Virgin America to Fly San Francisco to East Coast

Virgin America, a start-up low-fare airline, hopes to begin flying by the middle of next year out of San Francisco International Airport, injecting more competition and possibly lower prices for Bay Area air travelers.

The airline, which will fly under the Virgin brand made famous by British billionaire and balloonist Richard Branson, will be headquartered in Burlingame and employ 2,000 people by 2007, the new airline said.

Branson, who founded the British-based international airline Virgin Atlantic in 1984, dreamed up Virgin America a few years ago.

In a filing seeking U.S. government approval to begin flying, Virgin America said this week that it plans to operate an inaugural route between San Francisco and a New York-area airport. It would not disclose other possible routes.

``Part of it depends on which routes they are going to fly, but it's certainly going to be a winner for consumers. It always is for consumers when a low-fare airline enters the market,'' said Gerald Bernstein, a partner with aviation consultant Velocity Group in San Francisco.

Virgin America will become the only California-based airline, and the first since PSA was taken over in 1988.

The debut of Virgin America could also draw Peninsula fliers back to San Francisco International, at least for long-haul, coast-to-coast flights, and away from Mineta San Jose International Airport. About half of all flights from San Jose are considered low-fare, compared with 12 percent of flights from San Francisco.

Where passengers come from, ``depends on where you live and how accessible the airport is,'' said San Jose airport spokesman Rich Dressler. ``I think competition is always good.''

Virgin America flights aren't expected to begin until next summer, at the earliest.

Three-quarters of Virgin America's voting stock, according to U.S. law controlling foreign ownership of domestic airlines, must be owned by American investors and no more than 49 percent of the capital can come from foreign sources. Virgin Group, where Branson is chairman, will be a minority shareholder.

Southwest Airlines and a slew of low-fare carriers have left San Francisco airport in recent years, citing high costs, and airport officials are hoping Virgin America will reverse the trend and make the airport a bigger destination for domestic travel.

State and San Francisco officials lobbied hard for Virgin America to locate in San Francisco.

Virgin America spokeswoman Stacy Geagan said one way the airline will keep costs low is through technological innovations, ranging from online reservation systems to passenger check-in.

She compared the Virgin America flier to a Target shopper. ``Like Target, you feel very stylish and you're getting good value. You feel so good walking out, you walk out with more,'' she said.

Former Delta Air Lines President Fred Reid, a San Francisco native, will serve as chief executive officer of Virgin America. The airline said in its government filing that it had secured $177.3 million in financing, of which $88.9 million came from a U.S. group led by Black Canyon Capital and Cyrus Capital Partners.

Eighteen months ago, Virgin America said it had chosen San Francisco for its operations base over New York, Washington and Boston, but that it was keeping its corporate headquarters in New York. The company reconsidered and will announce next week that it has signed a lease for a Burlingame corporate headquarters.

San Jose Mercury News

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