Richard Branson’s new Virgin America airline, that is. The U.S. Dept. of Transportation has rejected Virgin America’s application to fly domestically, on the basis of its foreign ownership. So Virgin is taking is plight straight to the people, with a tantalizing website replete with petition.
Virgin Can’t Get Off the Ground
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Stephen, I notice you dont pass judgement on the Dept. of Transportation blocking Virgin. How do you feel about it?
Considering that DHL’s acquisition of Airborne Express already created foreign ownership of a US domestic airline, I dont see the argument here. I also thought that Virgin was trying to do it through a loophole.
I tend to err on the side of purist capitalism. Even if you do want to restrict who can compete, Richard Branson is a responsible businessman who likes to shake up the markets he enters. Virgin America would be good for the consumer and bad for the airlines.
Stephen, I notice you dont pass judgement on the Dept. of Transportation blocking Virgin. How do you feel about it?
Considering that DHL’s acquisition of Airborne Express already created foreign ownership of a US domestic airline, I dont see the argument here. I also thought that Virgin was trying to do it through a loophole.
I tend to err on the side of purist capitalism. Even if you do want to restrict who can compete, Richard Branson is a responsible businessman who likes to shake up the markets he enters. Virgin America would be good for the consumer and bad for the airlines.
…good for the consumer and bad for the airlines
If you mean that price competition would follow, probably yes. But that might not be all that good for consumers, as we already have Gresham’s Law in full force in the air market.
Maybe it’s inevitable, but all I see coming from the airlines today is price competition — I’m still waiting for there to be actual price and service points. I’d happily pay 10% more for 10% better service, but that’s not how this industry works, and that’s bad for everyone (IMO).
Instead we have this insane system where no two people on a given flight have paid the same price, and all are subject to the lowest common denominator in service.
There are only two levels of quality: horrible, at a wide range of prices, and pretty good, at an outrageous price. In no other industry would this be tolerated indefinitely.
Maybe Branson could find an innovative way to compete that would break this game open. We’ll never know if we don’t give him a chance.
…good for the consumer and bad for the airlines
If you mean that price competition would follow, probably yes. But that might not be all that good for consumers, as we already have Gresham’s Law in full force in the air market.
Maybe it’s inevitable, but all I see coming from the airlines today is price competition — I’m still waiting for there to be actual price and service points. I’d happily pay 10% more for 10% better service, but that’s not how this industry works, and that’s bad for everyone (IMO).
Instead we have this insane system where no two people on a given flight have paid the same price, and all are subject to the lowest common denominator in service.
There are only two levels of quality: horrible, at a wide range of prices, and pretty good, at an outrageous price. In no other industry would this be tolerated indefinitely.
Maybe Branson could find an innovative way to compete that would break this game open. We’ll never know if we don’t give him a chance.
I should note that Virgin Atlantic has done well on price and service and “features”. They introduced seat back screens with a huge library of movies and TV shows which you could start at any time (and FF and RW and pause); all this long before most Airlines even had seat back screens. They added video games and airplane wide games (playing against other passengers). They have done many other things like this, yet still put downward pressure on price. They also tend to be friendly, “cheeky” (intended to be in a good way), and reliable.
Virgin America is trying to use a loophole, by having an American partner who *appears* to own enough shares. Since they would adhere to US rules, be based in the US with a lot of autonomy (think Virgin Mobile USA for example), and have a positive impact on the US market, I think it is sad that they are being blocked.
I should note that Virgin Atlantic has done well on price and service and “features”. They introduced seat back screens with a huge library of movies and TV shows which you could start at any time (and FF and RW and pause); all this long before most Airlines even had seat back screens. They added video games and airplane wide games (playing against other passengers). They have done many other things like this, yet still put downward pressure on price. They also tend to be friendly, “cheeky” (intended to be in a good way), and reliable.
Virgin America is trying to use a loophole, by having an American partner who *appears* to own enough shares. Since they would adhere to US rules, be based in the US with a lot of autonomy (think Virgin Mobile USA for example), and have a positive impact on the US market, I think it is sad that they are being blocked.
I think Virgin could do wonders for the American market. They currently offer far better service than any of the American domestic airlines. I think it would do well for the entire industry to have to compete with Virgin.
I think Virgin could do wonders for the American market. They currently offer far better service than any of the American domestic airlines. I think it would do well for the entire industry to have to compete with Virgin.