After the Virgin Birth

Fred Reid, CEO of the fledgling carrier Virgin America, talks management strategy and explains his beef with airline food.

Fred Reid looks as if he could have played John Glenn in The Right Stuff. But the CEO of Virgin America--the new low-cost airline partly backed (but fully branded) by British entrepreneur Richard Branson--is a character all his own. As the president of Delta, he launched the ill-fated, low-cost Song. (What did he learn from the experience? "Damn little," he says.) As the president and COO of Lufthansa, he was the first American to lead a major non-U.S. carrier. We caught up with the razor-tongued Reid, 57, in New York, one of the five cities his airline currently serves.

Virgin America had a tough time getting regulatory approval to start flying. What was the problem?
There was a barrage of complaints--almost all of them spurious, mostly from the legacy carriers--threatening to derail us, because people did not want me running another airline. Partly, it was, "Uh-oh, Fred again," and partly it was, "Oh geez, a Virgin-branded company," and thirdly, it was, "Oh, good--another high-end, low-cost airline like JetBlue to make our lives miserable." Put those three things together, and they really pulled out all the stops.

But that battle helped bring you some recognition.
Sure. Last December, we launched a Web site called LetVAfly.com, and it produced hundreds of thousands of Web hits.

Given the recent problems in the airline industry--especially chronic flight delays--it seems like a tough time to launch a new carrier. What will it take to get things to work efficiently?
A troubled transportation system is a massive drain on economic productivity, quite apart from driving you and me batshit. We shouldn't tolerate it. There really has to be a combined solution involving three parties--the Federal Aviation Administration, the airlines, and private aviation--because a Lear jet takes the same amount of resources from the FAA as does a 747.

Now that you're up and running, how are you doing?
Load factor is a confidential number, but it's way north of 80%.

You canvass staffers on everything from marketing plans to flight-attendant uniforms. Is that from the Branson playbook?
No, that's from the Fred playbook. I've had no business input from Richard at all. He's the creator, a man of vision, but he and I have never discussed the mechanics of the business--ever. I said, "Look, I understand the Virgin brand--the cheekiness, the irreverence. But this is America. It has a very different competitive dynamic." And he said, "Yeah, fine, run with it."

So what did the Fred playbook say about how to shape the Virgin America flying experience?
I asked myself, What are the five things that passengers love the most and hate the most about legacy carriers? And what do they love the most and hate the most about the low-cost carriers? They don't hate anything about the low-cost carriers. They're nice guys. Some people want more of an elite recognition program at JetBlue or Southwest. So we said, "Okay, what about assigned seats, a frequent-flier program from day one, premium airports only, and kick-ass first class at amazing prices?" That gives you an idea about how we try and come down the middle and cherry-pick.

What did passengers like the least about legacy carriers?
Surly service, opportunistic price gouging, and various tricks on Web sites, like having to buy your ticket before you see what seat you're getting. Very unfriendly.

Food is a big issue in the air these days. What are you serving?
In first class, there's a hot meal on the long haul and a kind of tapas series of snacks for shorter flights--both for free. In the main cabin, we offer snacks and two meal options, but you pay for them. [The food] is not where I want it to be yet. I'm looking for an upscale option. For some reason, most airlines think that they have to offer you a soggy, cold turkey sandwich for $4. My challenge to my team is: I dare you to do a $20 meal option, because anybody who's traveling on business should be able to expense that. For $20, I can put on something kick-ass--and I'd be the only one doing it.

Sounds like you're a man who cares about food.
When I was the president of Delta, the night before I'd fly, I'd go to Whole Foods and get grass-fed, organic, dry-aged New York strip steaks, grill them, make a little potato salad, and put it all in a little box. When I got on the plane, someone would say, "Mr. Reid, that's not a good sign." And I'd say, "You know what, I have to buy the food here and you don't. You don't know where the stuff's coming from." And I'd eat my little Whole Foods steak.

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