OUTLOOK: Virgin America

When Richard Branson, Chairman of Virgin...well...Virgin Everything, looks across the pond at the airline industry he sees something beyond the chaos. He sees opportunity. Which is why he is quickly and quietly putting together his first foray into the US airline market...Virgin America. A visit to the Virgin America website does not reveal a whole bunch but here's a couple of things that caught my eye. Launch is slated for "mid-2005" and plans are to operate Airbus A320's. Virgin America has options for up to 105 A320's. Obviously, they won't start up with that many but they are not thinking small either. Destinations and schedules are not even hinted at yet but it looks like they will headquarter in New York and have a primary base of operations in San Francisco.

This, to me, says that they are thinking coast to coast as opposed to regional. The website alludes to the fact the "state and local governments offered remarkable incentives". No surprise. San Francisco International Airport (SFO) would like to hedge its bet since a United Airlines collapse is still a very real possibility. United has already scaled back operations at SFO leaving lots of vacant maintenance facilities and office space. So why not offer up some sweet deals on choice facilities and throw in some tax incentives to boot. Finally, keep in mind that Branson will not own Virgin America. Laws prohibit foreign ownership of a U.S. based airline. He will, however, be providing "some funding" for the start up. Some funding may be an understatement. Branson rarely goes small on anything. Expect Virgin America to be a well capitalized airline cut from the same flashy cloth as his other ventures. More later once Branson cranks up the media machine.