"In Philadelphia, we saw two things that were particularly attractive," said Virgin America president and CEO David Cush. "One was high ticket prices, which generally when we come in drop quite a bit.
"Second, about half the travelers going between Philadelphia and San Francisco and Los Angeles fly nonstop. The other half connect through other cities, like Chicago or Dallas-Fort Worth.
"That tells us that it is an underserved market. People are connecting because there are not enough nonstop seats on the route."
Cush said Philadelphia had "strong business and leisure travel connections" to California in higher education, finance, biotechnology, and pharmaceuticals. "There are ties between our regions that can be further developed."
Getting Virgin America here is "exciting news for Philadelphia," said airport chief executive officer Mark Gale.
"Any time that we are able to bring new air service in to the airport, that's going to stimulate competition, provide lower fares for consumers, and, in the case of Virgin America, their product is highly touted."
Since its founding in 2007, Virgin America has chalked up accolades including "Best U.S. Airline" from Conde Nast Traveler and Travel & Leisure magazines.
Virgin America sells itself as fun and cool, geared to the business traveler with such amenities as touch-screen entertainment, live TV, WiFi, power outlets under every seat, and cabin lighting that changes from purple, to pink, to blue, depending on the light outside.
Passengers can order onboard food and drinks via their seat-back touch screens.
When entering markets that offer little low-fare competition, Cush said, Virgin America has historically seen fares drop by up to one-third.
Fares from Dallas-Fort Worth and Chicago to California that began as $99 one-way have "crept up a little" to $119 each way, Cush said. Compared with prices before Virgin America started flying, which were "closer to $200, that's still a significant reduction," he said.
"We would expect the impact on average fares to be a 25 percent to 30 percent reduction permanently."
US Airways Group Inc. has four daily nonstops to Los Angeles and three to San Francisco. United Airlines flies two nonstops to San Francisco, and Delta Air Lines has one nonstop flight to Los Angeles.
Southwest Airlines Co. flies to California, but not nonstop.
At a time airlines are cutting fights because of the economy and high jet fuel, Virgin America is growing and operates in 16 U.S. cities, including Boston, New York, and Washington, and in Mexico.
It considers itself a low-cost carrier, although larger competitors sometimes beat its fares.
"They are known for cutting fares for a while, and they tend to get people excited about their product," said airline analyst Bob McAdoo of Avondale Partners L.L.C.
"They are really hip. That's their deal," McAdoo said. "And, as a result, their fares are sometimes higher than a traditional carrier's, although they have a lot of discount fares because they can't seem to fill the planes."
Steady profitability has eluded Virgin America, which has made money only in the July-August-September quarter of 2010.
"It generally takes 12 to 15 months for a new route to become profitable," Cush said. "You have to build up a market and a flier base." The airline says it expects to be profitable in 2012.
Mayor Nutter said: "New airline service not only lowers fares for travelers, but it is also a major economic driver, stimulating business travel, tourism, and local job growth."
Virgin America says it expects to hire 30 to 35 people to work at the airport. "Then there are lots of other services," Cush said.
"We'll be hiring some contract maintenance people to look at the airplanes, as well as catering, and all the other economic benefits that air service brings."
Contact staff writer Linda Loyd
at 215-854-2831 or lloyd@phillynews.com.
