Virgin: 'Let Me Fly'=0AClaire Cain Miller 01.11.07, 6:00 AM ET =0APopular V= ideos=0A=0A=0A=0AShopping With Desperate Housewives =0ABetting Big At CES = =0ANon-Cyclical Star =0AInside Professional Bull Riding =0AHealthcare Made = Simple =0A=0AGet quotes=0A=0A=0A=0A=0A=0AMost Popular Stories=0A=0A=0ABe A = Better Boss In 2007 =0ASony's Sort Of Internet TV =0AStocks Still Have Sizz= le =0ADeal Paper Calls The Tune =0AJumpstarting Jaguar =0A=0A=0A=0ASAN FRAN= CISCO - Virgin America, a new low-fare airline, is set to take off. Its shi= ny new red and white plane, christened Jefferson Airplane, is idling at San= Francisco Airport. Its champagne-soaked launch party drew California lumin= aries like Governor Arnold Schwarzenegger and rock star Grace Slick. Its pi= lots and flight attendants are hired, trained and ready to fly. =0AThere's = just one problem: America won't let them. After a 13-month delay, on Dec. 2= 7 the U.S. Department of Transportation rejected Virgin's application on fo= reign ownership grounds, citing its connections to Richard Branson's Virgin= Atlantic after a lobbying campaign by Continental, Delta and American. Vir= gin America says the airline is technically independent and meets U.S. guid= elines (foreigners provided less than 25% equity and fill fewer than 1/3 of= board and management positions). =0A"They don't have a highfalutin problem= with foreign equity," chief executive Fred Reid says of the big airlines. = "They're opportunistically killing the competition."=0ASo Virgin America is= planning to take the fight to the passengers. The linchpin of the campaign= : letVAfly.com, where people can sign petitions urging Congress and the DOT= to give Virgin its wings, is expected to launch next week. The airline wil= l push people there through cheap viral marketing on social media sites Dig= g, YouTube and Boing Boing, along with a few pricier newspaper ads. To sedu= ce the American public, on Jan. 17 Virgin will invite TV cameras on its pla= nes to show off their interiors, closely guarded until now. =0AThe campaign= goes hand in hand with Virgin's people-centric philosophy. Most Americans = despise airlines, Reid says. "Try to go to a cocktail party and say you wor= k for an airline. You'll never be able to get another drink because you=A2l= l be peppered with hate stories." He=A2s trying to fix that by giving the p= eople what they want, starting with the chance to name Virgin's planes on i= ts Web site. But first, he needs the people to help him get off the ground.= =0AReid says his airline will have costs 30% to 50% less than those of the = legacy carriers while offering passengers more frills. Had Virgin been up a= nd running the last two years, it estimates the low fares would have saved = U.S. consumers $780 million. How will it afford to offer more for less? Tha= t=A2s the beauty of starting from scratch.=0ANo one knows the difficulties = of the airline business better than Reid, who was president of Delta until = 2004. Burdened by terror threats and fuel costs, the six so-called legacy a= irlines have been in and out of bankruptcy. Meanwhile, low-cost carriers li= ke Southwest and Jet Blue steal their passengers. The low-fare carriers hav= e grown their market share from 5% to 30% in 15 years and that figure is pr= ojected to reach 50% in the next decade. =0AThey keep their costs lower tha= n the legacies by hiring less experienced employees without pensions, flyin= g point-to-point instead of inefficient hub-and-spoke routes, and using one= or two jet models so they don't have to train pilots and mechanics on a do= zen different varieties of planes. =0ABut simply following the low-cost bus= iness model is not enough, as Reid learned at Delta when he was chairman of= its low-fare airline Song. It ultimately flopped because it was still burd= ened by the budget, corporate culture and toxic management-labor relations = of old-timer Delta, says Richard Gritta, University of Portland finance pro= fessor who studies the aviation business. "Song was a smash hit with the cu= stomers, but it was not sustainable because it didn't start from scratch," = Reid says. =0AHis first mark on the clean slate at Virgin America: The airl= ine bought 34 new jets, Airbus 320s and 319s that run about $50 million api= ece. They burn fuel more efficiently and break down less often than older p= lanes. The bigger airlines can't afford a new fleet. Virgin will also save = by outsourcing ground and baggage crews and partnering with work-from-home = call center provider Willow. =0AVirgin will use newer and cheaper technolog= y than even six-year-old Jet Blue had when it launched. That will start wit= h digitizing the crews' manuals, so they're wirelessly updated each time th= e plane lands. This mundane step will save a lot of money. It's tedious for= airlines to replace all the paper books each time a manual gets changed, a= nd the number-one source of FAA fines is manuals that aren't up-to-date. = =0AReid is also using cheap technology to give customers perks and try to w= in over the eight of 10 fliers who dislike their experiences on the legacy = airlines. =0AThis will start with a simpler, uncluttered Web site that list= s lowest fares first. Passengers will be able to order food and drinks--wha= tever they want, whenever they want it--on the screens at their seats. =0AV= irgin aims to offer more in-flight entertainment than any other airline, in= cluding personal screens 50% bigger than Jet Blue's and will include all-di= gital live TV, movies and video games, and keyboards, electrical outlets, a= nd game controllers at each seat. It will add broadband Internet as soon as= it's available for aircraft. =0AThe Virgin brand will also help--unlike mo= st startups, it already has name recognition and a good reputation, says Ed= ward Faberman, director of the Air Carrier Association of low-fare airlines= .=0AThe legacies don't have a chance of catching up. "The legacy carriers h= ave the most to lose. That's why they=A2re trying to keep Virgin out," Grit= ta says. Tearing out all their old systems and replacing them with new ones= would be prohibitively expensive. "Trying to retrofit everything is a disa= ster. Virgin is buying modern equipment and has the capital to do it." =0AO= f course, Virgin's employees, planes and technology will eventually grow ol= d and start costing more. The risks start even earlier. Some 150 airlines h= ave gone bankrupt since 1982, according to Gritta's research, and almost al= l have been startups. =0ABut Virgin America won't even be able to try if th= e federal government won't let it fly.