Strategy of Virgin Atlantic Airlines

Strategy of Virgin Atlantic Airlines

 

Virgin Atlantic Airways is a British airline operating between the United Kingdom and

North America, the Caribbean, Africa, the Middle East, Asia and Australia from its

London Gatwick Airport and London Heathrow Airport bases, and using Airbus and

Boeing wide-body aircraft. Most of these aircraft offer the Economy, Premium Economy

and Upper Class configuration of cabins. The airline owned by Sir Richard Branson’s

Virgin Group and Singapore Airlines registered an annual operating loss of 132 million

pounds on a  2,357 million-pound turnover in the year to February 2010. From the

beginning, Virgin Atlantic has been a rival of British Airways.[1]

 

Virgin Atlantic Airlines’ strategic mission is to grow a profitable airline that people will

patronize and where people will like to work. A comparative analysis of the company’s

strengths, weaknesses, opportunities and threats (SWOT) will help executives

summarize the major facts and devise a course of action in the face of constantly

changing external and internal factors. Virgin Atlantic’ strengths include its recognition

by 98% of the British public, the expectation of good customer service by clients in each

separate class and the firm’s introduction of innovations like in flight music, ice cream

and games. Its weaknesses include flight delays and inefficiency, limited travel routes

and the separation of Hot Air magazine from traditional advertising magazines. The

opportunities open to Virgin Atlantic include the continued thrust toward innovative,

good value, caring and quality services, providing in flight Internet connection and

adding more airline routes. The threats it faces include the too rapid and global

expansion of the Virgin brand image without focus on the important products,

competition offered by British and United for routes and fluctuating fuel prices.[2]

On the transatlantic front, Virgin Atlantic has declared the British Airways/American

Airlines planned merger in 2008 as anti-competitive, because this will eliminate

competition, raise prices and reduce service. The move is a reaction to the factor of

rivalry in Porter’s 5 Forces business strategy framework. To maintain profitability, Virgin

Atlantic has concentrated on its core competencies, including strategies on sustaining

quality service and relationships with its Upper Class clients by way of route closures to

Toronto, Chicago and Cape Town and reduction of flights and personnel across the

North Atlantic. The latter is due to significantly less traffic following the September 11,

2001 incident in the US. The company has also introduced recycling initiatives on its

aircraft and offices to declare its concern for the environment, cost effectivity and

healthy and safe procedures. These moves are in line with the PESTLE business

strategy model, which seeks to understand the operating environment of a business

independent of its internal operations. To show the value Virgin Atlantic places on all

stakeholders, it has attempted to keep all Virgin family members employed in the Virgin

group by offering employment possibilities with the group’s leisure and health club and

has also planned to rehire ex-employees once the airline industry resurges.[3]

 

Virgin Atlantic Airlines has chosen upper class customers who basically travel on

business on transatlantic routes as its specific marketing target based on size and

growth potential, competition, company objectives and feasibility of success in the

market. The company offers fun, innovative and distinctive upper class service,

including Internet capabilities and a high-tech inventory management system, at

business class prices. The Virgin brand is one of the top 50 global brands, with people

all over the world increasingly preferring the Virgin Atlantic brand image for its

reputation of quality and experience in airline travel.[4]

Virgin Atlantic Airlines has doubled its profits to more than 0 million in 2008 due

to its fuel hedging and rising sales of first and business-class seats. The company is

winning market share from competitors because of resilient load factors as travelers

take advantage of bargain fares.[5]

 

While dropping unprofitable routes and reducing personnel, Virgin Atlantic has chosen

not to cut back on its influential advertising campaigns. Its ’25 years and still red hot’

marketing thrust was able to resist the economic downturn and was successfully

picked up websites, bloggers and cyber geeks worldwide.[6]

 

[1] “Virgin Atlantic Airways”, Wikipedia, 16 June 2011, <http://en.wikipedia.org/wiki/Virgin_Atlantic_Airways>

[accessed 23 June 2011]

[2] Donal Manning et al, “Virgin Atlantic Marketing Case Study”, SalterQuest.com, pdf, 2005, <http://www.safarigraphics.com/salterquest/portfolioPDFs/ws_Virgin_Atlantic_Marketing_Case_Study.pdf

[accessed 23 June 2011]

[3] ibid

[4] ibid

[5] Sarah Arnott, “Virgin Atlantic Defies Airline Slump”, BloombergBusinessweek, 27 May 2009, <http://www.businessweek.com/globalbiz/content/may2009/gb20090527_747393.htm>

[accessed 24 June 2011]

[6] ASC Staff, “Interview: Paul Dickinson, Virgin Atlantic”, ArabianSupplyChain.com, 21 March 2010, <http://www.arabiansupplychain.com/article-3760-interview-paul-dickinson-virgin-atlantic/>

[accessed 24 June 2011]

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