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Former American Airlines CEO Don Carty (DAVE CHAN/The Globe and Mail)
Former American Airlines CEO Don Carty (DAVE CHAN/The Globe and Mail)

U.S. airline sees Canada as Virgin territory Add to ...

As Virgin America launches its first international route Wednesday from Toronto, airline chairman Donald Carty is casting his gaze to Vancouver as the carrier's next Canadian destination.

The low-cost carrier, known for its cabin mood lighting, is offering daily service between Toronto and California's two busiest air terminals, in Los Angeles and San Francisco.

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Next up could be flights between British Columbia's largest city and California. "Vancouver is certainly on our radar screen, though we haven't decided on timing," Mr. Carty said in an interview.

He sees the opportunity to tap into a large community of Canadians working in the entertainment industry in Los Angeles, and eventually, carry high-tech workers between Vancouver and San Francisco.

Virgin America, based in Burlingame in the San Francisco area, launched U.S. flights in 2007. Its foray north of the border has been greeted with fare deals from rival Air Canada, which is promoting flights as low as $187 one-way, before taxes and other charges, between Toronto and San Francisco for weekdays in mid-July, for instance.

While Air Canada ticket prices on selected flights are undercutting Virgin America, Mr. Carty said the newcomer isn't competing on price alone. "Many startups have come to the market with the promise to the customer of low prices. That's great, but the customer wants and expects more. We will be delivering a travel experience, too," he said, referring to amenities such as an array of in-flight entertainment options on seatback screens.

"Air Canada isn't a naive carrier. They will compete and won't give up turf easily. If we see a strong economic recovery, there is probably room for success on routes for both entities," said Mr. Carty, 63, who is also chairman of Toronto-based Porter Airlines Inc. and a former chief executive officer at American Airlines and CP Air.

Air Canada spokesman Peter Fitzpatrick emphasized that the Montreal-based carrier has boosted its seat capacity in the Toronto-California market by more than 50 per cent this summer.

Mr. Carty will be in Toronto on June 29 for the promotional visit by Richard Branson, founder of Virgin Group Ltd., which has a 25-per-cent voting stake in Virgin America. "I know Richard is a big, big fan of the city of Toronto," Mr. Carty said.

While some industry observers have been skeptical of Virgin America's cash-draining expansion strategy of deploying new Airbus A319 and A320 jets, Mr. Carty said he envisages the carrier being healthy enough to embark on an initial public offering in two years or so.

Money-losing Porter shelved its IPO last month, though he said the regional carrier isn't under pressure to raise money. "We know how to take the next step of incremental growth without completing an IPO. There isn't any urgency. Porter is positioned for an IPO in future, but it remains to be seen whether it's late this year or next year," Mr. Carty said.

The airline industry veteran said he was pleasantly surprised by WestJet Airlines Ltd. CEO Gregg Saretsky's comments last week that Porter has a higher brand awareness in Toronto than Calgary-based WestJet.

WestJet abandoned the Toronto-Los Angeles route in late 2008, but Mr. Carty said Virgin America has the advantage of a better-known brand than WestJet in the United States.

 

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