British Airways to commence 787 service to Hyderbad in March 2014

by Devesh Agarwal

Image courtesy British Airways

Flag carrier British Airways will bring its latest aircraft, the 787-8 Dreamliner to India in the summer 2014 schedule which starts on March 30th. The aircraft has 214 seats in a three-class cabin layout with 35 business class seats, 25 economy plus, and 154 economy class seats. The aircraft features the latest cabin product of British Airways, though the economy class is the bone crunching nine-abreast seating.

Hyderabad will be the first destination in India, as the airline currently flies a daily 767-300 to the city with 189 seats in a three-class cabin layout with 24 business, 24 economy plus and 141 economy class seats.

The most rational explanation for the airline to operate the 787 to Hyderabad appears to be the similarity in size.

British Airways is also expanding routes using its new aircraft. Their A380 will begin flying between London Heathrow and Washington Dulles from September 1, 2014. The aircraft is already flying between London Heathrow and Los Angeles and Hong Kong direct, and will start services between London and Johannesburg in February 2014.

The airline's Boeing 787s will fly nonstop between London and Austin, Texas from March 3, 2014, Philadelphia, USA, from June 5 and Calgary, Canada from July 5, 2014. In addition to Hyderabad, the 787 will commence Chengdu, China as another Asian destination from May 5, 2014.

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Qatar Airways to fly to Miami from June 2014

by Devesh Agarwal

Image courtesy Qatar Airways

Flag carrier, Qatar Airways, has announced Miami to be its sixth destination in the United States with flights beginning June 10, 2014.

The airline will offer four non-stop flights a week from Doha using a Boeing 777-200LR aircraft in a two class configuration with 42 lie-flat seats in business class, and 217 seats in economy.

The proposed schedule dove-tails well with flights to the Indian sub-continent, which arrive in to Doha early morning, and depart at night.

Tuesday, Thursday, Saturday and Sunday
QR777 departs Doha 08:40 (8:40am) arrives Miami MIA 17:20 (5:20pm). Travel time: 15h40m.
QR778 departs Miami 21:15 (9:15pm) arrives Doha 18:20 (6:20pm) the next day. Travel time: 14h20m.

As it prepares to enter the oneworld alliance, this is a good move by Qatar Airways as Miami is the gateway to Latin America for oneworld original member American Airlines. Qatar already operates to American's hub in Chicago, and to Houston, New York (JFK), and Washington D.C. (Dulles), and will add Philadelphia in April 2014.

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BREAKING: US Airways Shareholders Approve Merger With American Airlines

by Vinay Bhaskara

Earlier today, at its annual general meeting for shareholders, the shareholders of Tempe, Arizona based US Airways voted to approve the merger between US Airways and Fort Worth, Texas based American Airlines. The merger, which would create the world's largest carrier by passengers carried, was announced on February 14, 2013.

Under the terms of the merger agreement, US Airways shareholders would get 28% of the combined shares in the company. The all-stock transaction would yield a company with annual revenues of nearly $38.7 billion, and headquartered in Dallas Fort Worth. The new board would include 5 AMR creditor representatives, 3 current AMR directors, and
4 US Airways representatives. US Airways shareholders did not question any component of the merger agreement proposal before voting.

According to US Airways CEO Doug Parker, the merger is still on track to close by the end of the 3rd quarter. Clearance for the merger is still required from the Department of Justice and the AMR bankrupcy court. Parker said at the meeting that if forced too, the new American will give up precious landing slots at Washington's Reagan National Airport, where the merged carrier will hold a dominant market share. However, Parker warned that the first markets to lose service as a result of divestment would be small cities. Parker said that the new American preferred to keep its entire slot holdings intact post merger;

There is no such standard in antitrust law that says airlines can't have that size of departures from any given airport.

Parker also tried to downplay any antitrust concerns surrounding the deal.

It [the new American] creates an important strong competitor to United, Delta and Southwest .... We will create a premier global airline.

Recent testimony from the US Government Accountability Office (GAO) before Congress warned that Philadelphia International Airport, currently US Airways' second largest hub and trans-Atlantic gateway, could lose service post merger to nearby New York JFK. However, Parker, in responding to a question from a Philadelhpia based frequent flyer and shareholder appeared to allay these concerns.

"Our hub [in Philadelphia] does well for US Airways... it will do even better as a part of American"

The new American will operate a mainline fleet of more than 940 aircraft, operating more than 6,700 flights per day to 336 destinations around the globe.

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Analysis: Qatar Airways to Philadelphia -- Etihad upgrades New York JFK

Major route announcements came from 2 Middle Eastern carriers yesterday, with Qatar Airways announcing plans to start new services to Philadelphia, Pennsylvania, USA (as well as Addis Ababa and Clark in the Philippines) and newly minted Jet Airways partner Etihad Airways revealing an up-gauge in capacity on its daily Abu Dhabi-New York JFK services to a Boeing 777-300ER.

For Qatar Airways, Doha-Philadelphia services will be launched in March of 2014. The airline had previously stated that its next US destination would be one of Atlanta, Boston, or Detroit. But the announcement of the mega-merger between US Airways and American Airlines, Qatar Airways’ oneworld partner, changed the calculus on US services. Philadelphia will be the new American’s gateway to the Northeast, and of current US destinations for Qatar Airways, one of two to offer serious connectivity through its oneworld partner American. When coupled with existing flights to American’s hub at Chicago’s O’hare International Airport, Qatar Airways has effectively bracketed the entire Eastern United States in terms of its network. There is also significant O&D traffic to support this route. While Philadelphia itself doesn’t have huge business travel demand to Asia, the Philadelphia metro area, especially the New Jersey suburbs, are home to huge numbers of Asians, primarily from the Indian subcontinent. When combined with the affluent base of South Asians in Central NJ, the Philly flight has a significant O&D base behind it, and allows Qatar Airways to bracket the South Asian VFR demand in New Jersey with flights on either end.

Meanwhile, rival Etihad Airways is up-gauging its own services Abu Dhabi – New York JFK to a daily Boeing 777-300ER from the current Airbus A340-500. The 777-300ER will offer a total of 328 seats (8F/40J/280Y), an increase of 36.6% over the current 240. The move can be tied in part to the recently born Jetihad, which will deliver increased demand from the Indian subcontinent for Etihad’s westbound intercontinental services. Jetihad will also result in services from Abu Dhabi to Newark, likely on a 777-300ER as well, and daily 777-300ERs to both Newark and JFK is a good bracketing strategy for the NYC area.

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American Airlines and US Airways to merge in $11 billion deal

American Airlines and US Airways officially announced their expected merger yesterday. Press release is below.

American Airlines, US Airways combined route map 

AMERICAN AIRLINES AND US AIRWAYS TO CREATE A PREMIER GLOBAL CARRIER --
THE NEW AMERICAN AIRLINES

Customers to Benefit from an Expanded Global Network and Investment in New Aircraft, Technology, Products, and Services

Combined Company to Enhance oneworld® Alliance, Offering a Seamless Global Network

Will Improve Loyalty Benefits by Expanding Member Opportunities to Earn and Redeem Miles

Combination Provides Path to Improved Compensation and Benefits with Greater Long-Term Opportunities for Employees of Both Companies

Combined Airline Expects to Maintain All Hubs and Service to All Destinations

Expected 2015 Annual Synergies of More Than $1 Billion, Creating Value for Stakeholders of
Both Companies

Enhances Recoveries for Stakeholders

AMR Stakeholders to Own 72% and US Airways Shareholders to Own 28% of
Combined Company’s Common Stock

Company to Retain Iconic, Globally Recognized American Airlines Brand

Company to Be Headquartered in Dallas-Fort Worth, with Significant Corporate and Operational Presence in Phoenix

FORT WORTH, TX, and TEMPE, AZ, February 14, 2013 – AMR Corporation (OTCQB: AAMRQ), the parent company of American Airlines, Inc., and US Airways Group, Inc. (NYSE: LCC) today announced that the boards of directors of both companies have unanimously approved a definitive merger agreement under which the companies will combine to create a premier global carrier, which will have an implied combined equity value of approximately $11 billion based on the price of US Airways’ stock as of February 13, 2013.

Operating under the American Airlines name, one of the most recognized brands in the world, the combined airline will have a robust global network and a strong financial foundation.  The merger will offer benefits to both airlines’ customers, communities, employees, investors, and creditors.  Customers will have access to more choices and increased service across the combined company’s larger worldwide network and through an enhanced oneworld® Alliance, of which American Airlines is a founding member.  With firm orders for more than 600 new mainline aircraft, the combined airline will have one of the most modern and efficient fleets in the industry, and a solid foundation for continued investment in technology, products, and services.

Thomas Horton, Chairman, President and Chief Executive Officer of American Airlines, will serve as Chairman of the combined airline’s Board of Directors through its first annual meeting of shareholders, and will also serve as the combined airline’s representative to the oneworld Alliance, of which he is currently chairman, and International Air Transport Association for the same duration.  Doug Parker, Chairman and CEO of US Airways, will serve as Chief Executive Officer and a member of the Board of Directors.  Mr. Parker will assume the additional position of Chairman of the Board following the conclusion of Mr. Horton’s service.  The Board of Directors will initially be made up of twelve members.  The Board will be comprised of three American Airlines representatives, including Tom Horton, four US Airways representatives, including Doug Parker, and five AMR creditor representatives.

Under the terms of the merger agreement, US Airways stockholders will receive one share of common stock of the combined airline for each share of US Airways common stock then held.  The aggregate number of shares of common stock of the combined airline issuable to holders of US Airways equity instruments (including stockholders, holders of convertible notes, optionees and holders of restricted stock units) will represent 28% of the diluted equity of the combined airline. The remaining 72% diluted equity ownership of the combined airline will be issuable to stakeholders of AMR and its debtor subsidiaries that filed for relief under Chapter 11 (the “Debtors”), American’s labor unions, and current AMR employees.

The merger is to be effected pursuant to a plan of reorganization (the “Plan”) for the Debtors in their currently pending cases under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. The Plan is subject to confirmation and consummation in accordance with the requirements of the Bankruptcy Code.

In connection with the merger agreement, AMR has entered into a support agreement with certain unsecured creditors holding approximately $1.2 billion of prepetition unsecured claims against the Debtors.  Pursuant to the support agreement, the creditors party thereto have agreed, subject to certain conditions, to support a plan of reorganization implementing the merger and incorporating a compromise and settlement of certain intercreditor and intercompany claims issues.  Provisions of the support agreement relating to the treatment of prepetition unsecured claims against the Debtors and the treatment of existing equity interests in AMR are summarized further below.

The combined airline will offer more than 6,700 daily flights to 336 destinations in 56 countries.  The combined airline is expected to maintain all hubs currently served by American Airlines and US Airways, resulting in more travel options for customers.  Both airlines expect that the regional carriers they own – AMR Corporation’s American Eagle and US Airways’ Piedmont and PSA – will continue to operate as distinct entities, providing seamless service to the combined airline.  The company will be headquartered in Dallas-Fort Worth and will maintain a significant corporate and operational presence in Phoenix.

“Today, we are proud to launch the new American Airlines – a premier global carrier well equipped to compete and win against the best in the world,” said Tom Horton, Chairman, President, and Chief Executive Officer of American Airlines.  “Together, we will be even better positioned to deliver for all of our stakeholders, including our customers, people, investors, partners, and the many communities we serve.

“The combination of American and US Airways brings together two highly complementary networks with access to the best destinations around the globe and gives us a strong platform to provide our customers the most connected, comfortable travel experience available.  The operational and financial strength of the combined airline is expected to enable continued investment in new products and technologies and will create exciting new opportunities for our people, even as we deliver strong cash flow and sustainable profitability.

“Over the past year, the American team stood tall as we established a rock solid foundation for long-term success through an efficient and effective restructuring.  As part of this process, after months of exhaustive analysis and a thorough review of all alternatives, we concluded that this merger is the best outcome for our company, delivering not only the greatest value for our financial stakeholders, but also positioning us well for sustainable success over the long term.

“This merger provides enhanced potential for full recovery for our creditors.  In addition, I am pleased that we were able to obtain the support of a sizable portion of our unsecured creditors for a plan that provides a recovery of at least a 3.5% aggregate ownership stake in the combined airline for our shareholders.  It is unusual in Chapter 11 cases – and unprecedented in recent airline restructurings – for shareholders to receive meaningful recoveries.  I look forward to working closely with Doug Parker, whom I have known as a friend for more than 25 years, and with the leadership teams of both companies to assure a smooth integration and the creation of a new industry leader.”

Doug Parker, Chairman and Chief Executive Officer of US Airways, said, “Today marks an exciting new chapter for American Airlines and US Airways.  American Airlines is one of the world’s most iconic brands.  The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace.  Our combined network will provide a significantly more attractive offering to customers, ensuring that we are always able to take them where they want to travel, when they want to go.”

Parker continued, “Today’s announcement is possible only because of the important work carried out over the past year by Tom Horton and the American team.  No one cares more about the long-term success of American Airlines and its people than Tom.  Through a successful restructuring and this merger, Tom and the American team have established an excellent foundation for the new American Airlines to become a premier global airline.  I am grateful for all that Tom has done to ensure that American is in the best position possible for future success and am delighted he has agreed to remain on board to assist with the transition.

“I am particularly pleased for the employees of both US Airways and American.  This merger will create a stronger company, with the path to improved compensation and benefits and greater long-term opportunities for all our employees.  We are grateful to have the support of both companies’ unions and thank them and their leaders for their hard work and vision.  We look forward to a bright future for our employees and enhanced service and choice for our customers.  With today’s announcement, we start becoming one team and one new airline.”

More Choices, Increased Service, and an Enhanced Travel Experience for Customers

The transaction will combine American Airlines’ and US Airways’ complementary flight networks, increasing efficiency and providing more options for customers.  The result for consumers is a highly competitive alternative to other global carriers.  Importantly, the combined worldwide network will offer superior breadth of schedule to high value travelers.

The combined airline is expected to:

• Provide the most service across the East Coast and Central regions of the U.S., including the East Coast shuttle, enhancing the combined carrier’s competitive position
• Expand its presence and further strengthen the network in the Western U.S.
• Bolster American’s industry-leading position in Latin America and the Caribbean
• Enhance connectivity within the oneworld Alliance – including joint businesses with British Airways and Iberia across the Atlantic and with Japan Airlines and Qantas across the Pacific – creating more options for travel and benefits both domestically and internationally
• Serve 21 destinations in Europe and the Middle East
• Maintain current hubs of both American Airlines and US Airways, resulting in more choices for customers
• Improve traffic flows through the existing hubs of both carriers
• Expand service from those hubs to offer increased service to existing markets and service to new cities
• Provide an industry-leading travel experience through innovative initiatives intended to increase comfort and connectivity for all customers
• Improve valuable loyalty program benefits through expanded opportunities to earn and redeem miles across the combined network

In addition, American Airlines’ landmark agreements with Airbus and Boeing, designed to transform the American Airlines fleet over the next four years, will solidify the combined airline’s fleet plan into the next decade.  The combined airline is planning to take delivery of more than 600 new aircraft, including 517 narrowbody aircraft and 90 widebody international aircraft, most of which will be equipped with advanced in-seat inflight entertainment systems offering thousands of hours of programming, inflight Wi-Fi offering connectivity throughout the world, and “Main Cabin Extra” seating with 4-6 inches of additional legroom in the Main Cabin.  The combined carrier’s fleet will also feature fully lie-flat, all-aisle access premium seating on American’s new Boeing 777-300ER aircraft and Airbus 321 Transcontinental deliveries slated for later this year. Similar to US Airways’ Airbus A330 international Envoy service, American will also retrofit existing 777-200 and 767-300 aircraft to include fully lie-flat premium seating in an effort to provide a consistent experience for customers flying on the combined carrier.

Customers can continue to book travel and track and manage flights and frequent flyer activity through AA.com or USAirways.com, and will continue to enjoy all benefits and rewards of the AAdvantage and Dividend Miles frequent flyer programs.  At this time, there are no changes to the frequent flyer programs of either airline as a result of the merger agreement.  All miles in both programs will continue to be honored.  Upon merger approval, additional information will be provided to customers of both frequent flyer programs on any future program updates, including account consolidation or benefit alignment.

Employees to Benefit from Greater Long-Term Opportunities

Employees of the combined airline will benefit from being part of a company with a more competitive and stable financial foundation, which will create greater opportunities over the long term.  Each carrier’s employees will receive reciprocal travel privileges as quickly as possible.  The merger will also provide the path to improved compensation and benefits for employees.

“Together we will combine the proud histories of both airlines and create one team that recognizes the contributions of all employees to our airlines’ great customer service and financial success.  Our future has never looked brighter thanks to the outstanding people of both American Airlines and US Airways,” concluded Parker.

As previously announced, the unions representing American Airlines pilots, flight attendants and ground employees, as well as the union representing US Airways pilots, have agreed to terms for improved collective bargaining agreements effective upon the closing of the merger. In addition, the union representing US Airways flight attendants has reached a tentative agreement that includes support for the merger. The American Airlines unions representing pilots and flight attendants are working with their US Airways counterparts to determine representation and single agreement protocols.

Superior Value for Stakeholders

American Airlines stakeholders and US Airways shareholders are expected to benefit from the significant upside potential of the new combined airline, which is expected to have approximately $40 billion in revenues based upon the combination of each company’s projected 2013 performance.  The combination is expected to deliver enhanced value to American Airlines stakeholders and is projected to be significantly accretive to EPS for US Airways shareholders in 2014.

The transaction is expected to generate more than $1 billion in annual net synergies in 2015, including $900 million in network revenue synergies, resulting predominantly from increased passenger traffic, taking advantage of the combined carrier’s improved schedule and connectivity, an improved mix of high-yield business, and the redeployment of the combined fleet to better match capacity to customer demand.  Estimated cost synergies of approximately $150 million are net of the impact of the new labor combined contracts at American Airlines and US Airways.  The companies expect one-time transition costs for the merger of approximately $1.2 billion, spread over the next three years.

The abovementioned provisions of the support agreement relating to the treatment of prepetition unsecured claims against the Debtors and existing equity interests in AMR under a plan are summarized as follows:

• Holders of existing AMR equity interests will receive an aggregate initial distribution of 3.5% of the common stock of the combined airline on the effective date of the plan, with the potential to receive additional shares if the value of common stock received by holders of prepetition unsecured claims would satisfy their claims in full;
• So-called “double dip” creditors (i.e., holders of prepetition unsecured claims as to which both AMR and American Airlines are obligors, either directly or indirectly) will receive shares of mandatorily convertible preferred stock equal to the full amount of their claims.  These shares will convert into common stock of the combined airline at 30 day intervals during the 120 day period following the effective date of the plan, based on a formula tied to the market price of the common stock of the combined airline;
• So-called “single dip” creditors (i.e., holders of prepetition unsecured claims that are not guaranteed) will receive a combination of shares of the same class of mandatorily convertible preferred stock as the “double dip” creditors will receive and shares of common stock of the combined airline;  and
• American Airlines’ labor unions and other employees will receive an aggregate of 23.6% of the common stock of the combined airline ultimately distributed to holders of prepetition unsecured claims against the Debtors.

The support agreement can be terminated in certain instances, including the failure of the Debtors to achieve certain milestones toward confirmation and consummation of the plan.

Clear Roadmap to Completion

The merger is conditioned on the approval by the U.S. Bankruptcy Court for the Southern District of New York, regulatory approvals, approval by US Airways shareholders, other customary closing conditions, and confirmation and consummation of the Plan.  The combination is expected to be completed in the third quarter of 2013.  During the period between the signing and closing of the transaction, a transition-planning team comprised of leaders from both companies will develop a carefully constructed integration plan to help assure a smooth and sustainable transition.

Tax Benefit Preservation Plan

In conjunction with execution of the Merger Agreement, US Airways also announced today that its Board of Directors has adopted a tax benefit preservation plan designed to help preserve the value of the net operating losses and other deferred tax benefits of US Airways and the combined enterprise resulting from the merger with AMR.  The tax benefit preservation plan, which is effective immediately and will remain in place no longer than the closing of the merger, is designed to reduce the likelihood that changes in the US Airways investor base would limit the future use of the tax benefits by US Airways or the combined enterprise, which would significantly impair the value of the benefits to all shareholders.

As part of the plan, the US Airways Board of Directors has declared a dividend of one common stock purchase right, which are referred to as “rights,” for each outstanding share of US Airways common stock.  The rights will be exercisable if a person or group, without the approval of the US Airways board or other permitted exception, acquires beneficial ownership of 4.9% or more of US Airways’ outstanding common stock.  The rights also will be exercisable if a person or group that already beneficially owns 4.9% or more of the common stock of US Airways, without board approval or other permitted exception, acquires additional shares (other than as a result of a dividend or a stock split).  If the rights become exercisable, all holders of rights, other than the person or group triggering the rights, will be entitled to purchase US Airways common stock at a 50% discount.  Rights held by the person or group triggering the rights will become void and will not be exercisable.  The rights will expire immediately upon the occurrence of certain events, including the closing of the merger or the termination of the merger agreement.  In addition, the certificate of incorporation of the combined company will contain limitations on certain acquisitions and dispositions of shares effective from and after the closing of the merger, also with the objective of preserving the value of net operating losses and other deferred tax benefits.

US Airways shareholders with ownership positions near or above the 4.9% threshold specified in the tax preservation plan are urged to review its terms carefully.  Further details about the plan will be contained in a Form 8-K to be filed today by US Airways with the Securities and Exchange Commission.

Website

Additional information about the benefits of the transaction is available at a new joint website launched by the airlines at www.newAmericanarriving.com. Customers are also invited to learn more at www.aa.com/arriving and www.usairways.com/arriving.

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JetBlue to launch Boston-Philadelphia - Will it last?

by Vinay Bhaskara

New York based low cost carrier (LCC) JetBlue will be launching 5 flights per day between their second largest hub in Boston and Philadelphia beginning May 23, 2013. All flights will be operated with Embraer E190s

B62059 BOS 0640 – 0809 PHL E90 Daily
B62159 BOS 0845 – 1016 PHL E90 Daily
B62259 BOS 1124 – 1250 PHL E90 Daily
B62359 BOS 1505 – 1639 PHL E90 Daily
B62459 BOS 1810 – 1949 PHL E90 Daily

B61776 PHL 0845 – 1017 BOS E90 Daily
B62060 PHL 1055 – 1227 BOS E90 Daily
B62160 PHL 1325 – 1454 BOS E90 Daily
B62260 PHL 1715 – 1855 BOS E90 Daily
B62360 PHL 2025 – 2154 BOS E90 Daily

JetBlue's primary competition on the route will be full service carrier US Airways, who operates 16 flights per day between Boston and its hub in Philadelphia. Several carriers have, in the past, attempted to challenge US Airways on the route, including full service carriers American Airlines and Delta Airlines, as well as LCCs AirTran Airways and Southwest Airlines.

In each case, the competing airline was forced off of the route within 4 years - and even LCC powerhouse Southwest ended service on the sector in February, 2012. JetBlue is stronger in Boston in terms of frequent flyer base and demand base than any of those carriers ever were on either end, and the 5x daily frequency is certainly strong enough for business travelers (though not optimal - which would be in the 8-10x daily range). But even so, US Airways has successfully driven several airlines off of this route. It will be interesting to see how this route performs as JetBlue continues to strengthen its Boston hub over the coming months.

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Virgin America to take delivery of 6 A320s in the first half of 2012 (and other news)

Late last week, San Francisco based Virgin America announced their latest destination, Philadelphia, which will be served from Los Angeles and San Francisco.

Flights will begin in April with two daily flights from LA and one from San Francisco, and will increase to 3 and two daily flights respectively.

Schedules for the new routes are as follow: (via airlineroute)

Los Angeles – Philadelphia

VX124 LAX1055 – 1900PHL 320 Daily
VX126 LAX1540 – 2355PHL 320 Daily
VX130 LAX2135 – 0545+1PHL 320 Daily

VX121 PHL0700 – 0955LAX 320 Daily
VX125 PHL1125 – 1425LAX 320 Daily
VX127 PHL2005 – 2255LAX 320 Daily

San Francisco – Philadelphia

VX136 SFO0830 – 1655PHL 320 Daily
VX144 SFO2300 – 0725+1PHL 320 Daily

VX137 PHL0835 – 1155SFO 320 Daily
VX141 PHL1750 – 2110SFO 320 Daily

The routes will be operating from common usage gates in Philadelphia's terminal E.

We spoke with Virgin America's media team regarding the new route and some other occurrences at the airline.

Last year, Virgin America CEO David Cush told me in an interview that their A320s occasionally struggle to make East Coast- West Coast (US) flights nonstop, necessitating the A319s in their fleet. Thus I was surprised to see that Philadelphia was scheduled to be served solely with Airbus A320s. However, Virgin America spokesperson Abby Lunardini stated that there were "No restrictions for PHL, so right now [the flight is] operating on 320s." However, it remains to be seen whether or not the A320s will make this route all the time next winter, and Lunardini did mention that, " as with other East Coast routes, we [can] operate a mix of A319s and A320s on the route depending on time of year flying."

I was also interested to ask about Virgin America's growth plans. Since its inception in 2007, Virgin America has been the fastest growing US airline, with annual capacity increases hovering around 30%. A figure in the ballpark of 30% for Virgin America was quoted in 2011 by Aviation Week, however, the carrier will be taking delivery of six A320s in the first half of 2012 – which will be the total number of aircraft that they take new delivery of this year. 6 new planes would likely necessitate increased utilization of current aircraft to meet capacity targets. Virgin America neglected to provide specific capacity guidance for 2012.

Virgin America had a few teething problems problems with their reservation systems earlier this month, after switching from an upstart reservations system back to industry leader Sabre. We expect this move to improve their visibility amongst business travelers. However, the switch did result in a few customer service issues for Virgin America passengers; with reduced website functionality and unsatisfactory call center performance.

To their credit, Virgin America owned up to the issues when questioned, and they believe that the worst of the problems are now behind them.

Here is what Lunardini had to say on the issue of the reservation systems:

Yes, the overwhelming majority of web issues have been resolved – and bookings are operating normally. By way of further background,reservations systems switches of this scale are a once in a lifetime event for an airline, involving the knife-edge migration of millions of records during live operations. Prior to the switch, we additionally staffed our operation, thinned our flight schedules and communicated to guests in advance about the potential impacts. Although our airports ran on time and without related cancellations, as an airline that prides itself on its guest service –we never like to see guests inconvenienced for any reason, including the web errors a sub-set of guests were encountering (ability to change/cancel online,check-in, view Elevate points and other web services) as well as unacceptably long call hold times. We apologized to impacted guests and offered 5000 Elevate points for those guests most impacted.

We made the switch to Sabre because of our growth. We needed to move to an industry standard system that would accommodate our growth, allow us to expand our code-share/interline ability and give guests and teammates better tools.

All told, some interesting news from San Francisco. Readers, do you have a question or thought about Virgin America? Please do let us know via a comment below.

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