Virgin America CEO Speaks Out on Fees, Security, Angry Passengers and the Future of Air Travel
Virgin America, which offers cheap flights and elegant amenities, has won Conde Nast's prestigious Best Airline award four years in a row now, but the low cost carrier's president and CEO David Cush said such honors never get boring. In a wide-ranging interview this week, FareCompare CEO Rick Seaney spoke with Cush about the good and the bad in the air travel industry today.
Rick Seaney: Are airline fees here to stay?
David Cush: It will never go back to the way it was. The way it was, was an unnatural pricing mechanism, it was really driven by regulation. The natural economic way is that you set a price and then you charge people more for the amenities.
You know, a hotel is a good example. You don't get to go to the restaurant and eat what you want for free when you check into a hotel.
The Virgin America Difference
Rick Seaney: You've told me Virgin America will be rolling out a new version of your inflight entertainment system with its individual seatback screens. Tell us about that, and why it's more popular than say, looking at an iPad.
David Cush: It will have bigger monitors, hi-definition screens and much more capability than our current system, which is already well beyond anything else flying. We're willing to make that investment [because] Virgin at its heart is also an entertainment company and we like to entertain our people. Second, we have the best laboratory possible for testing seatback versus your own device. Everyone on our flight also has their own device, you know, we fly out of the Silicon valley, people have two or three devices, and when I walk through our aircraft, what I will see is 75 percent of people are looking at that seatback screen.
Unruly Passenger Incidents
Rick Seaney: It's seems as though a week doesn't go by without hearing about a new "passenger incident" on a plane, but we don't hear about this happening much on Virgin America. Why is that?
David Cush: I'm kind of surprised it doesn't happen more often, in all honesty. You've got you know, 140 or 150 people from all walks of life, from all economic backgrounds, from all social backgrounds, some of them had a good day that morning, some of them had a bad day, and you're herding them onto an airline, into this cramped space, with a loss of control for one to 12 hours on an international flight. It's kind of surprising it doesn't happen more often.
We tend to have a very calm environment on our airplane. Part of it's [Virgin America's signature] mood-lighting, part of it's nice staff and stuff like that, but a big part of it is having that seatback video right in front of you. People sit down, stare at that video, they don't bother anyone around them. As I say, it's the opiate of the people on the ground, it's the opiate of the people in the air.
It makes the flying experience better for everyone whether you're watching it or not.
Dream Destinations for Virgin America
Rick Seaney: You told me you're considering Vancouver for an upcoming destination, but what is your "dream" destination?
David Cush: Our dream destination in the U.S., and this is going to sound really weird, is Newark, New Jersey. It's a market that needs competition, we know we can provide it, we know fares would come down 35 percent overnight, and we want in.
How Virgin America Keeps Airfare Prices Down
Rick Seaney: You say one of your biggest challenges is fighting for slots in new cities. Tell me about that.
David Cush: We fought for three years to get into Chicago. Once we got into Chicago, fares dropped by 40 percent in the cities that we went to. We've been fighting for four years to get into Newark. These are monopoly routes from the West Coast into Newark, the highest airfares in this country and the government should ensure competition and give us slots to get into Newark.
The legacy carriers are carving up this country, and if you end up in a place where there are regulatory boundaries to entry such as slots, and where new entrants can't get in, you're going to be a slave to that carrier and you're going to pay the price.
The Trouble with Airport Security
Rick Seaney: Nobody much likes the process of airport security. What's your take on it?
David Cush: It think the biggest issue is, it's intrusive. The core part of it is always going to bug people, that you have people inspecting you and intruding on your life. I think this is why it's maybe a little bit more of an issue in this country than it is in Europe, you know that I think there's this American idealism that, we are free people and I have individual rights that perhaps aren't used to being curbed.
The Future of Airlines, Big and Small
Rick Seaney: You've said consolidation, mergers, have been helpful to the air travel industry. Are you hopeful about the future?
David Cush: I'm quite optimistic about the economy. [And] airlines can be profitable. Look in Asia, look in Europe, look in Australia, these are companies that year in and year out are profitable, and do well by their shareholders and pay dividends and do all kinds of things that are crazy when you think of the U.S., so, I think we're entering into an age of stability in the airline industry, you know, maybe a golden age.
Cush said there's room for all kinds of airlines, including super-discounter Spirit. You know, we watch them very closely. We haven't emulated what they've done but the Spirit guys in particular keep us entertained.