There were more convenient flights later that morning, but Ms. Wolaner’s affection for Virgin’s service, as well as for the Wi-Fi, leather seats and even what she called the “adorable” animated safety video, prompted her to get up earlier than was ideal. This despite the fact that she once flew American Airlines so often that she is “platinum for life.”
She spoke wistfully of a night in 1987 when a blizzard pounded Albany, and American, rewarding her loyalty as a frequent flier, got her a seat on one of the last flights out. “I’ll never forget that night,” Ms. Wolaner said, as if reminiscing about an old friend. But in the years since, she felt that American’s service had declined, her elite status devalued.
“I’m a Virgin convert,” she said.
She’s not alone. Virgin works hard to convey an easy vibe — a flirty package of self-awareness and charisma bathed in purplish mood lighting that has earned glowing consumer reviews and challenged the idea that an airline can’t wow its passengers.
But if the airline has worked for consumers, it hasn’t worked for its investors. Since it started flying out of San Francisco in August 2007, Virgin has lost $675 million. Last November, foreseeing intensifying losses, the airline announced a sharp retrenchment, killing plans for 10 new airplanes each year and modestly cutting capacity on existing service. Already one of the smaller airlines — at 53 airplanes, it is not even a tenth the size of the big carriers — it seemed destined to remain boutique, if it survived at all.
History is not on Virgin’s side: since airline deregulation arrived in 1978, all but a handful of roughly 250 new airlines have failed.
Virgin’s combination of consumer popularity and lack of profitability raises a question: Can it make money and still be beloved? A few — like JetBlue and Southwest — have managed that. But the tried-and-true method of most United States carriers has been to cut back on customer service.
At Virgin, which recently celebrated its sixth anniversary, there’s a glimmer of progress for its investors, including Richard Branson, the founder and entrepreneur in chief of the Virgin Group, the investment company that owns 25 percent of Virgin America (which is distinct from Virgin Atlantic, the international carrier). Last month, Virgin America posted a profit of $8.8 million for the second quarter and forecast stronger results for the current quarter, reflecting typically heavy summer travel. But it also posted a loss of $37.5 million for the full first half of the year.
Still, it’s progress that the company’s chief executive, David Cush, said had come none too soon. Virgin has worked for its customers, he said, but now it has to work for investors, too.
“We’re 22 years old in the life of a human,” Mr. Cush said in a recent interview. “We’ve had a lot of fun in life, and now it’s time to join the real world.”
His ambitions are bold. He wants to take the airline public in 2014 or 2015. Such a move could well serve its major investors — including Mr. Branson’s Virgin Group and Cyrus Capital Partners, a hedge fund — who in May agreed to convert $290 million of the company’s $800 million in debt financing to an equity position. If the company goes public, they could cash in.
And yet, some industry analysts say a solid financial quarter hardly proves the company can go where few start-up airlines have gone before — into long-term profitability. “They’re nowhere near out of the woods yet,” said Henry Harteveldt, a veteran travel industry analyst. “If pizazz were profits, Virgin would be the most successful airline, but there are fundamentals.”
And there is another catch. Joining the real world means doing things that can frustrate travelers. For instance, Virgin is tweaking prices to try to bolster the number of passengers on each flight, which could make boarding and deplaning more frantic and risk delays. It is also trying to attract more business customers, which could create hierarchies that undercut the airline’s more democratic feel. And it is charging more than the industry average on some established routes.
The other airlines have responded by doing some of the things for which Virgin was a pioneer: upgrading airplanes with amenities like mood lighting, Wi-Fi and advanced in-seat entertainment. They, too, have made viral safety videos, including one from Delta that, among other things, featured a man politely declining to sit in the exit row.
At stake are travelers like Ms. Wolaner. She is infatuated with Virgin but is open to the idea that it may not last, having been let down by airlines before. On the Monday when she was traveling to Seattle, executives from Virgin were involved in two important meetings — one about a new safety video and another about ticket prices — very different sessions representing the cultural and financial sides of Virgin, both trying to help marry popularity and profit. It is a razor’s edge that few airlines have been able to navigate.
This article has been revised to reflect the following correction:
Correction: September 9, 2013
An earlier version of this article misspelled the surname of the editor in chief of Travel Leisure magazine. She is Nancy Novogrod, not Novograd.
Article source: http://www.nytimes.com/2013/09/08/business/at-virgin-america-a-fine-line-between-pizazz-and-profit.html?partner=rss&emc=rss
