Virgin America designs a low-cost airline for business travelers

Most low-cost airlines begin life serving leisure destinations and budget-conscious consumers, but one recent start-up is bucking the trend. Two-year-old Virgin America was designed to appeal specifically to business travelers, according to the airline's chief executive officer, David Cush. Cush joined Virgin America shortly after the airline took flight after a 20-year career with American Airlines and I caught up with him at the recent National Business Travel Association annual conference.

Although it follows the successful low-cost airline model with a single aircraft type (the Airbus A320 family) and a point-to-point route network with few connections, Virgin America has constructed a premium product including 9" video touch screens with a full qwerty keyboard, 110-volt electrical power outlets, and USB and RJ-45 Ethernet jacks at every seat in the airplane. Passengers may access the Internet, live television channels, on-demand movies or 3,000 music MP3's. In addition, travelers may use the in-flight seat-back entertainment system to build their own playlists, engage in live seat-to-seat chat messaging with other passengers or order food and drinks on-demand. Virgin America also offers a luxurious first-class cabin that resembles international business class on most airlines.

Going beyond jetBlue

Some of the inspiration for Virgin America came from another low-cost airline that prospered by focusing on comfort and in-flight entertainment. Observing jetBlue "really opened my eyes when I was at American Airlines," says Cush. "They had a very high quality product, but were able to produce it at a low cost."

Cush attributes jetBlue's success to investing primarily in what is most visible to the customer, like new airplanes, live television and well-trained people, an example Cush practices at Virgin America. Beyond initial training, all 1,520 Virgin America employees go through a "Refresh" recurrent training session annually. Each two-day Refresh class brings together 70 employees from all parts of the airline and covers conflict resolution and similar customer service issues. "We'll go through real-life scenarios we've encountered in the last year and do a lot of role playing," says Cush.

Targeting D-I-Y travelers

Initially the airline focused on "unmanaged" or "self-managed" travelers – those business customers generally in smaller companies who book their own flights and aren't constrained by corporate travel policies. "It was a conscious decision to go after that market," says Cush, particularly with a small route network and frequent-flier program that can't compete with the global airlines and the alliances.

Though self-managed business travelers account for just half of the business travel market, Cush believes Virgin America's San Francisco home base is well-situated with so many smaller companies and start-ups in the area. Proximity to Silicon Valley also attracts computer-savvy business travelers interested in the airline's high-tech product offering.

Unlike most other airlines, Virgin America relies heavily on online marketing channels to reach prospective business travelers. "We don't spend a lot of money on traditional mass media," says Cush. "An image ad on 60 Minutes or 30 Rock is not going to have a big impact on the customer we're targeting." As much as 70% of Virgin America's marketing budget is spent online on social media or blogs where they believe their target audience goes for information.

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