This paper presents an examination of Virgin Atlantic Airlines. It focuses on the history of Virgin Atlantic and key strategies that has enabled the company a big success. It discusses how several strategies have helped the company to be at the top for a long time. Strategies like improving the brand value, marketing strategy, airline alliance strategy, airline partnership and the Branson’s factor, have played a big role in the process. Virgin group remains to be a big brand through its strong organisational structure, customer satisfaction, and employee satisfaction among others.
Table of contents 4
A brief History of Virgin Atlantic Airlines 5
Strategy in action 6
Virgin Atlantic airlines business strategies 6
Improving Brand value 7
Marketing strategy 7
Airline Alliances strategy 9
Airline partnerships strategy 9
Innovation and creativity in service delivery (The Branson Factor) 10
Selling strategy 11
Virgin Atlantic Airline organisational structure 11
The functional structure 12
Managing strategic change 12
Virgin Atlantic group is based in London and owned by Sir. Branson whose owns (51%) of the total shares as the Singapore Airlines owns (49%) of the shares. It has its headquarters in Crawley and West Sussex in England. Virgin’s highest business profile has been boosted by its big stake in the airlines. Virgin Atlantic Airline is an international undertaking with over 30 destinations. However, the company has businesses spread out in various industries, from financial services to railways, from soft drinks to cosmetics.
History of Virgin Atlantic Airlines
Virgin was founded in early 1970 as a mail order record business but later went on to become a music publishing and retailing private company.
Back in 1980’s Sir Richard Branson was well known for Virgin Records a legendary label that signed major stars like the rolling stones, Janet Jackson among others1. In the 1980’s virgin expanded into Virgin Atlantic Airways in 1983, Virgin Cargo and Virgin Holidays in 1984 and 1985 respectively. In 1986 the company was floated on the London stock exchange with a turnover of over 250 million pounds. Later, Richard Branson realised that the public obligations and compliance rules were expensive and time consuming; this prompted him to take the business back into private ownership, (Gerry, Scholes, and Whittington, 2009).
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Randolph fields approached Richard Branson with the idea of operating an airline service top New York and without any previous knowledge in the airline industry, he accepted to invest in the Virgin project. This resulted in the need for some expertise in the field and the company hired two former Laker Airways employees. Started its operations on June 24th 1984, The paramount goal of Virgin Atlantic is to ensure that it avails various classes of travel in order to improve the quality of services it offers to its clients.
Virgin Atlantic quickly opened up operation in various places including Miami (1986), Boston (1987), Orlando (1988), Tokyo (1989), and Los Angles (1990). During the time Virgin Atlantic struggled with its authorisation at Heathrow airport, Britain’s largest airport. In the early 1990’s Virgin Atlantic was given a licence to operate at Heathrow airport and this boosted their fleet expansion. Virgin Atlantic offers three main products; the upper class, premium economy and economy. In March 200 Virgin group sold 49% of their shareholding to Singapore Airlines, leaving Sir Richard Branson with a51% ownership.
Strategy in action
A strategy in action techniques depict a dignified purpose and guide the visions that are all vital but being alone, they cannot make strong, powerful organizations. For Virgin Atlantic to succeed, they needed ways to translate their vision, values and purpose to be able to put them into action. This involves formulating strategies that are workable and specific about the future. Strategic management is the leader’s job to find this fit and translate it into action and which Sir Richard Branson has played well. In formulating any strategy, leaders ask questions such as “where the organizations want to be? What changes and trends occurring in the competitive environment? What courses of action can help us achieve our vision?”
Development of effective strategies requires active listening, to people both inside and outside the organization, as well as examining the environment that can be used to gain an edge.
Virgin Atlantic airlines business strategies
A Strategy can be defined as the general plan of action that describes resource allocation and other activities for dealing with environment and helping the organization attain its goals Strategies are statements of how objectives of a company are to be achieved. According to Richard, the airline works under the principle aimed at improving its performance in terms of growth and profitability. This does not only benefit the firm but also the employees since they are motivated to work under good working conditions.
Improving Brand value
This is basically the image and experiences that the company has in the eyes of the consumer. Virgin Atlantic has worked their way up in brand management, which stems from the chairman, Sir Richard Branson. This is an important strategy in Virgin Atlantic as it represents a promise to the customer about the product the company is offering. Through its name which is thought to mean a virgin in every business they venture in, creates the feeling that the company wants to be the best in its service delivery. Customer satisfaction affects the brand value because if the consumers are satisfied they develop a brand loyalty, which improves the company’s revenues. Sir Richard Branson’s business philosophy is founded on reputation, quality, innovation, and price rather than image.
Virgin Atlantic Airlines has won several awards as a result of a great service in long overhaul services. These awards include; Best Long-Haul Airline 2009 – Sunday Times Travel Magazine Readers Awards, Leading Transatlantic airline – World travel Awards 2009, hitwise top ten award (No. 7 airlines website)
Marketing strategies involve having a marketing mix, which is a combination of; product, price, place, and promotion-to be used inline with the marketing strategy. Virgin Atlantic has always offered creative and innovative products which are fun and of high quality and convenient to consumer locations. Virgin continues to market itself in the UK through the TV, press, magazines, outdoor posters and taxi sides.
Virgin Atlantic offers three distinct classes; premium economy the upper class and economy highlighted below.
Upper Class has several services which are but not limited to this list;
Internal-flight aesthetic therapy – massages and manicures
Freedom menu – restaurant style cuisine at any time
On board stand up bar
Personal 10.4 inch video screen and many other services.
Premium economy has the following services;
Dedicated check in desk
Flexible ticket- no charges for last minute changes
Pre-flight champagne and other services
The economy class has the following services;
Seatback video screen with more than 45 channels of movies, music, and video games
Complimentary beverages, including a vegetarian option
Free amenity kit and other services
Virgin Atlantic enjoys a 60/40 bias of all UK passengers from route to route; the Upper class passengers are predominantly travelling on business and are male, 35 to 45 years old.
Airline Alliances strategy
Virgin Atlantic made code-share agreements with Continental Airlines, British Midland, Malaysia Airlines, and a marketing agreement with Ansett. Travelers booked as Virgin Atlantic passengers can earn Virgin Freeway miles on all code-share flights.
The agreement with Continental airlines allows for a higher frequency, high quality service, and efficient competition by enhancing services on the London/New York routes. This offers seven services both ways, connections for Virgin Atlantic flights entering the U.S., with check-in only in London. The code-share agreement with British Midland allows passengers from a number of European destinations access to Virgin Atlantic’s worldwide service. The alliance with Malaysia Airlines offers a twice-daily service between London and Kuala Lumpar. The alliance allows for connections to Sydney and Melbourne.
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The marketing association with Ansett Australia provides customers travel via Hong Kong to various Australian cities. In cooperation with Air India, Virgin Atlantic now offers increased service between the United Kingdom and India. Virgin Atlantic offers higher frequency flights into South Africa, at Johannesburg and Cape Town, through an agreement with Nationwide Airlines, which allows Virgin to capitalize on their service throughout South Africa.
Airline partnerships strategy
In December 1999, Virgin Atlantic announced a distinctive worldwide partnership with Singapore Airlines. Virgin Atlantic has continued to partner with other airlines to improve their customer’s satisfaction. Virgin Atlantic airline partners include other partner Airlines, hotels, car rental, shopping (which helps you earn if you are shopping in the UK airports with BAA world points), financial services and other rewarding schemes that help the customer’s to earn miles, spend miles or both. Earn miles is a scheme that enables a customer to earn points that can be converted to free flights or into other services. Airline partnership improves Virgin Atlantic connectivity to various parts of the world, but to enjoy some of this services you need to be a Flying Club member. Local partners in areas which Virgin group operate enable traveler’s access quick and reliable services away from home, and thereby improving their satisfaction. Some of the Virgin Atlantic Airlines partners include; Air China, Air New Zealand, Continental Airlines, Jet Airways, Singapore Airlines, Virgin America, South African Airways, Gulf Air, Virgin Blue, Hawaiian Airways and many others.
Innovation and creativity in service delivery (The Branson Factor)
Due to Richard’s skills of entrepreneurship and attitude, his bold status for antics to expand across the Atlantic Ocean, the Virgin brand has been granted its fair share of publicity. Virgin Atlantic’s Managing Director, Steve Ridgway is an equally passionate advocate of these brand values and shares Richard’s irrepressible spirit of adventure, having been his co-pilot in the record-breaking speedboat crossing of the Atlantic in 1986. It’s an attitude that has played an important part in the widespread global success of the Virgin brand and promoting the values that consumers can associate with, (Gerry, Scholes, and Whittington, 2009). The brand has been known to give a memorable service to their customers especially onboard, where the entertainment gadgets have been installed to improve the flights comfort. Finally, Virgin Atlantic’s president Sir Richard Branson has always boosted his brand as one that holds up to its name .virgin Atlantic has been recognised internationally for its innovation, quality and sensitivity in fun, The company’s creative and innovative customer relations help customers in solving problems like ;ticket refunds, baggage claims, and flight disruptions among other issues. This is normally inline with their vision and commitment to their passengers needs.
Theses are efforts to induce the consumer to buy what the company has to offer set in line with the marketing strategy. Virgin Atlantic has a program that enables the passengers to earn more miles which are convertible into free flights. To achieve this, the company partnered with the Bank of America and issued Virgin Atlantic American ExpressÂ® card. The cards are issued in two options; the Virgin Atlantic black card and Virgin Atlantic White card. Virgin Atlantic Black card offers:
The first purchase earns you 20,000 bonus miles
All other purchases, 1$ spent earns 1.5 miles
In anniversaries and other great services Up to 15,000 bonus miles is earned.
The Virgin Atlantic White card offers the following:
The first purchase earns you 12,500 bonus miles
Every1$ spent on all other purchases earns 1 mile.
1$ spent directly on virgin Atlantic purchases and other services earns 3 miles.
Virgin Airlines allows e-ticketing, hotel booking, group travel which allows the customers to book and pay via their website. This is an innovative selling strategy and improves the service quality and efficiency.
Virgin Atlantic Airline organisational structure
An organisation structure is the mainly a framework, typically hierarchical with different levels of management. Virgin Atlantic organisation is managed by a President (Sir Richard Branson).
The functional structure
Virgin Atlantic has a fleet size of more than 39 planes plying over 30 destinations. The head quarters are in London, and the key people behind it’s the company are;
Sir Richard Branson – the president, Stephen Murphy – the Chairman, Steve Ridgway (CEO), Julie Southern (CCO) and Steve Griffiths (COO). The company had revenue of 2.357 billion pounds and this represented a loss of 132 million pounds.
Use of technology is another boost in the airline, a passenger can book and pay for the ticket using the airlines website (e-ticketing). This ensures real-time booking saving time and costs.
Managing strategic change
Sir Richard Branson’s entrepreneurial attitude and innovative publicity enables Virgin Atlantic to achieve a reputation in management. Steve Ridgeway, the managing Director Virgin Atlantic shares the same passion with the group’s president. This management attitude made Sir Richard Branson exit London stock exchange as it required more transparency and compliances, he choose to repurchase his shares to retain his autonomy. This shows his originality in managing Virgin Atlantic group.
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