• Virgin Atlantic is one of the world’s most recognised brands. Since its launch in 1984, Virgin Atlantic has grown into the second largest UK based transatlantic carrier, winning awards for its products and innovative marketing.

• Despite Virgin Atlantic’s growth the service still remains customer driven with an emphasis on value for money, quality, fun and innovation.

BackgroundBackground

PPESTEL – PoliticalESTEL – Political

A deregulated “Open Skies” policy allowed freedom of entry and exit on routes, haveOwn prices subject to some controls.

Key international bodies that set the standard of aviation industry within Europe (theEU, the International Civil Aviation Organization, the European Civil Aviation ConferenceAnd the EUROCONTROL). The issues that these bodies may tackle include: safety,Security and service quality in aviation

Department for Transport is actually keeping an eye on airline activities (environmentalissues: such as noise, noise mitigation and compensation, air quality and climatechange).

The global alliances: - One World Alliance (Aer Lingus, British Airways, Cathay Pacific,Finnair, Iberia, American Airlines, Lan Chile and Qantas Airlines). - Star Alliance Global networks (Lufthansa, SAS, Air Canada, Varig, Thai International).

PPEESTEL – EconomicSTEL – Economic

• Contribution of the airline sector to the local and world economy (increasing jobs, GDP, inward investments, encourage firms to base new projects)

• As it a transport infrastructure, it helps make business transactions faster, creates more options, and provides a boost to the tourism of the country.

PEPESSTEL – SocialTEL – Social

Consumer expectation (service quality) - 2 most important issues are:• the reason for travel (business or leisure)• the class of preferred travel (first, business, or economy).

Fact that airlines are still exposed to terrorist attacks

Rise in travel by students, elderly.

PESPESTTEL – TechnologicalEL – Technological

Technological innovations - World class In-flight entertainment system ($19m investments)- In flight internet connection- Virgin Atlantic Alerts (a new way of communicating and distributing information directly to a

user’s desktop)- Technology adds improvements (Galileo) an advanced inventory system

Fuel-efficient engines and airframes (VA upgraded it’s airlines from B747-200s to B747-400, A340s, A380s)VA operates a pioneering biofuel demonstration with Boeing and enginemanufacturer GE Aviation on a 747 between London and Amsterdam. This was theworld's first flight using biofuel by a commercial airline.

VA has also ordered 15 of the 787-9 Dreamliner's which burn around 27% less fuel perpassenger than the A340-300, the aircraft it will replace in the VA fleet.

PESTPESTEEL – Environmental L – Environmental

• Focused on implementing their support for recycled products.

• Noise pollution controls• Energy consumption controls

PESTEPESTELL –Legal –Legal

• Legal lawsuit against BA won in the year 1993, improved the brand image of the company.

• Preferential airport rights for some carriers

Porter’s 5 Forces Porter’s 5 Forces (industry analysis)(industry analysis)

Power of Suppliers (High)

- Fuel suppliers-Manufactures: Airbus &

Boeing

Threat of Potential entrants (High)

- The alliance of other airlines- Establishment of a new

airline company

Threat of Substitutes (Low)

- No threats for long-haul routes

Power of buyers (High)

-Competitive prices from competitors- New airline

Competitive rivalry (High)

- BA & New airline alliance (smaller airlines grouping

together)-Fly Emirates (recently signed the

Contract for 90 A380s)

Key DriversKey DriversHigh quality, low pricesProfessionalismInnovative in serving on board and atairports for customersEntertaining on flights.Personally address customer complaintsand open to suggestions from customers

Core CapabilitiesCore CapabilitiesOutstanding daring personality of Richard Branson (Communication, media presence, innovative)Pleasurable flights and customer comfort focused

McKinsey’s 7 S’ McKinsey’s 7 S’ (micro analysis)(micro analysis)

Structure Centralized structure (27 people reporting directly to chief) till 1989Decentralized structure (3 managing directors reporting to chief)

Strategy To focus on corporate segmentLong distance flights Provide all classes of travelers with the highest quality travel at the

lowest cost (“offering a first class service at less than First Classfares”)

Flexibility to customers changing needsUnderstanding of passengers needs and go beyond their expectations

Skills Hired 2 executives from Laker AirQuality trained employees recruited from other airlinesRichard Branson’s innovative entrepreneurial management

McKinsey’s 7 S’ McKinsey’s 7 S’ (micro analysis)(micro analysis)

Staff 2 602 employees, 880 cabin crew membersInvolving management & staff was the key to superior resultsStimulate the individual, encourage staff to take initiatives and give them the means to implement them R.Branson wants employees to feel that they can make the difference

Systems Press office which operates 24 hours a day enabling the organization to attend the queries from media and customers Richard branson maintains regular correspondence with employees for their input and they were communicated with relevant information.

Style Being accessible to staff all the time, encouraged innovation from employeesBeing not only in the airline business but also in entertainment & leisureInnovative style

Shared values “Hands on” approach with management and staffIdeal employee is informal but caringEmployees are involved in the process, they take responsibility and can express dissatisfaction

Future strategyFuture strategy

Aggressive expansion in Asia, South America Increase the aircraft fleetForm a strategic alliance with other airlines (which could have been a future threat)Continue to develop innovative approaches in airline services Maintain relationships with Upper Class customersGlobalize the Virgin brand further