Virgin America could open up to three new markets in 2011

Washington DC
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Virgin America plans to use the 12 Airbus narrowbodies joining its fleet next year to support both new market growth and frequency expansion in its mature markets.

Currently Virgin America operates a fleet of 31 Airbus aircraft, according to Flightglobal's ACAS database, split between 10 A319s and 21 A320s.

Between now and March 2012 the carrier plans to add a total of 22 Airbus narrowbodies, and Virgin America chief executive David Cush tells ATI all those aircraft have financing.

As 12 of the 22 aircraft come online in 2011 Cush expects Virgin America to introduce one new market during the first half of the year and one-to-two more during the second half. The rest of the aircraft are pegged to bolster frequencies in some the carrier's existing markets.

Although no movement has been made in Virgin America's efforts to gain gates at Chicago O'Hare airport, Cush says Chicago remains at the top of the carrier's list of new markets. While Atlanta has been mentioned as a potential corporate market for Virgin America, Cush says the city is further down the list. However, citing the airline's upcoming service launch to Dallas, Cush explains that market is ideal for corporate travellers. The carrier's new service from Los Angeles and San Francisco to Dallas begins in December.

He believes Virgin America's entry into American's headquarters and hub should create both market stimulation through the introduction of lower fares and allow Virgin America to capture some market share from American.

Cush says members of Virgin America's loyalty programme currently use American for flights to Dallas, which he notes has strong ties to the financial and technological sectors, due to the lack of service from Virgin America.

Once Virgin America introduces new flights to Dallas and Orlando and just-announced service to Cancun and San Jose del Cabo, Mexico, the carrier will add roughly four new markets in about 4.5 months.

Cush acknowledges that introducing a number of markets so close together could stretch resources, but "we think we have it covered", he says. "We'll know soon enough."

At the launch of a new market Virgin America usually has about 60% of the revenue maturity "straight out of the gate", says Cush, and achieves a 90% level during the 13th month of operating in the market. He does admit that can create a revenue hit during the first year, but that is balanced out by tempering the number of new markets introduced to avoid "taking a top line hit".

Virgin America's chief executive also is putting the carrier's aggressive growth during the next few years into context. Once it takes 22 deliveries through the first part of 2012 Virgin America plans to start accepting a new batch of 40 Airbus narrowbodies after announcing a memorandum of understanding with Airbus covering the aircraft at last month's Farnborough Air Show.

Noting that he's read Delta plans to remove 70 aircraft from its fleet this year, Cush explains that is "more aircraft than we'll have in our system in 2014".

Cush also says Virgin America remains comfortable with its growth plans during the next couple of years. He explains a lot of inefficient capacity is being removed from the market place as carriers merge and down size secondary hubs. Virgin America's chief also expects that Continental and United are likely behave similarly in their merger even though they've publicly stated current service levels at their hubs should remain intact.