Startup airline Virgin America is scheduled to land its first planes today amid much hoopla, as passengers arrive at San Francisco International Airport from New York and Los Angeles.
The low-fare carrier, based in Burlingame, is beginning service with two flights per day out of SFO to New York and five to Los Angeles. It plans to begin service between SFO and Las Vegas, Boston and Washington in the coming months.
Among the glitterati expected to attend today's kickoff are Richard Branson, chairman of the Virgin Group; Virgin America Chief Executive Officer Fred Reid; San Francisco Mayor Gavin Newsom and possibly Gov. Arnold Schwarzenegger.
Virgin America set up skeletal office operations in 2004, promising to create excitement, jobs and an economic ripple effect in the Bay Area. It took three years, but funding finally fell into place, and the Transportation Department overcame questions about foreign ownership, signing off on Virgin America's flight plans.
Virgin America has already shown it can generate buzz. The fledgling carrier has held high-profile promotional events, enlisted members of the public to name its aircraft and imported celebrities associated with San Francisco, such as retired rock singer Grace Slick, to make appearances on its behalf.
The celebrity quotient will soar higher today, as Branson, founder of the Virgin Group, the London company that owns 25 percent of Virgin America and licenses the Virgin brand to Virgin America, jets into town. Newsom and Schwarzenegger lobbied Virgin America to set up its headquarters in the Bay Area. The governor talked up California to Branson and the state anted up nearly $13 million in job-training funds as inducements for the startup carrier to open its corporate headquarters here.
Virgin America has begun to fulfill its economic promise. But as a still-small startup, much of its commercial clout remains potential rather than actual.
Virgin America has hired about 500 of the estimated 3,000 to 5,000 employees it expects to eventually have on board, according to airline spokeswoman Abby Lunardini. About 100 of those employees are pilots and another 100 are flight attendants, she said. Most staffers are expected to be based in the Bay Area.
In July 2006, Virgin America - then attempting to secure government approval to begin service - commissioned a study that concluded it could save U.S. passengers $786 million a year with its lower airfares. The study, conducted by Campbell-Hill Aviation Group Inc., said Bay Area residents would gain the most, with $402 million in savings.
A separate study by the Bay Area Economic Forum released in November 2004 concluded that a domestic airline based at SFO and operating 70 flights per week could be expected to generate up to 3,891 jobs, 1,692 of which would be at the airport and 2,199 associated with the visitor industry.
An airline that size would generate about $241 million a year in business revenue, the study said. With 140 flights weekly, annual revenue would jump to $482 million.
Both SFO and the Mayor's Office of Economic and Workforce Development are using the forum numbers to gain a sense of the new airline's economic impact, according to Deputy Airport Director Kandace Bender.
Not all of Virgin America's employees are in the Bay Area. The carrier uses reservations agents who work from their homes around the United States. Virgin America also augments its 20-person information technology team by outsourcing many of its IT needs to CSS Corp., a San Jose company that assigns work for Virgin America to employees in Chennai (formerly Madras), India.
"Virgin America is offering a very high-quality service at a cut-throat price," said CSS chief marketing officer Ajmal Noorani. "They need to keep their IT lean and mean."
CSS, a 10-year-old company, employs 45 people in San Jose, Noorani said. The firm has 5,000 workers worldwide and has offices in New York, Washington and Singapore, in addition to India. It is also setting up operations in Poland and Ireland, he said.
In 2004, Virgin America received nearly $13 million in job development funding from the Employment Training Panel, associated with the California Employment Development Department, to create Bay Area jobs, said Rayna Lehman, director of community services for the San Mateo County Central Labor Council.
Officials expected the company would use some of the money to retrain some of the thousands of Bay Area aviation industry workers laid off in the post-Sept. 11 U.S. airline meltdown, Lehman said.
"That was in 2004," she said. "It's 2007. From the labor point of view, a concerted effort is going to have to be made to track those people down."