Virgin America has a great consumer product. They offer comfortable flights with plenty of entertainment and even white leather seats. However, they have yet to make a dime. Virgin has a  following, corporate and groupies alike, despite setting up a home base competing in two of United strongholds, San Francisco and Los Angeles hubs. They share 8 over lapping routes out of Los Angeles LAX, including Chicago ORD and Washington IAD, where United has the advantage of connecting feed on both ends in addition to local traffic. At San Francisco SFO, there are 14 over lapping routes, where once again United has connecting feed on both ends, Virgin only on the SFO side. So it’s very clear, Virgin isn’t scared of United. What is puzzling is their latest addition from Los Angeles to Las Vegas, a market already saturated by 5 carriers.

The table below is the Los Angeles-Las Vegas market in a nut shell:

los-angeles---las-vegas-competition

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The second quarter of 2012 was promising for major U.S. carriers, as nine of the ten carriers analyzed here reported positive results. However, Virgin America continues a negative trend in the red. Southwest’s lower than normal RASM (revenue per airline seat mile) and CASM (cost per airline seat mile) are in part due to network contraction, approximately 4,300 fewer flights in Q2 as the airline strives for higher load factors and profit margins. Looking ahead, Southwest is adding routes without adding new incremental aircraft, so capacity will increase through density, 137 to 143 seats per aircraft. As of today, Southwest has now discontinued service to 14 cities once serviced by AirTran.

RASM-CASM-2Q12

Source: DOT data analyzed by editor.

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