Virgin America: Financials prove service makes a difference

We’ve all gotten used to bailing out airlines that can’t figure out how to take care of their paying customers, operate profitably or otherwise get their respective acts together. And, there really isn’t much hope of this situation changing. To be an airline, in general, is to be dysfunctional … until you look at the new entrant, Virgin America. The privately held carrier announced on Friday that its revenue surged 38.3 percent from the third quarter of 2008 to the third quarter of 2009.

The airline has amassed a collection of awards to back up its commitment to customer service, including “Best Domestic Airline” in Travel + Leisure‘s 2009 World’s Best Awards and “Best Business/First Class” among domestic airlines in Condé Nast Traveler‘s 2009 Business Travel Poll. And, the fact that the 1,500-person company is adding jobs in this market — beating both the recession and its worsened form in the travel business — suggests that it is possible for an airline to not just survive but actually succeed.

David Cush, Virgin America’s President and CEO, says, “Despite an uncertain economic climate since our 2007 launch, we’re pleased to report steady and strong financial performance and our first quarterly operating profit.” He adds, “At a time when flyers are more discerning than ever, it is clear that our low fares, award-winning guest service and innovative amenities continue to convert a growing network of loyal travelers. We look forward to bringing our unique value proposition to more travelers as we grow in 2010 and beyond. ”

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But, enough of the soft stuff — let’s turn to the numbers. That’s where you’ll find the truth in these matters. Cost containment and operational efficiency helped Virgin America post a record load factor of 86.6 percent, an increase of 5.2 percentage points year-over-year. Costs per available seat mile were pushed down 33.9 percent (24.4 percent ex-fuel), and operating income swung from a $54 million loss in the third quarter of 2008 to a $5.1 million gain this year. Along the way, Virgin America realized a mishandled baggage rate of 1.18 per thousand — three times better than the industry average. And, it attained an on-time rate of 87.2 percent.

Sorry to go “quant” and dwell on the numbers a bit, but they speak to a common theme here at Gadling: whether the airlines are doomed to fail … and be propped up by the government taxpayers and fail again … and so on. Virgin America’s proved that an airline can amass 1.1 million loyalty program members and fly 5.8 million passengers in just over two years and still find a way to get into the black. There is probably market share gain in this airline’s future, but it is making a big mistake: by not screwing up, it’s taking a pass on all the free money the feds are more than willing to give to an industry that refuses to help itself.

Hawaii’s on sale with cheap flights from United and Hawaiian Airlines

Winter may not have officially started yet, but it certainly feels like it has. With temps in the double, and even single, digits and snowstorms covering the country, there’s no denying that a tropical vacation sounds pretty darn good right about now. Luckily escaping to the warmth of Hawaii this winter will be surprisingly cheap thanks to two great airfare sales.

Book a ticket through the Hawaiian Airlines sale by December 16 for travel January 5 to March 11 and April 6 to June 10 and you could fly for as little as $288 round trip (plus taxes). Seattle or Portland to Honolulu, and Portland to Maui are the cheapest routes at $288 round trip. Los Angeles and San Francisco to Honolulu are $368 and Seattle to Maui is $318.

Rates are even lower through United’s sale, which ends a day earlier on Dec 15. The travel dates are more limited – just January 12 to March 4 – but there is a wider variety of cities to choose from. For example, Chicago to Maui is $302, LA to Honolulu is $261, San Francisco to Kona is $265, and Denver to Maui is $285.
And if you need a reason to go to Hawaii this winter (other than “it’s warm there!”) Hawaiian Airlines offers a few more. January to April is whale watching season, now is the perfect time for surfers to catch huge waves formed by storms, and in February there are several Chinese New Year celebrations and the Big Island’s Waimea Cherry Blossom Festival. Plus, did I mention, it’s warm there?

If you can’t afford the flight, check out Portland International Airport’s website by January 2 and enter to win a pair of tickets from Portland to Maui. Okay, actually you can choose Maui or Chicago, but let’s be real – you’ll choose Maui.

Foreigners are still spending less in the U.S.

Visitors from outside the United States came in and spent $9.9 billion in August … which sounds like a lot. Unfortunately, it’s down 21 percent from what they spent in August 2008, according to the U.S. Department of Commerce, as the travel slump continues to clamp wallets shut. The good news, though, is that spending by foreign visitors to the United States edged 1 percent higher from July.

Spending by visitors to the United States has fallen every month since 2008, but the really severe declines began in May. Year-over-year drops have been 20 percent or worse every month since then: -23 percent in May, -22 percent in June and July and -21 percent in August.

Most of the money came from “travel receipts,” which the Commerce Department defines as just about everything except the planes, trains, boats and so on that take travelers into and out of the country. This was good for $7.8 billion in August and includes food, lodging, gives and entertainment, among other categories. “Passenger fare receipts,” the travel money, brought $2.1 billion into the U.S. economy in August — off $700 million from the previous August.

So far this year, foreign visitors have poured $79.4 billion into the U.S. travel and tourism industry, which is $16.4 billion less than we saw at this point in 2008 (a decline of 17 percent).

In an unsurprising application of the “golden rule” — screw unto others, as they screw unto you — American travelers haven’t been spending as much abroad, either. Those of us heading out of the country this year have only spent $65.9 billion so far, down 12 percent ($9.3 billion) from last year. The result is a $13.5 billion trade surplus, which is $7.1 billion less favorable than it was at this time last year.

With the next monthly report from the Commerce Department, the numbers should start to change a bit — in fact, they should start to look better. Don’t be deceived by this subtle shift, which will gain momentum next year. After Septmeber, and the worldwide financial crisis, the travel industry was battered. So, as we cross the September threshold, we’ll be comparing current results to lower benchmarks. But, it will be nice to see something that at least looks positive.

British Airways computer glitch posts super low cost flights to India

Late Friday night, an alert went out on Twitter. Fares to Mumbai, India, from locations all over the US were being offered at rock bottom prices on British Airways. Flights from Chicago to Mumbai were just $550 per person.

I quickly logged on to Orbitz, selected my dates, and clicked purchase. I received an email from Orbitz confirming my purchase and then got to work planning the trip. My husband was out with friends and had left his cell phone at home, so I was hoping he’d come home just tipsy enough to not mind that I’d just bought $1100 worth of plane tickets without discussing it with him first. Besides, he is accustomed to me buying plane tickets on a whim, just because they are on sale.

Luckily, he was just as excited as I was….until Saturday morning, when I received an email from Orbitz saying that due to “limited quantities”, our order could not be fulfilled. As it turns out, it’s because the fare never should have existed. Someone at BA obviously messed up (how’d you like to be that person come Monday morning?) and entered the wrong number. The fare should have been more like $1550 per person. The fat finger fare was corrected, but not before several people, myself included, had bought tickets at the faulty price.

Word on the web is that tickets bought before the error was discovered will be honored, if they were purchased on British Airways. So far it seems that those of us who used Orbitz will be out of luck. Christopher Elliott posted the story on his blog, along with a response from the company. They say British Airways didn’t honor the purchases made with Orbitz ,so people who tried to book that way will not receive tickets.

This isn’t the first time a technical error has crushed some budget traveler’s dreams. In February, Northwest refused to honor $0 fares that were “purchased” online in error. So next time you see a fare that seems to good to be true, watch out. It might not be.

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Share your travel deals with friends with Yapta’s Frugal Travel Flaunts

Yapta, a website that tracks prices and helps you figure out when to book your airfare, has launched a new Facebook application called Frugal Travel Flaunts. When you find a deal on a flight and add it to “my trips”, you can choose to publish it on your Facebook page, alerting all your friends to your great find.

The idea behind the app is pretty solid. How many times have you found out about the amazing low-cost flight a friend found, but too late? Hearing that my friend spent just $300 on a round trip ticket from Chicago to London after she gets back from the trip doesn’t help me take advantage of the same deal. And likewise, I feel bad when friends ask why I didn’t share the news of my cheap fare purchase with them. The Frugal Travel Flaunts application allows you to use social media to alert your friends to good deals and helps you score your own with a few easy clicks.

Yapta will also help you get a credit if a flight you’ve already purchased drops in price. The site will alert you to the fare decrease with a link that sends you to the page on their site with credit info. You can also “flaunt” that on your Facebook page, though I see that as a less useful tool. Sharing news on killer deals is one thing, boasting about refunds is another – there’s a fine line between a flaunt and a taunt.