Image: Richard Branson
Bob Riha, Jr.  /  AP
Richard Branson, left, celebrates the new Virgin America terminal with airport officials, at Los Angeles International Airport on Wednesday, prior to boarding an Airbus 320 aircraft for the discount carrier's first flight from LAX to New York's John F. Kennedy International Airport.
updated 8/29/2007 3:22:23 PM ET 2007-08-29T19:22:23

Discount airline Virgin America began flying between New York and Los Angeles on Wednesday, further setting the stage for a showdown between the carrier and competitors with overlapping routes.

In addition to its two daily nonstop flights between John F. Kennedy International Airport and Los Angeles International Airport, Virgin offers three daily flights between JFK and its base at San Francisco International Airport. The privately held carrier will add an additional daily flight on both routes in coming weeks.

Virgin also offers service between Washington, D.C. and both West Coast airports, as well as between Las Vegas and both JFK and Washington.

The entry of discount airlines like Virgin and Skybus Airlines is "likely to be a significant negative for carriers competing in overlapping markets," Morgan Stanley analyst William Greene said in a note on Tuesday.

He downgraded shares of JetBlue to "Underweight" on Aug. 7 because of concerns about capacity growth on Virgin's transcontinental routes, and said Virgin routes may also interfere with those of UAL Corp.

Virgin America's chief executive, Fred Reid, said in a statement that the airline will announce flights between other cities in "the very near future" and that the response to the new airline has been "overwhelmingly positive."

The carrier launched its first domestic U.S. flights on Aug. 8.

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