Virgin America: Will some big airlines never learn?
15-Apr-2013 The competition authorities, in their wisdom, have allowed the six biggest airlines in America to become three giant airlines - and among the biggest in the world.
However, size doesn't equate to quality, as the latest major survey showed in the US. United came bottom of the pile; I'm delighted to say Virgin America came top.
The real advantage these big airlines have is their sheer market dominance, and they often use it to get rid of their smaller rivals using questionable tactics. Virgin America is the only airline started since JetBlue in February 2000 that is still in business. They have all been driven to the wall. What's more, no other new startup airlines are in the pipeline because of the lack of investors willing to enter the current anti-competitive environment.
Access to Newark Airport is the perfect example. For five years we were told there were no slots available for us to get into the airport and operate. In fact, the incumbent airlines managed to "squat" on capacity to keep competition out of Newark alone. The Newark-San Francisco flights were only operated by one carrier - a monopoly route that had some of the highest fares in the US as a result.
When American Airlines went into Chapter 11 a few slots became available. Virgin America entered the market and fares from Newark to California dropped by 40% and suddenly consumers had better options with new planes, in-flight wi-fi and exemplary service. But instead of competing based on quality, United then conjured up a whole batch of previously "non-existent" slots to double their capacity on San Francisco-New York and Los Angeles-New York flights to try to squeeze Virgin America out.
They have been playing this game against Virgin America by putting on extra capacity on our other routes at a massive loss to themselves. My estimate is that the extra capacity out of Newark will cost them $130 million per year - just to try to drive us out of the marketplace.
Well, we won't be driven out. It didn't work in Chicago or Dallas and it won't work here.
But for the sake of other independent carriers and the travelling public - today and in the future - we would ask the Department of Transportation to consider looking into what United has been up to these past couple of years and consider taking appropriate action.
When British Airways tried this against Virgin Atlantic many years ago, we won the highest damages in history (which became known as the BA Christmas Bonus when we distributed it to our staff!) It seems that some old dominant airlines never change their spots.