech wonks for its state-of-the-art technology offerings, comfort features such as custom leather seats, and -- at least during its initial launch -- affordability.
Virgin America's nine Airbus A320 aircraft offer plugs for laptops and other portable electronic devices and an entertainment system -- with a 9-inch video touch-screen and keyboard at each seat -- that allows passengers to order food, watch one of 25 movies or satellite TV, play video games, create a playlist from more than 3,000 MP3 music tracks and exchange messages with other passengers.
Robert Mann, president of R.W. Mann & Co., an airline industry consultant, said that Virgin America has been "well received by tech-savvy individuals" and that the Branson brand and "fresh approach" will encourage initial switching from more established carriers.
"People will switch and try the product, but whether the switch endures is entirely a function of what happens in the airport, during the flight and when your bag gets delivered," Mann said. "At the end of the day it is all about service."
Mann said Virgin America, along with other airlines, is trying to carve out a bigger share of the corporate and business travel market. Business travelers tend to be more profitable for airlines because they travel more frequently and pay higher fares because they tend to book closer to departure dates.
In San Diego, Virgin America will be competing for passengers with Southwest Airlines and United Airlines, both of which offer nonstop service to San Francisco.
The airline's San Diego-San Francisco fares will start at $39 one way in the main cabin and $149 one way in first class. Southwest's online reservation system yesterday listed one-way tickets with 21-day advance purchase to San Francisco for $74-$84, while United Airlines had one-way fares of $69-$95 with 21-day advance purchase.
Yesterday, Southwest announced a new Business Select program to draw more business travelers and boost revenue. Starting today, passengers who purchase tickets in the new category will get preferred boarding, free-cocktail vouchers and bonus frequent-flier award credits to earn free tickets.
Fares for Business Select seats will be from $10 to $30 more one-way than the current highest-priced tickets sold by the Dallas-based airline, with the airline setting aside about 10 percent of seats for the new category.
Southwest Chief Executive Gary Kelly expects the new product to generate at least $100 million in annual revenue starting next year.
"In recent months we've announced plans to change how we board our aircraft and the look and feel of our gate areas systemwide -- all to increase customer productivity and comfort," Kelly said in a statement yesterday. "Today, we are announcing additional product changes that transition Southwest from a one-size-fits-all airline to the airline that fits your life."
Abby Lunardini, a spokeswoman for Virgin America, declined to disclose passenger occupancy on flights since the airline made its debut with flights from San Francisco to Los Angeles and New York. Since then, flights to Washington, D.C., and Las Vegas have been added.
"Sales have been well beyond our business model and expectations," Lunardini said. "And we believe San Diego will be a huge market for us. It is one of the Bay Area's biggest markets in terms of tourism and business travel, and vice versa."
Lunardini said the airline will employ a San Diego staff of 25 by the time it launches here in February, and plans to expand in coming years.
The fledgling airline has raised more than $300 million from investors. Several major U.S. airlines, including American, Delta and Continental, initially tried to block Virgin America from entering the market.
By law, no more than 25 percent of a U.S. airline may be owned by foreign interests, and the airline must be under the actual control of U.S. citizens.
VAI Partners, composed of investments from Black Canyon Capital and Cyrus Capital Partners, owns 75 percent of the capital stock, while 25 percent is owned by Branson's Virgin Group, which controls the British-based Virgin Atlantic airline.
PROFILE
Virgin America
Headquarters: San Francisco International Airport
Cities served: San Francisco, Los Angeles, Las Vegas, New York (JFK), Washington (Dulles)
Launched: Aug. 8
San Diego service starts: Feb. 12
Features: Mood lighting; leather seats; entertainment system that allows passengers to order food, watch one of 25 movies or satellite television, play video games or send instant messages to other passengers
Background: Majority-owned by U.S. investors, with minority stake held by Carola Holdings, an entity affiliated with Richard Branson's Virgin Group, parent of the Virgin Atlantic trans-Atlantic carrier
