The airline, which is based in Burlingame, Calif., and licenses the popular Virgin brand, will offer introductory main-cabin fares of $44 between Las Vegas and San Francisco and $149 first-class fares.

The fares are competitive with discount carriers, but the airline is offering service amenities such as leather seats, mood lighting and advanced in-flight entertainment on par with legacy carriers' first-class offerings.

The result could be an opportunity to lure business travelers who want to save money without sacrificing service. The youth-oriented Virgin brand and low prices could also appeal to young travelers.

Although it is operated from the United States, Virgin Group of London has a minority stake in the new airline. The Virgin brand, which is on everything from airplanes to cell phones, is controlled by celebrity billionaire Sir Richard Branson.

"I think they are going to be a major airline in the U.S.," airline travel observer Terry Trippler said.

Trippler, who is based in Minneapolis, said Virgin could potentially make significant inroads with business travelers, but probably not for a few years.

"Nobody has got a first class fare to begin to even compete with what they are offering," Trippler said.

And legacy carriers like United, Delta and Continental are in a bind when it comes to competing with an upstart like Virgin, Trippler said.

Lowering first-class fares can alienate existing legacy customers. That's because many of the legacy customers are used to frequent upgrades to first-class seating. If the airlines use lower prices to fill first-class seats with new customers or would-be coach travelers it leaves fewer seats open for upgrades.

The good news for competing airlines is Virgin is still small. The company is starting this week with routes between San Francisco and New York and San Francisco and Los Angeles. It will have just 11 Airbus A320 airplanes at launch, each capable of carrying about 150 passengers with just eight first-class seats.

But size is relative. Virgin will be small compared with giants such as Southwest, which has about 500 planes and flies about 3,300 routes daily, but large for a startup.

Virgin America says it has $312 million in startup investment. That's more than double the founders of JetBlue started with seven years ago when they launched that airline with $133 million, according to a profile on CNNMoney.com.

The addition of Virgin would increase the total number of daily flights between McCarran and the three major airports in the Bay Area to nearly 50.

That doesn't mean the market between Las Vegas and Northern California is saturated, said Randall Walker, director of the Clark County Department of Aviation.

"You can't say a market is saturated because a certain number of flights," said Walker, adding that many flights between the markets are about 80 percent full.

"You can pretty much figure at the peak times they are at 100 percent," Walker said.

Abby Lunardini, a spokeswoman for Virgin, expects the new service will do well in spite of the crowding and delays associated with contemporary air travel.

"Everybody kind of faces the same constraints," Lunardini said.

She said the San Francisco International Airport, Virgin's home base, is not among the top 20 airports when it comes to delays.

"We are pretty happy because we have certain things going for us," she said.