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Making money at 35,000 feet

Today is the first time I have flown Virgin America from Boston to San Francisco.  In fact, I am flying right now as I post this.  Virgin offers Wifi on their flight for $12.95.  It's not cheap, but it's worth it if you really want to surf the web for the 5+ hours on the plane.  And, it's good incremental revenue for the airlines.

With the airlines and so many other industries, struggling now for revenue, Virgin has the right model that others should follow.  Instead of racing to the bottom by cutting prices and services, they offer a nice experience at a reasonable price.  My ticket cost $380 round trip  (booked pretty far in advance).  That's a good value for a cross-country flight.

And, the plane's entertainment system is pretty nice -- TV, music, movies, seat-to-seat chat, and food ordering whenever you want.  And, I had to test the wifi service.  It's a little slow (you won't want to do any big downloads).  But, it works pretty well.  For web surfing and email, it's great.

Virgin has a mix of free services and things you have to pay for.  But, when they deliver it well, I am sure that they sell quite a bit.  As my traveling companion pointed out, they need to figure out a way to sell things to people while they are waiting to board the plane.  But, whatever they sell incrementally is probably pretty high margin.  That should help their profitability.  And, the plane was totally full, which is always good for the bottom line.

I'm glad to see some companies try to make money by deliverying more at a good value rather than cutting everything and somehow hoping they can make it up in volume.  There is a place for the cheapest option, but I bet that a lot of people will pay more for a good experience.

Virgin is my new favorite way to go across the country.

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Comments

Hi Mike, glad to hear that you're enjoying Virgin America. I've flown Virgin atlantic a couple of times from Boston to London and aside from the cramped seating, I really enjoyed flying with them. They definitely pioneered a new customer experience that's missing from so many of the legacy airlines. I'm still amazed that many of them have refused to at least modify their business model to incorporate some of Virgin's innovations.

I've been traveling throughout SE Asia recently and have been flying AirAsia almost exclusively (8 flights so far, two more to go). Not only are they present in most areas, but their exclusive hub in Kuala Lumpur (LCCT) makes connections a breeze. Including immigration and customs, I made a connection from Phuket to Bali in under an hour. Their website, http://www.airasia.com, is very user-friendly and allows you to pick not only your flight and seat, but also all of the other ammenities that you may or may not need: advanced boarding, meal options, insurance, allowable luggage weight and so on. The website prices are discounted and whatever you order appears on your boarding pass so you don't need to hassle with money or missing out on some tasty airline food, but they do not offer booze. You can even pre-book your bus transfers through the website. Everyone from the baggage handlers to the flight crew are helpful, polite and make flying fun again. Things may seem wacky and chaotic sometimes, but I have yet to miss a flight or lose a bag.

The average cost of one flight is around $80US. I'm flying to London next week on AirAsia X. Total cost one way was $300, but I upgraded to Business Class with full ammenities and the ticket was still under $600 one-way. Taking three flights within twenty-four hours plus sleeping in an airport rates a crack at the good seats.

They don't offer much for in-flight entertainment, sometimes just watching the other passengers is a treat in this part of the world, but at least their in-flight magazine is entertaining althought the cabin music could use an update into the 21st century. That being said, it's been a real pleasure to fly with them. I like to pay for what I want and only what I want, and I like what I pay for to consistent with the price I paid for it. Also, I like to be treated like a paying customer, not as a potential threat, as is with most of the domestic American carriers I've flown with since 9/11. Since when did National Security hinge upon whether or not a drink cart could make it up and down the aisle unhindered?

That being said, I'm not sure if I'd pay $1 to use the toilet on RyanAir flights, but I'm flying with them next week, so I'll let you know how that goes.

The seat-to-seat chat is probably best used to keep in touch with a colleague who isn't sitting with you. I don't see it as a big service, and I think it's creepy that Branson mentions a stalker-like use for them. It's mostly a neat thing that probably wasn't hard to do. And, you can easily turn it off so you aren't bothered.

I do agree that improving the speed would be great. Users always want more speed. But, on plane services like seat-to-seat chat probably don't compete for resources with the air-to-Internet connection (which, I believe, is powered by AirCell and a service provider called Gogo).

The lighting was a nice touch. I did notice it when I entered the plane, but forgot about it soon afterwards. It's a nice touch, and it shows the focus on customer experience.

I find Branson's efforts overall positive in that his mission statement for Virgin America seems to be that "it's time to bring service back to the skies." As a "blurb" on his webpage for the airline, I saw, "Loyalty: It's hard to earn, but easy to lose," so operating on those principies, I would think the company and employees would have that drilled into them.

I'm glad you tested the WiFi services. I know I would be using them. Rather than offering services like "seat to seat chat," I'd rather have them focus on how to improve speed in the download-upload aspect of computer usage, since speed (or lack thereof,)can affect what I'm trying to do with a computer on a long flight. I also love the attention to connectivity and having powering sources to have your other electronics charging while in flight.

I had to read more about "seat to seat chat." I thought I could guess at what it was, but overall, I don't see it as something of high priority. At best, it's for what? Talking to a friend or family member seated in another section of the plane? Richard Branson himself was quoted as saying (when asked about it,)"Well...perhaps you see a pretty lady on the plane you wish to chat with," that had something vaguely stalkerish about it, and yes, I know there are features of the service allowing you to block something like that, but still...an odd thing to say.

You didn't mention the ambient lighting, and I thought that was a "taking it beyond" feature that was nice. Not only the psychological-emotional aspects of pleasant lighting from light into dark, but also properties that reduce sunlight glare. There are also special elements of the seats including increased leg room, winged headrests and contours of the seats.

You spoke of selling things to people as they wait to board the plane, and if they aren't, I agree they should be marketing these additional services in advance. I also read in the news about a year ago, that Virgin America was taking old airplane seat fabric (and seat belt fabric) and making it into purchasable totes through an eco-recycling company called Keetsa. Also last year, on April 22nd...Earth Day..Virgin America had plastic bag "rehabs" on every seat as a courtesy bag for Earth Day.

In a world constantly changing so much into the cheapest option to salvage their business, it's nice that Branson is seeking a better experience for his customers. It sounds like you appreciated it.


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