Virgin America adds cheap seats to an airline industry that has cut back to lower costs

NEW YORK — Just as major airlines are beginning to return to profitability after cutting capacity to lower costs and boost profits, Virgin America entered the fray Wednesday.

Virgin America's inaugural flights, which could mark the beginning of stiffer price competition, will link its San Francisco hub with New York's John F. Kennedy International Airport and Los Angeles.

The new carrier got a taste of the challenges other airlines face when its first flight out of Kennedy Airport was delayed due to the severe storms that hit New York Wednesday morning. Airport officials said the storms caused flight delays of up to an hour and a half and much worse ground delays.

Virgin America's scheduled 10 a.m. flight lifted off about 10:50, said spokesman Gareth Edmonson-Jones. Onboard were Richard Branson and Chief Executive Fred Reid, who was late arriving at the airport.

Comedian Stephen Colbert, scheduled to attend a ceremony at the airport, didn't make it.

"He was in a car for 4 1/2 hours and turned around in the end," Edmonson-Jones said.

The airline, a brainchild of billionaire Richard Branson, plans to add direct New York to Los Angeles flights beginning Aug. 29 and more routes later this year, including service between Washington's Dulles International Airport and the West Coast. It will also fly into Las Vegas.

Virgin America is offering round trip fares of $278 between New York and the West Coast. First-class round trips start at $778. Some airlines, including JetBlue Airways Corp., have already been forced to match Virgin America's economy fares, while other airlines are offering even cheaper fares.

"(The) last thing needed now is another airline," said Ray Neidl, an analyst at Calyon Securities. "(It) will have a negative effect on pricing."

Others say the relatively small number of transcontinental and California routes Virgin America will serve are already highly competitive and in such demand that a few new daily flights will hardly dent other airlines.

Virgin America's 19 daily U.S. flights represent a minuscule percentage of the air system's 10.3 million annual departures.

"If you're going to start an airline, right now may be the best time — everybody's full and there's limited ability to competitively respond," said Mike Boyd, a consultant whose firm, The Boyd Group, is based in Evergreen, Colo. "I don't think it'll hurt anybody."