New low-cost carrier en route

Marketplace Staff Mar 21, 2007
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New low-cost carrier en route

Marketplace Staff Mar 21, 2007
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TEXT OF INTERVIEW

SCOTT JAGOW: Virgin America has been trying to get off the ground for some time. The U.S. government has been standing in the way, citing foreign ownership rules. But last night the Transportation Department changed its mind and gave a tentative OK for Virgin America to start flying planes in the U.S. The airline will have to make some ownership changes, but billionaire Richard Branson will still be involved. Kieran Daly is editor of Air Transport Intelligence in London. Kieran, why the turnabout here?

KIERAN DALY: I think that the point is that in the end they couldn’t find a way to block it. And the DOT’s actions throughout this whole affair have been essentially entirely at the behest of the legacy U.S. carriers simply in order to keep out a competitor. You know this has got nothing to do with U.S. security or U.S. competitiveness or anything like that. It has to do with the fact that the legacy carriers are horrified at seeing new entrants. You know they saw what happened with JetBlue when they came in, now they don’t want to see the same thing happening again.

JAGOW: And what kind of a competitor might Virgin America be?

DALY: Well Virgin America will almost certainly be an extremely powerful competitor. What has been demonstrated is that the Virgin brand has a great deal of equity around the world. You know there was a precedent for this in Australia, where a similar kind of operation, Virgin Blue, was set up there and has been tremendously successful in one of the most brutally competitive markets in the world. Now I think you’ll see the same kind of factors at play with Virgin America. So I think the other airlines are rightfully afraid of what Virgin America will do to them, but if you’re a taxpayer or a consumer then you should be delighted at that.

JAGOW: Now is Virgin America akin to Southwest or JetBlue?

DALY: It will be that kind of model, and really that is almost the only sort of model that’s achievable these days. I would distinguish between Southwest and JetBlue and what we will probably see now is something rather like JetBlue. And the magic of JetBlue has been being able to produce a pretty satisfactory product which people will not always pay rock-bottom prices for but will pay low prices for.

JAGOW: Kieran Daly of Air Transport Intelligence, thank you.

DALY: You’re welcome.

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