Virgin America Leaves SJC – But Wants to Operate HSR
In what is seen as something of a blow to Mineta San José airport, Virgin America announced last week it would be leaving SJC even though they had just launched flights to LAX less than a year ago:
“Despite our steadily improving performance at SJC, demand in the market hasn’t met expectations and we’ve made the decision to focus on more lucrative long-haul flying opportunities,” a Virgin America spokeswoman told the Business Journal in an email. “We thank the San Jose airport leadership, the business community and travelers for supporting us — and hope that many South Bay travelers will continue to choose us to stay connected and comfortable for their longer flights from from our home base at SFO.”…
Officials had hoped success with the single SJC-to-LAX route would prompt Virgin America to add the real prize: Longer flights to East Coast and Midwest cities like Chicago, Boston, New York and Washington, D.C. — a major goal for city and business leaders.
This should not come as any surprise. We’ve known for years now that airlines see the most profits in medium and long haul routes, not in the short haul shuttle routes like SF to LA. In 2010 JetBlue’s CEO made the point explicitly:
Q: Do you see nationwide high-speed rail as a threat or complement to the airline industry?
A: It’s a complement. I don’t think we need hundreds of departures every day from the Bay Area to Los Angeles.
That CEO expanded on his point when discussing NYC to Boston:
It was an event filled with charts and maps that drove home how overwhelmed and outdated current air traffic control technology is. One solution Maruster said was obvious is taking airline passengers off some routes, like New York to Boston. “It seems like there’s a mode that might work better for us in that regard. When we see things like high-speed rail going into South Florida, we say OK, that makes sense. But I think this region, with almost 25 million people in the Tri-State area, makes a lot more sense for those kind of things.” Maruster says he’d like to see New York City and federal transportation officials put out a 20 or 30-year vision that addresses how airplanes, trains and other modes of transportation can be put together. He hasn’t seen one yet.
Airlines make some profit on their SF-LA routes. But as fuel costs rise, those profits have shrunk. Given the immense cost of expanding airports, gate space is at a premium. Airlines would much rather use those gates for the more profitable medium and long haul flights than for more shuttle flights within California.
So what about the short haul routes? Do companies like Virgin and Southwest plan to just abandon those? Far from it. In fact, they would like to operate high speed rail on those routes, replacing air travel, according to Ben Tripousis of the California High Speed Rail Authority:
Tripousis said the rail authority is also in very preliminary talks with airlines about operating the statewide $68 billion rail system — that is, if major funding and planning questions can be resolved to get the system built over the next 15-plus years….
“It’s very cursory. We’re starting to talk about what’s possible. What’s true for Virgin — they’ve done it in other parts of the world — could be true for somebody like Southwest. We’re hamstrung in terms of the number of airline gates we can have or expand to.”
So the shape of transportation in California’s future is clear. The airlines would like to redirect existing gates to medium and long haul flights and replace the short haul flights with high speed rail. I’m not sure I like the idea of a private operator, but it’s also not the end of the world.
More importantly, it shows that to the private sector, HSR is a big deal and very important to their future plans. Of course, it’s also beyond their ability to fund the capital costs, which is where government comes in.
So when people like Neel Kashkari go around California calling HSR the “crazy train,” he’s really just showing how deeply out of touch he has become with what the travel industry wants and expects in the years to come. HSR really is a crucial part of California’s future. Even the airlines agree.