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MIAMI — Virgin America announced that it would be entering the Hawaiian market earlier this year, and the entrance of the aggressive boutique carrier into the competitive market between the West Coast and major Hawaiian destinations further shifts the balance of a market once dominated by trunk carriers flying widebody aircraft.

Virgin America will fly daily roundtrip flights from its home base at San Francisco to Honolulu and Kahului, Maui beginning this winter, and will become the seventh airline in the mainland-Hawaii market after American Airlines, Delta Air Lines, United Airlines, Alaska Airlines, Hawaiian Airlines, and Allegiant Air. Virgin America will instantly have  a larger footprint than Allegiant Air, and will become the first airline to fly the Airbus A320 to Hawaii (American Airlines is set to fly its larger cousin, the Airbus A321, twice daily between Honolulu and Los Angeles this winter).

The move marks an attempt by Virgin America to capture passengers by applying its well-regarded leisure product in a market that is overwhelmingly powered by tourist traffic. At the very least, Virgin America should be credited with self-awareness; it has realized that its brand equity amongst younger, “hipper” consumers is mostly applicable to leisure travel. When it comes time to take that five-day business trip, even to cities that Virgin America serves like Chicago O’Hare or Austin, it can’t hold a candle to the legacies, Southwest, or even JetBlue.

Virgin America simply can’t offer the requisite frequency and network connectivity to compete for business travel in most of these markets, and rather than attempt to do so, it has instead redeployed capacity to markets where its product matches the consumer mix. And along with fuel prices, this strategic shift has helped pave the path to a decent standard of profitability. Between Virgin America’s network adjustment and Virgin Atlantic’s Delta tie-up and recent fleet moves, the best descriptor for the tone and mood around Richard Branson affiliated carriers today is sobering, which should be viewed as the surest sign of the coming of the apocalypse.

So Virgin America’s entry into Hawaii makes some sense. But the airline will unquestionably be at a disadvantage relative to established players.

Assessing the Mainland-Hawaii marketplace

To get a better idea of Virgin America’s positioning within the market, we performed an in-depth analysis of the market between the continental United States and Hawaii for the IATA Winter 2015-16 season, the peak period for Hawaii travel. This analysis was conducted using schedule data from the week of December 14-20, 2015. Seat capacity for certain aircraft types is approximate and taken as the blended average of the frames in the airline’s fleet. However, these approximations tended to be small (usually 3-5 seats difference) and as such, the capacity data can be treated as largely accurate.


First and foremost, the market is massive, with 904 weekly departures from the mainland to Hawaii, representing weekly capacity of 187,665 seats. This averages out to roughly 130 flights per day and represents annualized one-way capacity of 9.8 million seats. This capacity is spread across 57 distinct nonstop routes between 21 cities in the Continental US and 5 in Hawaii.

The following chart gives a better idea of the scope of Mainland-Hawaii operations.

As the chart show, the Mainland-Hawaii market is dominated by narrowbodies, mainly the 737-800 and 757-200 with 291 and 218 weekly departures respectively. Still, there are 292 widebody departures per week (367 including the widebody-sized Boeing 767-300), more than half (157) from home carrier Hawaiian Airlines. As expected, Honolulu is the most important Hawaiian hub, with just under half of the weekly departures. Kahului is about half the size of Honolulu, and Lihue/Kona half the size of Kahului (Maui). Hilo is a nonentity.

On the mainland, the most notable factor is the staggering dominance of Los Angeles, which sees nearly more than 40 daily departures to Hawaii on aircraft that are 757 sized or larger. Seattle’s figure is largely driven by the twin competition of Alaska and Delta, and while San Francisco has much more capacity, its frequency is not much higher as it is mostly monopoly markets for United. Still, by weekly frequency and capacity, Virgin is entering into the second most competitive market between the mainland and the US.

Meanwhile, the following chart takes a look at the competitive position of various airlines in the market.
Slide1As the chart illustrates, Virgin America is very much still a bit player in the Hawaii marketplace; less than 4% of the size of the largest carrier in the market by capacity (United). As a whole the market is reasonably competitive, with five airlines each holding between 16 and 26% capacity share and two bit players. But within this broader evenness, there are several key differences in the respective airlines. Alaska is largely (outside of Seattle and Portland) flying point to point (p2p) routes to Hawaii from cities up and down the West Coast. American and United are split between two key Hawaii gateways apiece: Los Angeles and Phoenix for the former, Los Angeles and San Francisco for the latter. Delta’s Hawaii operations are concentrated at Los Angeles, and Hawaiian has a primary gateway at Honolulu, a secondary operation at Kahului, and a few p2p flights from Kona and Lihue.