I hope you’re ready for something completely different.
The quandaries I wrote about last week for Virgin America in Love Field continue to get interesting, as the Justice Department squelched Delta Air Lines bid for two gates at the airport. (How Delta will deal with the tickets it put up for sale, for slots it did not yet have, is an interesting complication.)
This leaves Southwest and Virgin America in the bid for those two slots. The decision will hinge on whether Dallas officials feel Virgin America would provide better diversity for this airport, and whether the Justice Department believes giving these additional two slots to Southwest gives Southwest too strong a hold on the market.
I’ll put my neck out there and hazard a guess that this denial of slots to Delta is just a step towards the approval of Virgin America’s bid. I suspect the parties involved will decide that Southwest has a strong enough base in Love (have had for a long time) and it’s time for some fresh competition. Virgin America is sittin’ pretty, and I expect the announcement that they’ve won will come soon.
But, as I said in my previous post, Virgin America is yet another odd entity in the curious Virgin brand family. To take these slots, they will give up their hold on DFW, and yes, I feel they are poised to reform themselves as one of the emerging Low-Cost Lux brands.
This hybrid of the Low-Cost business model and the multi-class service airline model is one we see increasingly in Asia, but it’s been present in the states for a while, initiated by JetBlue. It’s characterised by comfort, and a marketing strategy targeted at consumers who don’t want to go too low market (by flying traditional Low-Costs, or Ultra-Low Costs) and who consider the product offering of traditional carriers inadequate and over priced. There is a big market out there who fall into this category, and both JetBlue and Virgin America could benefit from their focus on this market segment.
This week, in the news, JetBlue and American Airlines announced their D-I-V-O-R-C-E, ending their interline agreement and putting the kibosh on their reciprocal frequent flyer program. It’s a complication which generates an opportunity.
If JetBlue and Virgin America Red can get together to span the whole of the states from East Coast to West, then they might have the start of something special. A Low-Cost Lux Alliance.
Of course, Virgin America has not declared itself officially as a Low Cost Carrier, and JetBlue might quibble with being grouped too much with this category; but when an airline operates following the Low-Cost business model, offers low fares and competes independently in markets ruled by the wooly mammoths, then what are we to call them?
No, they’ll never be Southwest. Southwest is Southwest. They’ll never be Spirit, and have no intention to go down that route.
But the market is ripe for Low-Cost Lux, and a collaborative mileage program between these two “cooler than cool” brands, even code-sharing agreements to extend their mutual market reach would be a revolutionary development. Exciting and novel, but also of great benefit to passengers.
Love is key to this. If Virgin America gains those two slots, and they cozy up to JetBlue at the same time, then they may produce something different enough to give American Airlines a run for their money. It may even cause Southwest to look twice, but that is less important.
This is me just playing “fantasy airline.”
True, Blue is a Native New Yorker, and Red has a bit of the Brit (personalities which sometimes conflict), but they could work it out.
There’s no reason why anyone should listen to me, either at JetBlue or Virgin America. But a girl can dream.
What do you think? Do share! (That’s what the space below is for.)
JetBlue featured image taken by Anthony Quintano and used under Creative Commons Licence.
[…] there go my views of the potential success of a Low-Cost LUX business model–right out the little round […]
[…] well as a compatible business strategy, also makes Virgin America attractive to JetBlue. We might fancy a low-cost luxe merger in the U.S. that strengthens the upscale budget business model and increases the pressure on […]