Virgin America weathers capacity onslaught in New York, Dallas, with strong unit revenue performance

Virgin America is joining nearly every other US airline in forecasting a decline in unit revenue growth for 2Q2015 after posting an increase that was higher than most of its US airline peers during 1Q2015. Its solid performance was more impressive given that the airline faced significant competitive capacity additions in its New York and Dallas markets.

During 2015 Virgin America is making moves to balance out some of the seasonality in its network largely through its new service at Dallas Love Field and the addition of flights to Hawaii scheduled to begin in late 2015. Those investments could take some time to pay off as each market remains highly competitive. But Virgin America is citing some positive trends in Dallas, and aims to leverage its point of sale strength in California for service to Hawaii.

At the same time as Virgin America's unit revenues are declining, its unit costs are increasing - mainly due to salary increases to bring employee wages in line with industry averages. All this is creating some choppiness for Virgin America in 2015 as capacity growth resumes in 2016.