The strategy has worked. Virgin America has muscled into major airports in San Francisco, Los Angeles, San Diego, Las Vegas, Seattle, Orange County, New York, Boston, and Washington, D.C. The company begins flying to Ft. Lauderdale, Florida, on November 18. The company said it has its eyes on at least five new cities, including Atlanta, Dallas, Austin, Toronto, and Vancouver.

As revenue grows, Virgin America is moving toward the break-even point. The company reported narrower losses for each of the last three quarters. In the most recent quarter, losses were $11.4 million on sales of $136 million. That is down from a loss of $62 million on sales of $92.5 million in the year-ago period.

Rival airlines have taken notice. JetBlue and Alaska Airlines, for example, have added flights along routes connecting San Francisco and New York, San Francisco and Boston, and San Francisco and Seattle. Jetblue and Alaska do not attribute the moves to Virgin America. But Virgin America is “sucking away business that would otherwise go to those airlines,” said Henry Harteveldt, airline analyst with Forrester Research Inc.

Rivals are battling Virgin America in other ways. Alaska Airlines has been leading the charge against Virgin America’s corporate structure. The Seattle-based airline alleges that Virgin America is really controlled by Branson, a British citizen. If that were true, it would violate a U.S. law that forbids foreigners from controlling U.S.-based airlines.

For its part, Virgin America said it complies with U.S. law regarding citizenship. It recently tried to put a stop to Alaska’s efforts, asking the U.S. Department of Transportation to quash the case. Federal officials have not yet responded.

Still, other challenges remain. The domestic airline market is expected to remain weak for the rest of 2009 and into 2010. Passenger revenue fell 19 percent in September 2009 versus the same month a year ago, the 11th consecutive month in which passenger revenue declined from the prior year, said the Air Transport Association.

Virgin America must keep an eye on its bank account. Cash supply shrunk $10 million to $28 million in the most recent quarter. CEO David Cush said that is enough to carry the company to profitability. But any number of major events, including a spike in oil prices, a global health scare, a double-dip recession, or other major political calamity could cut demand for air travel, upending that prediction.