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 $100 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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