Why Virgin America Is (By Far) The Best US Airline
As a (relatively) frequent traveler, typically around ~30-40 trips a year involving flying, I’ve almost universally hated airline brands. Delayed flights due to broken planes, awful customer service, bad e-commerce platforms, overbooked flights, uncomfortable seats, terrible food in-flight, etc. I am not going to go on because I’m sure you have your own things that annoy you about flying.
With that I love to travel personally and professionally and while the aspect of physically moving from place to place via plane is not a pleasant experience I deal with it, and mentally wrote it off as something I’d just always suffer through.
Until I moved to San Francisco and through a recommendation decided to give Virgin America a try several years ago. And since that first flight, something magical happened: an experience I had been conditioned would be terrible became wonderful. In every possible way.
The big ways:
- New fleet – I have not a single time had a Virgin flight canceled or delayed due to maintenance issues. I have repeatedly had problems on nearly all other airlines — stranded, delayed, you name it from mechanical issues. I’ve even been in a plane once that had to make an emergency landing. Not so from Virgin. Perhaps I am lucky but I travel enough that I am exposed to the operational flaws of everyone over a continuum.
- E-commerce experience rocks! More so than any other airline, and in fact they even took some of my feedback into account when building their new website (I noted they they should auto-complete several steps of purchasing tickets, like always having your home city selected as the default ‘from’ airport to provide a better user experience). They actually listen to their users – amazing.
- Flight teams are kind, professional, courteous, fun, hip, creative people (of all ages – they’re all awesome). I have never once had a bad experience here and I am even personal friends with a few flight crews I see frequently. I’ve been treated rudely by several other airlines without provocation.
- On-demand content, high quality food in flight (including healthy options).
- Their pilots are just aces, I’ve never been on smoother flights. Might have to do with newer planes too but the pilots I’ve met have all been top notch and super professional.
The subtle ways:
- All new kiosks / setups for checking in at the airport. I have never waited in a line to check in or print a ticket. They have a generous amount of self-service check-ins and pro travelers do not check luggage. You glide right through and they even have priority lines for SFO.
- Easy to understand / use rewards points system. So easy you can’t mess it up.
- Plane seats are comfortable, plugs on every flight and Internet service. Business travelers can’t go back to any other airline after they experience that the SF >> NY flight is simply 4 hours of productivity from a plane with no worries of dead batteries.
- They love their customers, they let their power users have shares of their IPO at the Wall St price of $23 / share, which garnered a premium of 30% at market open on Friday. They understand that their most passionate users are also frequently members of the investing community and want to let them share in their growth. I love this move because it shows they have the same care of shareholders as they do their customers. So few companies understand importance of both especially airlines.
- A whole bunch of other intangibles from their creative team, such as good music when boarding, while the other airlines show stuffy / boring videos or physical demostrations of FAA-required tips frequent travelers have memorized, Virgin shows a cool / creative video that reinforces their brand and has some fun instead of 5 minutes of wasted time. Who else does stuff like their below video, which by the way has been viewed more than 10 million times. That an airline inspired this organically says it all.
The point is they truly care about their users and have made customer service and experience a priority. Virgin Airlines is, as my friend Seth Godin likes to says, “remarkable.” They are worth remarking about whereas no other airline is.
As just one example of their investment in this, let’s look at just some metrics that are publicly accessible from Twitter, compared with, say Delta (who they actually partner with). Delta’s fleet has 766 planes while Virgin has 53. So Delta which has 1,445% more planes (not to mention a market cap 28x larger) than Virgin has Tweeted barely 15% as much from their main brand handle (update: Anthony points out they have a service account which I didn’t even find upon writing this post, but it doesn’t change their lack of brand engagement from the main corporate handle – they should be doing more here for sure). Their presence on Twitter is obviously just one small indicator but one that shows how dedicated Virgin is to real-time responses and customer service, something that highly matters for this industry. Also just look at the language used for both their bios on Twitter, which tells all the story you need to know about how these companies approach the market. Margin business vs. one that cares. So reminiscent of the greatness that is Zappos.
And as a note, I am not picking on Delta here. I actually think they are the best airline besides Virgin. But what’s amazing is Virgin manages to squeak by with mostly positive reviews (1400+ people actually were passionate enough to comment on our local DMA page on the notoriously snarky Yelp, while Delta manages a paltry 122 mostly negative reviews despite being larger). The language and effusiveness of customer experience on Virgin speaks for itself.
I purchased Virgin America shares (ticker: $VA) on IPO day and plan to be a long-term investor. I believe they will follow the path of Chipotle as they continue to grow in awareness and size. Chipotle continues to grow and steal marketshare from the lower quality fast food chains like McDonald’s whose brand cache continue to slide. Certainly there are plenty of other things that impact the market value and share price of an airline such as oil prices, international crisis’, macro economic indicators, etc. But I think the story is similar in that Chiptole decided to go with fresh, organic food and a focus on filling a totally under-served market segment. Virgin is the premium brand airline and their passengers know it. It’s especially telling as I have friends who travel frequently but haven’t been on Virgin yet. It is still a ‘best kept secret’ and yet their planes are already typically full. The future growth here is going to be amazing.
Interestingly enough, of course some people just don’t quite understand Virgin’s vision or ability to do something different. Industry people are almost always way too close to this stuff as we’ve seen with financial and automotive analysts and press bash Tesla the entire way up (and continue to scream that they’re overvalued). The story on Virgin in the San Jose news highlights this by sharing the “challenges” with Virgin:
There are very profitable airlines such as Spirit, Kaplan explains, that sell cheap tickets but spend very little on operations, so their margins are high. Then there are airlines like Delta, which fly so many routes and cram so many passengers onto planes that their revenue is soaring. Virgin doesn’t really have either — its prices aren’t the cheapest and its flight options are limited. And Virgin puts dozens fewer people on its spacious planes, which means it can’t generate as much cash as competitors.
The thing is, if you are a Virgin user, all of these ‘challenges’ are positives for you! People hate Spirit airlines (to the point media make fun of them), and that Delta crams so many passengers onto a flight in uncomfortable seats isn’t a good thing from a user experience standpoint. And anyway, I fly Virgin all the time and nearly all flights I’m on are full because their users are willing to pay slightly more for a better experience. And there’s that word again: experience. I think there’s been a shift in airlines not exploited yet, that many of us value experience in life above all else and realize every precious second matters. I don’t own a car. Am a minimalist and barely even have “things” in my apartment other than workstation and clothes. I spend my life traveling, working on my passions (analytics, tech), composing music, investing, learning and broadening myself. To me it’s all about the experience, and if I fly a lot it makes even less sense to suffer to save a couple bucks because I literally only spend money on experiential-related things. Millennial research reflects I am not an outlier here. If I don’t have to be a part of the margin business pain, it’s a no-brainer to choose another option. Especially when just coach on Virgin is better than first class on any other domestic US airline.
Reinforcing this, it’s not just me. A commenter on the Bloomberg story of their IPO sums up something that a lot of investment folk who aren’t using the product, part of my generation / demographic or in our market on the ground miss:
…everyone I know in their 20s, 30s, 40s vastly prefer Virgin America if given the choice for a given flight route. I think it’s a rare opportunity to get a “best in breed” stock. It has way more cache in 7 short years than any other airline among the technology and entertainment crowds on the west coast. I think there’s much room to grow.
At least for me and their passionate fans, Virgin
will win already won the airline wars. To the point I consciously avoid places they do not travel as do many friends. They are the ideal product for business travelers and are just starting to hit their stride. A perfect storm of high quality product, marketing, experience and customer service. They absolutely have challenges ahead which if you’re an investor you should be aware of (plenty of the financial industry pubs outline these). But I believe their management team is strong enough and has gotten this far, they will work through issues especially with the new resources they have from their IPO funds. Excited to see where this one goes, because it is nearly always the small, new player just breaking through that makes change in a large industry with massive barriers to entry.
Bonus: cool infographic I found on Virgin released with their recent IPO:
Disclosure: the author of this post is long $VA.