Virgin America, California's hip and high-tech airline, is pulling its flights from Philadelphia to Los Angeles and San Francisco, and flying the airplanes instead to more lucrative corporate travel markets - between Dallas and New York City and Washington.
The airline began Philadelphia flights two years ago. It said the service will end Oct. 6.
The Burlingame, Calif., carrier said Friday that it had been awarded two gates at Dallas' Love Field by the Justice Department and planned to begin flights in October to New York LaGuardia and Reagan Washington National Airports.
Virgin America recently won takeoff and landing rights at LaGuardia and Reagan that American Airlines agreed to divest to settle a government lawsuit seeking to block its merger with US Airways.
The Dallas Love Field gates are also being relinquished by American.
"This came down to opportunity cost, and in short, the chance to expand new service on multiple routes to major business destinations on both coasts offered a better network and revenue opportunity for our airline in the short term," Virgin America spokeswoman Jennifer Thomas said. "That said, Philadelphia has been a strong and growing market for us, so we are suspending the service for now - but we hope to have the opportunity to come back in future years as our aircraft capacity grows."
Virgin America, a privately held airline 25 percent owned by the English billionaire Richard Branson, said that because its next aircraft deliveries are not scheduled until 2015, it needed to reduce flights in other markets given the "longer-term network potential" in Dallas, Washington, and New York.
"I think they had more opportunity to make money in Dallas," said Jeffrey Erlbaum, president of ETA Travel in Conshohocken. "I'm really disappointed. They are a great airline. A lot of my clients are going to be really upset. From a fare and service perspective, they are a superior product."
Virgin America began here with two daily round-trip flights to Los Angeles and one daily flight to San Francisco in April 2012. The San Francisco flight was dropped last summer, and the morning departure to Los Angeles was suspended this winter, although it was restored April 1.
"It's a Catch-22. They see they are not making enough money," Erlbaum said. "They pull flights. They have one flight a day, and it's hard, especially for a business traveler, to make the one flight work."
In contrast, US Airways, with a hub in Philadelphia, operates five daily nonstops to Los Angeles (six return L.A.-Philadelphia flights this time of year) and five daily nonstops to San Francisco. United Airlines offers one nonstop flight to San Francisco.
"US Airways always matches the prices. They have more flights. People want their Dividend Miles," Erlbaum said.
At Philadelphia International, "obviously, we're disappointed. The city of Philadelphia and Virgin America have enjoyed a great partnership. Virgin is one of the finest airlines in the country," airport spokeswoman Victoria Lupica said.
When Virgin arrived, flights to Los Angeles and San Francisco dropped immediately in price, from about $1,200 round-trip to between $300 and $400 on average, Erlbaum said.
Seth Kaplan, managing partner of Airline Weekly, an industry publication, said, "I'm sure they are funding the Dallas expansion by reducing their most marginal markets."
"US Airways, now American, has probably done a good job of defending the markets, just as they've done against Southwest Airlines."