This article has quite a bit more info: http://www.sfgate.com/business/article/Virgin-America-a-hit-...
Sounds like they are getting ready to slow down expenses next year and prep for an IPO.
Not really sure what's made this particular article stick and make the rounds but it's conveniently short on info seemingly to make a more dramatic story.
For example, the comment in question contains a url. I could easily imagine that turning out to be a valuable predictor. The defining quality of the middlebrow dismissal is that it's a cache dump of the writer's prejudices, and someone doing that doesn't even take the time to think, let alone look up urls; they're not even really writing to inform.
He was doing some research on detecting which comments are authoritative based upon textual analysis (no username or social analysis). They made a complicated topic model, but found that the following heuristic is almost as good for automatically detecting authority in comments:
Favor the person with the broadest vocabulary compared to other people in the thread.
This was evaluated on Yelp and Goodreads. IIRC it may have also been tested on HN data.
(reference: Alexandre Passos, Jacques Wainer, Aria Haghighi, What do you know? A topic-model approach to authority identification.)
The problem with disclosing these heuristics as part of your filtering algorithm means that people will try and game the system. They'll include URLs and expanded vocabulary to get higher-ranked comments. And then we win.
But also potentially looking at things like the urls that get linked into regular discussions such as weight loss or political topics. That might go beyond the immediate scope, but comments with those links might have other factors similar to middlebrow dismissals, so they might be worth building into the model.
Trying to catch something like this post would be interesting to add. Maybe an anti-indicator if the link adds value. Then you get into figuring the value of the content of the link. Maybe compare it to the content of the original link, which you would want to be similar, but not too similar. Yeah, that might get involved.
Google's Pagerank didn't have to look at the page contents to understand which pages are higher quality. At Quantcast, we categorize related content based on who is visiting, no need to look at the content itself.
The best way to find out is to open up the HN data, in either a closed or open research project. I'd help fund a closed Kaggle competition with NDAs if that's whats wanted. Just consider it a way to learn what works. pg himself would be the final arbiter and likely implementor of what works.
For instance, this article seems to have been spawned by the recent Businessweek article re: financial forecasts for the airline industry and specifically what it may do to VA: http://www.businessweek.com/news/2012-10-17/virgin-america-t...
The tone of this particular write-up sounded very doom and gloom when in actuality VA seems to be following the annual trends of the airline industry while also pursuing an aggressive growth strategy. Not unlike many extremely popular startups (whether it works out or not, well, that's still quite a few years away).
(BTW, thank you for saving me the necessity of reading past the first page of the article.)
The airline industry is being commoditised - Virgin America is trying to move against that trend . What is happening is more fundamental than ill-timed expansion; it's a rejection of Virgin America's core hypothesis (U.S. air travellers will trade low prices and a bit of convenience for a delightful experience). An analogy could be Verizon trying to swim against the global trend towards carriers becoming dumb pipes.
The new routes Virgin America is opening are losing money; Virgin America is presently rolling back select routes . This lends is more consistent with a bad strategy versus 'unlucky exposure to unforseeable systemic factors' hypothesis.
Further evaluating the specific factors to Virgin America versus expansion-related woes hypothesis, one notes that Spirit Airlines (NASDAQ:SAVE) spent 3.6% (44.2%) of revenues (operating cash flow) on capital expenditures in 2011. Delta spent 0.1% (8.2%). Average CAPEX/Revenues spread between Spirit and Delta from 2008 to 2011 was 3.5% (Delta has been out-spending Spirit in 2012). Spirit is generally profitable.
Virgin is betting on a strong consumer or business travel spending recovery in the U.S. If that happens , temporarily depressing costs will work out fine if it can stay solvent long enough to be proven right. If the recent shifts are structural changes, however, they're out of luck.
 http://www.sec.gov/Archives/edgar/data/1498710/0001498710120... Spirit Airlines Q3 10-Q Filing
Norwegian consistently kicks its competitors' asses (one of them state-owned), because rising fuel prices is pushing margins for all airlines. Having a small edge here means everything when you're competing on price, which is what passengers go for.
 http://annualreport.norwegian.no/2009/operating_costs Most gorgeous annual report section ever
For a while, Virgin was doing $69-89 flights from SFO to SEA, etc., which is probably below the point where even a 100% full aircraft is profitable.
I don't think they're anywhere near as efficient on plane utilization as Southwest, due to network. The other way to make money is to make small amounts on each (full) plane, but fly a lot of flights with those planes.
According to the numbers, they lose a ton of money on their existing flights: http://crankyflier.com/2012/07/05/virgin-america-posts-terri...
So I think the gist of the article posted is about right, even if they didn't back it up with the relevant facts: VA's equilibrium fares don't meet their operating costs.
They won the leisure market to/from SFO, but that's not a big enough market to be a successful airline.
The funny part is at some point it feels a bit like playing a Zynga game, including the occasional "screw it, I'm so close I'll pay a little cash to bump up to the next level"
Though, out of my city I don't have a ton of options, living in a United hub.
However I think it's quite wise to get a loyal fanbase before trying to expand everywhere. SFO alone won't make them a huge player, but I for one will be recommending them to my friends once Virgin is available to them.
The airline industry is byfar the worst run, worst staffed, most inefficient excuse of business ventures. This is the second time I have been stranded at an airport because agents haven't a clue how to navigate the system, dick around and make customers wait, and are incredibly dishonest. I was told today that supervisors were telling agents to, and I quote, "blow off" the passengers today who are desperate to fly. They tell you one thing, make you wait hours, all the while knowing what they told you wasn't true just to avoid customer anger.
Someone needs to completely flip these morons on their heads. They're making flying such an unbelievably frustrating and inconvenient task. I now dread to head to the airport, nervous they'll screw up my reservation or find a way to make me wait unnecessarily. Not to mention how pricey it is now to fly for just 4 hours.
I'm seriously fuming, and this is far from the first time it's happened. The airline industry has consistently delivered the crappiest customer experience I have ever seen.
Plus, extreme variation in demand with the economy, and cost due to fuel.
I'm here speaking with other passengers and am finding that we were all told completely different things. People have been stranded here for 2 days and are being told to wait while others who stroll in with the pilot hours beforehand are given priority standby seats. Let's say there's a valid reason for that, you're sill leaving many customers feeling as if they're being pushed to the side. Everyone feels lied to and ignored.
I'm aware that this is one specific incident, but things like this have happened a handful of times to me, and I'm absolutely certain to thousands and thousands on a daily basis. It's absolutely absurd.
Some of it is just being badly run, but a lot of it is trying to eke out as much efficiency as possible.
The only way to win is not to play; the airline industry still has overcapacity as a result of the legacy carriers and deregulation, so it's not a great idea to enter the market. The exception is air cargo -- FedEx is an AMAZING business.
-- Not enough, or not in the right way.
Not a political or even an economic argument. The purpose of regulation is to get the consumer something that is a decent product for a decent price, in a manner that is efficient in time and money.
Virgin has proved that on a level playing field they can compete on product, via Virgin Atlantic. Jet Blue was the first Domestic Carrier to even try on the Product Front. The US carriers are apalling and quite frankly embarassing. Even the us automakers have been improving their quality and design in the past 5 years. If they can do it, so can the airlines. =/
The international regulations are both about planes not falling out of the sky (which is good for basically all international airlines, bad for some national domestic airlines), and about political things like who gets how many gates, who is allowed to pick up passengers where, etc.
Some of it is about documenting price and standardizing other terms of carriage, but very little is about consumer comfort or anything like that.
The obvious problem with this is that one generations "floor" of minimum quality becomes the next "ceiling" when tech changes and innovation promises better/faster/cheaper ways of doing things. Once the power is given to write the rules, then the special interests will ensure they are written for their benefit. Etc. But its still worth thinking the problem through. To big an issue to not even try.
Look at the impact that Heathrow had. It provided London and the UK with a massive advantage over the past 20 years as the English speaking gateway to the EU. And thats despite all of its limitations and problems.
tl;dr; the executives make the big money by rewarding themselves for going a certain amount of time between bankruptcies
But I agree with the parent, and unfortunately, those who are making money are 'cattle transporters' like Ryanair
The airline model has to be rethought from the ground up: fares, service, route allocation, price segmentation. Throw everything away and start afresh.
On the other hand I have taken Virgin America a handful of times, and the experience is the opposite. It is a complete dream and pleasure. I love the lighting (feels so sheek).
So what is the problem? Their product is top notch, but they are losing money hand over fist. Normally, a company would just adjust their prices, but in the brutally competitive landscape that is air-travel, prices are everything (see my top paragraph). So, what is Virgin America to do?
I still to this day don't know how Southwest is able to offer flights significantly cheaper than everybody, and stay afloat, while the rest of the air-line industry can't. What is their secret sauce? Cheaper plans? Lower wages? Not sure, but Virgin America should figure it out and adopt it. I am sure it ins't their interior lighting and amazing customer service though.
They do a couple of other clever things, like only fly a single type of plane to take advantage of economies of scale, and only fly out of airports that have cheaper gate licensing fees. But the futures contracts really helped them through the industry's rough patch so that they could expand and aggressively grow while their competitors were declaring bankruptcy.
The other thing they did which helped them a lot was Goldman-level hedging of fuel contracts, although that could have hurt them if prices had gone down (although when they took on all the hedges, prices for fuel were quite low, and everyone expected them to go up.)
In comparison, flying from LAX to San Jose: American Eagle 93%, Horizon 89%, Southwest 82%, and flying into Oakland, Southwest is 85%, Skywest is 82%.
They don't do assigned seating because they found that without assigned seats they were able to fill the planes faster, meaning less time at the gate meaning more time in the air, meaning more legs in a day, which makes them more financially efficient.
Back in the day they didn't pay travel agents the %15, and sold direct instead, etc.
Southwest treats their employees very well, and while there is occasionaly a union squabble of some sort or another, they have much less of a problem than other airlines. Why? Becuase its' cheaper to treat your employees well. Seriously.
This also means that customers are happier because employees are happier.
The attitude of a southwest steward compared to the big three (Delta, United, Continental) is radically different. The big three employees often give me attitude and seem to think that dealing with me is some sort of an imposition-- and so I am loathe to fly on them (it only takes a couple incidents.)
Awhile back southwest merged with a regional carrier (frontier? no, something else) but that carrier was known for a gimick where the employees would sing on landing or do the safety lecture in rhyme and the pilots would tell jokes. Southwest didn't change this practice, and it became optional and now it's not unusual to fly on SWA and have a landing limmerick.
Their ticker symbol is LUV.
Southwest flies into Midland instead of DFW. They fly into the older city airports, not the big fancy new airports. Why? Gate fees are a huge operating cost (basically a license for the local government to extort as much as they can from the airlines for the "priviledge" of providing air travel that boosts the cities tax revenues anyway) ... but soutwest doesn't pay to be in the glamorous locations. You may walk further to your gate and your airport may not be as nice, but it saves them, and -- here's the important thing-- they pass that savings along.
Southwest doesn't serve hot meals. They give you a bag of peanuts labeled "Frills".
They are one of those unique companies like Apple and Zappos and Crutchfield that really put the customer first, and were willing to go against convention to do it.
Nothing against Virgin- I think they're trying to do the same thing and taking the high end of the market, and I'd love to fly Virgin if they had ever had an option on a route I was going (they haven't yet, so I haven't flown Virgin yet.)
But Southwest filters everything they do thru their mantra. They are THE low cost airline. Does whatever help that? No? Then don't do it.
Southwest is a result of focus, and that is a useful lesson for every startup.
I hear the book written by Herb Kehler (sp?) is well worth reading (I think it's called "Nuts" or something like that.)
My guess is that you're thinking of PSA (Pacific Southwest Airlines). They were the classic and original "funny" airline.
PSA didn't merge into Southwest, but Herb Kelleher did study them and use some of their ideas.
Southwest does fly into Dallas, but they do so into Love Field (DAL). That's where their ticker symbol comes from; Dallas Love Field was their primary airport for years and still serves as the airport where they have almost complete control and their corporate HQ. They still fly from Love because DFW is almost completely controlled by American Airlines. Southwest was even the direct target of a law (the Wright Amendment) that artificially hobbled service at DAL--and the law only recently started to phase out of existence--because Braniff-now-American didn't want the competition. Neither did Fort Worth, because Dallas and Fort Worth went in together on the construction costs of Love and both were supposed to close their city-owned regional airports to commercial traffic. Fort Worth closed Meacham Field, Dallas didn't close Love Field. Fort Worth sued and lost, so Fort Worth-based Braniff, followed by Fort Worth-based American, lobbied for the law.
Southwest operates from Dallas Love Field (DAL) instead of DFW- almost all commercial flights at DAL are Southwest flights. Midland(MAF) is a city about 350 miles away that they also fly to.
Southwest merged with Airtran, not Frontier about 18 months ago- they are still in the process of integrating their routes and operations.
It seems like you should be able to simply advertise the fact that yes, we cost exactly $20 more than the cheap guy. And here's all stuff you get for that (dignity, comfort, sodapop and your bags in the hold). And here's how small a fraction of your whole trip that $20 actually represents. And oh, here's how small a fraction of your whole trip the entire $179 you're paying for the flight is.
But there's just so much innumeracy and irrational behavior to overcome before you can get that message across. Try selling the above to the average flyer who will happily take the $159 seat on the airline that charges him $50 to check a bag over the $179 seat that doesn't have any added fees.
I hope somebody cracks it. It seems like you could do it with a whole bunch of published (and advertised) transparency in your pricing and value offered, combined with a campaign encouraging buyers to "sort by happiness" or whatever when browsing at kayak.com.
For me it is an easy trade off. When faced recently with a 3 day jaunt out East, my pact with myself was to fly Virgin, or not to fly at all. It's the difference between an acceptable experience and a high chance of a very unacceptable one. Seriously - I have no idea why there hasn't been a mass rejection of the flying experiences in the USA.
Some folks like chasing Air points or status, but ask first - do you really want to spend even more time getting lousy service on a lousy airline?
I'm lucky enough to be based in New Zealand, and these days our flag carrier is simply great. Their Hobbit safety video just came out: http://www.youtube.com/watch?v=cBlRbrB_Gnc
One reason: Cost
All? Evidently many people (myself included) prefer Virgin America, otherwise its flights would always be empty. Blaming "all people" is not understanding how a market economy works.
But then again, I may be one of the minority...
Said another way, those willing to pay a large premium for VA flights are not "at fault" for the companies losses. It is the fact that there aren't ENOUGH people willing to pay enough of a premium.
That's all I was trying to say. I think it's judgmental to say that the people who buy airplane tickets are "at fault" but their aggregate decisions are the reason VA is failing.
Service to small destinations.
The population of the US is incredibly spread out, and while it'd be fun to imagine the bulk of domestic flying to be jaunts between LAX-SFO-ORD-BOS-JFK-EWR, the less glamorous truth is that the US out-flies every other country on Earth by virtue of local short-hauls.
The large, legacy airlines have an exclusive lock on offering seamless, single-experience flights between short-haul destinations hubbing through major cities.
The problem with flying is that it's a complex function that doesn't scale easily. Even if we assume there was a large enough number of people just flying, say, SFO-JFK to support a new entrant to the route, there is a minimum volume the airline must fly to remain competitive.
After all, no one is particularly interested in a SFO-JFK route that offers only 2 departures a day.
And guess how you dramatically increase occupancy on your main routes? With feeder regional flights. A flight from a small city to a large airport, connect to another large airport, connect to another small city. A much larger percentage of all flights in the US are of this nature than most people know.
The market for SFO-JFK only is not nearly as large as the market for XXX-SFO-JFK-YYY, not even close, and the legacy airlines, by offering regional short-hauls, stand to improve to the quality of their longer hauls by being able to do things like increase airplane size (therefore flight experience) and frequency.
There is a lot more to succeeding as an airline than offering the in-flight experience people are willing to pay for.
I think their problem is they don't offer enough choices to be a regular "goto" place to buy tickets so they slide out of peoples minds.
Singapore is also well situated politically (it has no real enemies anymore, so while China may deny a US airline they wouldn't deny Singapore), geographically and commercially in terms of global trade.
The lesson here is that if you want to run a super cheap airline, make sure you are backed by the government of one of the wealthiest countries and major trading hubs in the world.
Edit: Here are the two sentences I found. They're small but they have the staff to check for this, don't they.
"It’s fairly remarkable than (THAT) any airline can generate positive feelings among customers in today’s travel scene. But while Virgin America may be well-liked, it may not be well-suited to compete."
"Because Virgin America is young, it doesn’t have a (AS) large a network of routes"
Virgin Australia is a very successful company - started in 2001 by Richard Branson and a few others with about $4 million in capital, 2 aircraft and a single route, and they managed to be around when one half of the cosy duopoly of Australian airline industry went bankrupt in October 2001, as a direct result of the September 11 attacks and subsequent collapse in air travel.
As a result they expanded from 2 planes to 90 in 10 years, expanded from a domestic carrier to an international carrier and have progressed from being a budget airline to much more like the model that Virgin America now has - cheaper pricing but better service, two class cabins and business lounges.
I would expect that if Virgin America proves to be remotely as successful, then it is here to stay.
(Maybe I'm just bitter because I'll probably never take a Virgin flight due to their route layout. Also I hate SFO.)
OAK and SJC are far more reliable, although far less pleasant as airports.
There are already some great direct flights out of OAK -- Alaska and Hawaiian direct flights to Honolulu and the Neighbor Islands, etc.
1 - 2014 is going to be a glorious year with the Wright Amendment going fully away. I hope to be on WN's inaugural non-stop SEA/DAL flight.
Flying from London 5 hours in any direction costs around 4/5 times more for airlines that have a significantly worse experience than Virgin America.
But saying that I booked a flight to LA a few days ago and picked Southwest because it was $50 cheaper than VA and if the Florida flight would have been $50 cheaper on Southwest I would have gone with them too.
The way I see it is that I can deal with slightly less comfort on a flight if it means I save enough money to buy myself something like a new pair of Converse when I land.
Hence Ryan Air has $14 pound flights to Berlin, and stuff like that. (been awhile since we lived in europe, so I could be out of date.)
At my age, and 20 years of flying on Southwest, if I ever got a chance to fly Virgin and it was $50 more, I'd pick Virgin. Historically Southwest has been my favorite airline and most flown airline, but I'm getting too old for the cattle car.
Its interesting that the major low cost American airline is famed for customer service, while the major low cost European airline (in fact, the biggest passenger airline in Europe) is also famed for (negative) customer service.
Typically the 14 pound flights are either terrible times or on a Tuesday, which tends to be the cheapest day to fly. Source - I've spent way too much time on the Ryanair website.
It is only a risk and failing if their ability to raise new money is hindered, and Virgin are a long, long way from that.