Virgin America, the U.S-based low-cost carrier under the wing of the Virgin Group, had a short but eventful life between its inception in 2004 to its eventual full merger with Alaska Airlines in 2018. We explore the history of Virgin America and how it almost came to be known as “Virgin USA.”
The airline was first named Virgin USA
Sir Richard Branson’s Virgin Group had seen enormous success with its foray into aviation, Virgin Atlantic, as well as subsidiary airlines Virgin Express and Virgin Blue (now Virgin Australia). With Virgin Atlantic’s transatlantic services flourishing, Branson was keen on setting up a domestic U.S carrier to link to Virgin Atlantic’s network. This is where “Virgin USA” came in.
Virgin Group announced its plans for a low-cost U.S carrier in early 2004, initially called Virgin USA. With a launch date of mid-2005 on the calendar, Virgin USA set up operations in the San Francisco Bay Area. Branson named Fred Reid, former Delta Air Lines president, as Virgin USA’s CEO and set up corporate headquarters in New York.
Virgin’s business was highly sought after by city and state officials, who saw the economic potential of a big startup airline in their area. San Francisco mayor Gavin Newsom and California governor Arnold Schwarzenegger eventually wooed Virgin with enough incentives, including over $15 million in grants.
Newsom said,
“This is a tremendous deal for the city of San Francisco and the entire Bay Area. The new Virgin-branded airline startup is a perfect match with San Francisco in so many ways. The Virgin brand is unique, and San Francisco is the world’s most unique city.”
During a speech at the International Aviation Club in Washington, D.C., CEO Reid announced the airline’s official name was to be “Virgin America.” Allegedly, disputes over branding led the airline to drop Virgin USA.
Launch date setback
Despite all the early optimism, Virgin soon doubted if it would make it off the ground at all. A major obstacle facing Virgin America was attracting enough investment for a low-cost airline in a competitive industry against carriers like JetBlue and Southwest Airlines.
Additionally, other major carriers in the country, including United and U.S Airways, had filed for bankruptcy. Fuel prices at the time were also sky-high, causing further hesitancy from investors. This meant Virgin’s mid-2005 launch date was off the cards.
Branson took plenty of flak during this process. Due to U.S laws, airlines are permitted a maximum of 25% foreign ownership, which forced Branson to seek out other investors. A USA Today article at the time mentioned, “he’s been saying the same thing since at least 1999… Branson has no money, no planes, no routes and no government approval to fly.”
Funding finally secured
Eventually, by late-2005, the airline had secured $177.3 million in funding, filed its license with the U.S Transportation Department and set a launch date of 2006. However, opposition to a UK-led airline operating in the U.S was strong, with Continental Airlines and the Air Line Pilots Association leading the charge.
After much delay, the airline finally launched in August 2007. Virgin America operated at a loss for three years running before turning a profit by the end of 2010. By late-2015, Virgin America was the subject of takeover speculation, with interested parties including Alaska Airlines and JetBlue.
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A bidding war between the two swiftly ensued, with Alaska Airlines announcing a deal in April 2016. With the merger finalized in 2018, the Virgin America brand was promptly scrubbed by Alaska Airlines and today is no more.
What did you think of the Virgin America brand? How frequently did you fly with them? Let us know your thoughts and experiences in the comments.
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