Virgin America set to soar today

An RTT Global News report says that while US Airfare competition has always been intense, stakes are rising as new fleets hit the market.

After overcoming a lengthy court battle, Sir Richard Branson’s Virgin brand enters the U.S. domestic market today, with the outspoken billionaire, while muzzled somewhat by the controversy surrounding his entry into the new routes, saying he believes it is the perfect time to take advantage of the American market.

Whether he will be able to overcome the issues that have stifled U.S. carriers in the past remains an open question.

Virgin America enters the U.S. market today with flights between New York City and San Francisco, with flights offering passengers satellite TV, video games, mood lighting and leather seats.

The airplane caters to its high tech customers as well, offering Ethernet and USB port as well as a QWERTY keyboard input for the plane’s Linux-based terminals and along with the aforementioned perks, the airplane company has also promised low prices.

The Virgin America concept expands on Branson’s Virgin brand, which includes businesses focused on everything from cell phone service to soft drinks. In the aviation category, the company already boasts Virgin Atlantic, an international carrier, and Virgin Blue, a low-cost airline in Australia. Virgin’s travel services also include Virgin Galactic, through which Branson plans to one day offer commercial trips to outer space.

Luxury surroundings aside, Virgin America will face the same weather, air-traffic control system and economic swings that plague the American airline market. Virgin America hopes that the new amenities will overcome the possible pitfalls, and lure customers eager to find affordable flights with leg room.

Branson has stated he wants to offer Americans a better option. While U.S. airline companies are hit with bankruptcies and union problems, Branson remarked that it’s a perfect time to step in. The introduction of the fleet comes after one of the worst summers for flying, as the summer was rife with people sitting on tarmacs for hours with little to no compensation. Already, the airline has the cheapest advance ticket between NYC and San Francisco; just over $250 before taxes. Previously, ticket prices were $310 around mid July.

As well as offering American customers a sweeter deal, Branson sees the airline as a chance to aid the green movement. All profits from Virgin America will be invested into the development of clean fuels. The green product market has been widening recently and could become profitable in the future. Branson stated, “If we can come up with a fuel that replaces gasoline, then I’m sure we’ll make a penny.”

While the airline seems to have soared into the market, the entrance comes only after a court battle. Though the company had initial funding of $128 million, one of the highest numbers in start up airline history, this week’s launch follows a 17 month fight. The company had to convince the U.S Department of Transportation that Branson’s Virgin Group Ltd., which owns a 25% stake in the airline, complies with U.S. foreign ownership laws. U.S. airline giants Continental and American aggressively lobbied against Virgin America after it first filed for permission in December 2005.

Virgin America was given the green light only after taking steps to make sure Branson’s voice remained a minority in the boardroom, and that Fred Reid, Virgin America’s CEO, who regulators argue remains “beholden” to Virgin Group, must step down shortly after the airline takes off.

As the airline takes off today, the future of the company will not depend on its overcoming previous battles or ultra luxurious setting. The question will be whether Virgin America can generate repeat business and garner customer loyalty.

Report by The Mole