Their frequent flyer program is basically subpar (and was only added relatively recently), which kept business travelers off. (I like the Virgin America product, but if I can fly United and get upgraded to First, lounges, etc. and earn miles toward flying in International Business or First to Asia for fun, I'll probably suffer through a United transcontinental over a Virgin America flight...)
They won the leisure market to/from SFO, but that's not a big enough market to be a successful airline.
My wife has been 1k for the last several years. Before we met I had no concept of mileage programs but traveling with her has really opened my eyes.
The funny part is at some point it feels a bit like playing a Zynga game, including the occasional "screw it, I'm so close I'll pay a little cash to bump up to the next level"
Yup, same reason I stay with United. Their frequent flyer program is insanely flexible. US to Thailand with a week-long stopover in Berlin, flying back out of Singapore, in first class? Sure!
Though, out of my city I don't have a ton of options, living in a United hub.
I'm glad they finally added the status program, but like you say it's not fantastic by any means. Fortunately for me, the only routes I fly regularly are covered by Virgin :)
However I think it's quite wise to get a loyal fanbase before trying to expand everywhere. SFO alone won't make them a huge player, but I for one will be recommending them to my friends once Virgin is available to them.
...although conversely, if you're a Virgin Atlantic frequent flier then Virgin America is actually a half decent option, as you get status points with every flight.
They won the leisure market to/from SFO, but that's not a big enough market to be a successful airline.