Virgin America Takes Battle to US Airways in Philadelphia

US low-cost carrier Virgin America has never been afraid to take the battle to its US major rivals at the country’s main airports and it has proved successful in Chicago, Los Angeles, New York and San Francisco, to name just four major gateways. Now it is US Airways’ turn to face competition from the airline after it announced this week plans to launch flights to Philadelphia International Airport from both Los Angeles and San Francisco.

US Airways is by far the largest carrier at Philadelphia International Airport, which acts as one of its hubs. The airline currently offers just under 3,000 flights per week offering over 250,000 seats per week from the facility. This accounts for a massive 71.6 per cent share of the available weekly capacity. Its largest rival is Southwest Airlines (10.2 per cent) which offers one-stop links to both Los Angeles and San Francisco currently.

Virgin America will offer a twice daily flight between Philadelphia and Los Angeles from April 4, 2012 and a daily link between Philadelphia and San Francisco from April 10, 2012. An additional rotation on each flight will be introduced from May 1, 2012 increasing frequencies to three and two a day, respectively. US Airways currently offers four and three daily flights on these two routes while Delta Air Lines also flies the Los Angeles link non-stop and United Airlines provides a direct option on the San Francisco service. An estimated 492,000 O&D passengers travelled between Philadelphia and Los Angeles last year and approximately 388,000 between Philadelphia and San Francisco.

As the table above shows Los Angeles was the seventh largest market for O&D traffic to and from Philadelphia. Despite the healthy traffic flows San Francisco didn't make it into the top ten list and currently resides at number 12, a position that will certainly change following the arrival of Virgin America in this market.

As Virgin America has proven on many of its other routes, its arrival into a particular markets has helped drive down air fares, a major fillip for consumers but not for competitors on the routes as their yields weaken. Virgin America puts the figure at around a 33 per cent fall in air fares particularly in markets like these were there are no other low-cost operators. According to IATA statistics, the average one-way fare on the Philadelphia – Los Angeles route over the past year was $415 while the average one-way fare between Philadelphia and San Francisco was higher at $441.

Virgin America highlighted the impact its arrival in domestic markets has had on air fares in a DOT application last year. According to the carrier its flights on many US domestic routes has resulted in air fares falling by between a third and a fifth. For example between New York and Los Angeles and San Francisco it says average fares have reduced by up to 31 per cent (see below). These figures are from the airline and will therefore obviously show the biggest price differences on the particular routes during only a selected period of time.

Source: Virgin America, US DOT Application

“Travellers deserve more options than just the typical legacy airline cattle car, and we hope our unique brand of low fares and inventive service will be a breath of fresh air for Philadelphians,” said David Cush, President and Chief Executive Officer, Virgin America. “When more airlines compete, consumers win – with lower fares and better service.”

The airline expects a strong business and leisure demand. The Philadelphia region, including northern Delaware, southern New Jersey and southeastern Pennsylvania, is home to a robust pharmaceutical industry and is an important East Coast hub for biotechnology R&D and Virgin America’s onbaord product with IFE and WiFi will certainly be popular for travellers including those commuting from Philadelphia to Silicon Valley and Southern California.