No gates at O’Hare leaves Virgin in lurch
Virgin America, unable to lease gates from other carriers at Chicago's O'Hare International Airport, will soon decide whether to scrap plans to enter the Chicago market.
Virgin America, unable to lease gates from other carriers at Chicago’s O’Hare International Airport, will soon decide whether to scrap plans to enter the Chicago market.
“I’m guessing we’re a couple of weeks away from making a tough decision,” David Cush, president and chief executive of San Francisco-based Virgin told the Tribune.
If Virgin America does bail on Chicago, it will mark the latest setback in a string of problems besetting the carrier that aimed to be the first lower-cost airline to directly challenge United and American Airlines on flights to the West Coast’s largest business centers, San Francisco and Los Angeles.
City officials said they are trying to broker a deal on behalf of Virgin American.
“We continue to hold discussions with the airline about gate options,” said Karen Pride, spokeswoman for the City of Chicago’s Aviation Department.
Added Cush: “There is a solution to this problem. I just don’t know how we get there.”
Chicago also was to have been Virgin’s first midcontinent destination, a place where customers could connect to trans-Atlantic flights offered by Virgin Atlantic, a sister company.
But those plans have been stymied by an unusual setup at O’Hare that gives airlines control over their gates through long-term leases that don’t expire until 2018.
Virgin has landing rights for the five daily flights it planned to initially offer from O’Hare to Los Angeles and San Francisco, Cush said. But not having gates has forced the discounter, affiliated with Richard Branson, to postpone its entry into O’Hare to Feb. 28. It had expected to begin flights here this fall.
Virgin has discussed leasing gates with United, American and Delta Air Lines, Cush added. But none of the airport’s longtime occupants is ready to part with gates despite deep cutbacks in their operations. Many airports require airlines to maintain a certain level of flying in order to keep their gates.
United’s capacity at the airport is down 21 percent from 2000 levels, according to data compiled for the Tribune by OAGback Aviation Solutions, while American and Delta have pared their flying by 22 percent and 45 percent, respectively.
Cush said Virgin had set aside three planes to fly the Chicago routes but would use them to enter a new Eastern Seaboard market if O’Hare doesn’t work out. The discounter operates 24 aircraft and plans to grow modestly in 2009, adding four jets to its fleet.
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Henry Harteveldt, a travel analyst with Forrester Research Inc., said the foul-up at O’Hare also points to execution problems at Virgin. While the start-up has won raves for its service, which is aimed at business travelers, it has been slow to add some of the amenities that its target audience value most.
The airline is known for its new planes, funky interiors and business-friendly features like seat-side plugs for laptops. It will roll out onboard Wi-Fi service this month and plans to have it installed on all its aircraft by spring 2009.
But Virgin didn’t unveil a frequent-flier program until last month, more than a year after it started service. And it hasn’t added any destinations to its route map since spring, after encountering soaring fuel prices followed by a recession that hurt travel. The airline flies to seven cities clustered along the East and West Coasts.
“They don’t have a cohesive advertising strategy; they don’t have a cohesive route network,” Harteveldt said. “They’ve lost the opportunity to really make meaningful inroads against United and American on coast-to-coast networks.”
But Virgin grew at a faster rate than JetBlue Airways did during its first year of operations, with 24 planes to the New York-based discounter’s 11 aircraft, noted Virgin spokeswoman Abby Lunardini. Virgin’s frequent-flier program has 500,000 members and is enrolling 1,300 people per day, on average.
And the low-cost carrier’s network would be broader if it weren’t attempting to gain a foothold at airports where capacity is constrained: Newark (N.J.), where it can’t gain slots, and O’Hare.
“I’d say we’ve tapped the brakes a bit and are growing less aggressively, but we’re still growing, just more slowly in 2009,” Lunardini said