College of Business and Economics
CALIFORNIA STATE UNIVERSITY, LOS ANGELES
MKT 500, Dr. Kim
Dayao, Gina; Kuszta, Paulina; Rodtadtan, Ken Akkadech; Bishnoi, Virat
VIRGIN ATLANTIC
Since its foundation in 1984, Virgin Atlantic has become Britain’s second largest carrier.
Virgin Atlantic airline belongs to the “Virgin” group, the third most recognized brand in
Britain. It operates long haul services to thirty destinations worldwide ranging from
Shanghai to Las Vegas. Virgin Atlantic has been a trendsetter, innovating new standards
of service. It has won top business and customer awards from around the world. Virgin
Atlantic has served some 53 million passengers and currently employees over 9000
people.
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VIRGIN ATLANTIC 1
VIRGIN ATLANTIC BACKGROUND AND HISTORY
In 1982, Randolph Fields and Alan Hellary set out to start a new airline, named
British Atlantic Airways (BAA), as a direct successor of Laker Airways. The intent was
to fly from London to Falkland Islands, as the service was needed when the Falklands
War had ended. But due to the short runway at Port Stanley, Fields decided to plan a
flight from London, Gatwick to New York, JFK airport instead. The proposal was
rejected in 1983, when both British Caledonian and the BAA objected. This time Hellary
and Fields planned on flying a DC10 carrier to Newark. Fields met Richard Branson to
secure funds for getting the airline off the ground. Thereafter, Branson became the
president and the airline was renamed Virgin Atlantic (Fields agreed to become Virgin
Atlantic’s first chairman with a stake of 25%). On June 22, 1984, Virgin Atlantic
operated its inaugural scheduled air service between London Gatwick and Newark
Liberty using a single, leased Boeing 747-200. In the coming years, additional aircrafts
were acquired and further routes were launched from Gatwick to Miami, New York,
Tokyo, Los Angeles, Boston and Orlando. In 1991, UK government decided to abolish
the "London Air Traffic Distribution Rules", thus allowing Virgin to operate from
London Heathrow Airport. The airline’s aim was: “To provide the highest quality
innovative service at excellent value for money for all classes of air travelers”. [1]
Almost all Virgin aircrafts are divided into three classes: Economy, Premium
economy (introduced in 1992) and Business class cabins. In 1997, Virgin Atlantic started
its Frequent Flyer program known as Flying Club. In 1999, Singapore Airlines bought
49% shares leaving Richard Branson’s Virgin group with 51% majority share. In 2001,
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VIRGIN ATLANTIC 2
Virgin Atlantic Airlines was voted the OAG Airline of the year.[2] On September 27,
2006, Richard Branson, on behalf of Virgin Atlantic, announced plans to reduce
greenhouse gas emissions by cutting down on aircraft weight and fuel consumption.
Virgin Atlantic is the second largest British Long Haul international airline. The
company holds a United Kingdom Civil Aviation Authority Type A Operating License,
which permits it to carry passengers, cargo, and mail on aircraft with 20 or more seats
[3]. Its headquarters are located in Crawley, England, United Kingdom. Virgin Atlantic
operates a fleet of 38 aircrafts: 13 Boeing 747s and 25 Airbus A340, with 6 orders of
Airbus A380 and 23 orders of Boeing 787 to be delivered in 2013 and 2011
respectively[4]. Currently over 9000 employees work for Virgin Airlines. Virgin Atlantic
has used the following famous slogans in past: “Mine’s bugger than yours,” “4 Engines 4
Long haul,” “Avoid the Q,” “Keep Discovering – Until You Find The Best,” “No way
BA/AA.” [5]
Recent Finances [6]:
Y/E April
2003
2004
2005
2006
2007
TURNOVER
£1401m
£1272m
£1630m
£1912m
£2140m
PROFIT
£15.7m
£20.9m
£20.1m
£41.6
£46.8
THE AIRLINE INDUSTRY
The airline industry is classified into four categories by the Department of
Transportation (DOT): International - 130+ seat planes that have the ability to take
passengers just about anywhere in the world and that typically have an annual revenue of
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VIRGIN ATLANTIC 3
$1 Billion or more; National - airlines that usually seat 100-150 people and have revenues
between $100 million and $1 billion; Regional - airlines with revenues of less than $100
million and that focus on short-haul flights; and Cargo - airlines whose main purpose is to
transport goods.
Full-service airlines have a high level of fixed and operating costs in order to
establish and maintain air services: labor, fuel, airplanes, engines, spares and parts, IT
services and networks, airport equipment, airport handling services, sales distribution,
catering, training, aviation insurance and other costs. Thus all but a small percentage of
the income from ticket sales is paid out to a wide variety of external providers or internal
cost centers. Other significant issues that effect airlines are airport capacity, route
structures, weather and labor. Weather is variable and unpredictable. Extreme heat, cold,
fog, and snow can shut down airports and cancel flights, which leads to a loss in revenue.
Weather is also the second-largest cause of flight accidents. On average, fuel can make
up 14-16% of an airline's total costs. The average cost of a gallon of commercial jet fuel
in the US has more than doubled since 2000, from $0.78 per-gallon in January 2000 to
$1.81 per-gallon in January 2006. [7] Short haul airlines typically get lower fuel
efficiency because take-offs and landings consume high amounts of jet fuel. Although
necessary, it is estimated that approximately 40% of an airline's expenses are used to pay
pilots, flight attendants, baggage handlers, dispatchers, customer service, and others.
Airlines earn revenue from transporting cargo, selling frequent flier miles to other
companies and the largest proportion of revenue is derived from regular and business
passengers. Airlines assign prices to their services in an attempt to maximize profitability.
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VIRGIN ATLANTIC 4
The pricing of airline tickets has become increasingly complicated over the years and is
now largely determined by computerized yield management systems. Most airlines use
differentiated pricing, in order to sell air services at varying prices simultaneously to
different segments. Factors influencing the price include the days remaining until
departure, the current booked load factor, the forecast of total demand by price point,
competitive pricing in force, and variations by day of week of departure, and by time of
day. Carriers often accomplish this by dividing each cabin of the aircraft (first, business
and economy) into a number of travel classes for pricing purposes.
Business travelers are important to airlines because they are more likely to travel
several times throughout the year, and they tend to purchase the upgraded services that
have higher margins for the airline. On the other hand, leisure travelers are less likely to
purchase these premium services and are typically very price sensitive. In times of
economic uncertainty or sharp decline in consumer confidence it is expected for the
amount of leisure travelers to decline.
Between 1990 to 2000, industry growth increased by 7% per year.
The
International Air Transport Association forecasts international air travel to grow by over
5% a year from 2000 to 2010. But in Europe and North America where the air travel
market is already highly developed, slower growth of 4%-6% is expected. [7]
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VIRGIN ATLANTIC 5
SWOT Analysis
Strengths
Weaknesses
-Strong brand image
-Increased passenger and cargo traffic
-Strong financial position
-Declining market share in key markets
-Lack of scale
Opportunities
Threats
-Expanding passenger traffic in Asia
-Increase in trans-pacific cargo
-Partnership with ANA
-Cargo price-fixing investigation
-Rising aviation fuel prices
-Terrorist attacks and scares deter passengers
from flying
Source: Virgin Atlantic Datamonitor
Strengths
Strong brand image
Virgin Atlantic is a part of the widely recognized Richard Branson’s Virgin Group, which
has strong brand image.
Increased passenger and cargo traffic
Virgin Atlantic recorded higher passenger and cargo traffic in 2006, as compared to
2005. The number of passengers carried by the company rose by 3.7% to 4.5 million.
The quantity of cargo and mail carried increased by 9.1% to 163,165 tons.
Strong financial position
The company has witnessed strong revenue growth in fiscal 2006. It recorded revenues of
£1,912 million in fiscal 2006, an increase of 17.3% from 2005. The operating profit of
the company was £41.6 million during fiscal year 2006 as compared to £20.1 million in
______________________________________________________________________________________
VIRGIN ATLANTIC 6
2005. Moreover, the operating margin of the company also increased from 1.2% in 2005
to 2.2% in 2006.
Weaknesses
Declining market share in key markets
Despite strong brand image and improved financial performance, Virgin Atlantic’s
market share has declined in most of its markets in 2006. Its market share in New York,
East Coast, Caribbean, India and China has declined from 25%, 21%, 59%, 23% and
22% in 2005 to 24%, 17%, 57%, 18% and 8%, respectively, in 2006.
Lack of scale
The company operates 27 destinations whereas, its top competitors British Airways and
Thai Airways International operates 148 and 600 destinations worldwide.
Opportunities
Expanding passenger traffic in Asia Pacific
Driven by increased economic activity in emerging Asian countries such as
China and India, demand for air travel to the Asia Pacific is rising. Virgin Atlantic
already has significant presence in this region and is well positioned to benefit from
increasing air travel to Asia.
Increase in trans-pacific cargo
The outlook for trans-pacific cargo market is positive. During 2006-2009, the market is
expected to increase by an average of 7%, an increase from a 4.3% average annual
growth recorded during 1999-2004. Because Virgin Atlantic operates Virgin Cargo, a
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VIRGIN ATLANTIC 7
worldwide air cargo business, this will allow opportunity for the company to further
strengthen its market position in cargo.
Partnership with ANA
In September 2006, Virgin Atlantic announced that it has teamed up with one of the
world’s ten largest airlines, All Nippon Airways (ANA), which allows Virgin Atlantic
passengers to fly to Japan on ANA’s domestic services. This new arrangement with ANA
would enable the company to offer better service to its customers.
Threats
Cargo price-fixing investigation
The US Justice Department and the executive body of the European Union have launched
an investigation into allegations of price-fixing in the air cargo industry in February 2006
and one of the company’s investigated was Virgin Atlantic. If the company is found to
have participated in price-fixing, it may have to pay a significant fine and investor
confidence could also be impacted.
Rising aviation fuel prices
Due to the rising oil prices globally, the prices of aviation fuel have increased
substantially. This could impact Virgin Atlantic’s margins as it is mostly reliant on air
freight business.
Terrorist attacks and scares can deter passengers from flying
When terrorist attacks occur, it places fear in potential customers, and can deter
individuals from flying.
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VIRGIN ATLANTIC 8
ENVIRONMENTAL ANALYSIS
The major environmental factors that affect Virgin Atlantic are economic,
regulatory and competitive factors, although social factors, such as terrorist fears, also
affect the growth of market share.
Recently, an economic slowdown in the UK, US and Eurozone has been
observed. This greatly affects Virgin Atlantic because its targeted customers reside in
these countries. In fiscal 2006, the company derived more than 50% of its total revenues
from the routes that fall in the US and Eurozone. According to the British Chambers of
Commerce, the GDP growth in the UK is expected to decline from 2.6% in 2006 to 2.3%
in 2007. Additionally, according to the Organization for Economic Cooperation and
Development (OECD), GDP growth of the US economy is forecasted to slow down from
an estimated 3.6% in 2006 to 3.1% in 2007, and the GDP growth in the Eurozone is
forecasted to decline from an estimated 2.2% in 2006 to 2.1% in 2007. A weak economic
outlook for the UK, Eurozone and the US would put pressure on the revenues of Virgin
Atlantic. [7]
Private airlines are subject to a great deal of government regulation for economic,
political, and safety concerns. The government often intervenes to halt airline labor
actions in order to protect the free flow of people, communications, and goods between
different regions without compromising safety.
The International Civil Aviation
Organization establishes worldwide standards for safety and other vital concerns.
International air traffic is primarily regulated by bilateral agreements between
countries, which designate specific carriers to operate on specific routes.
Bilateral
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VIRGIN ATLANTIC 9
agreements are based on a group of generalized traffic rights ranging from the freedom to
overfly a country to the freedom to provide domestic flights within a country. In the
1990s, open skies agreements became more common. These agreements take many of the
regulatory powers from state governments and open up international routes for further
competition. [4]
Additionally, airlines are responsible for enforcing government regulations. If
airlines carry passengers without proper documentation on an international flight, they
are responsible for returning them back to the originating country.
VIRGIN ATLANTIC COMPETITION
The airlines industry is very competitive, although the barriers of entry for new
airlines are lower in a deregulated market.
A deregulated market occurs when a
government does not dictate airfares, route networks, and other operational requirements
for airlines. Deregulation has produced far greater competition and because of this,
average fares tend to drop 20% or more. [4] The added competition, together with pricing
freedom, signifies that new entrants often take market share with highly reduced rates
that, to a limited degree, full service airlines must match. This is a major constraint on
profitability for established carriers, which tend to have a higher cost base.
As a result, profitability in a deregulated market is uneven for most airlines. These
forces have caused some major airlines to go out of business, in addition to most of the
poorly established new entrants. The following airlines have all declared Chapter 11
bankruptcy: United Airlines, US Airways (twice), Delta Air Lines, and Northwest
______________________________________________________________________________________
VIRGIN ATLANTIC 10
Airlines.
Since 1995, American Airlines, Alitalia, Scandinavian Airlines System,
SABENA, Swissair, Japan Air System, Viasa, Air Canada, Ansett Australia, and others
have nearly declared bankruptcy.
Virgin Atlantic has 9 major competitors which include: AMR Corporation, British
Airways, Cathay Pacific Airways, Continental Airlines, UAL Corporation, BMI,
Lufthansa, Delta Airlines and Japan Airlines. Revenues generated can be an indicator of
the progression of a company’s performance. Table 1, in the Appendix shows the global
airlines revenue in 2006. Virgin Atlantic’s operating profit in fiscal year 2006 was $81.63
million, which is a 48.32 % increase compared with fiscal year 2005. [4]
Virgin Atlantic successfully competes on all of its routes with the industry's top
national carriers. These include British Airways, BMI British Midland, American
Airlines, Continental, Delta and United on transatlantic routes; British Airways and South
African Airlines to South Africa; British Airways, All Nippon Airways, Cathay Pacific
and Japan Airlines to the Far East; British Airways to Delhi. Table 2 in the Appendix
shows the competitor features and strategy matrix of these top competitors. Although
Virgin Atlantic is able to successfully compete, the company has limited service
capabilities in both destinations and quantity of aircrafts. Virgin Atlantic has only 30
destinations and 38 aircrafts, whereas British Airways and BMI British Midland Airways,
which are the direct competitors in both domestic and international routes, have 222 & 51
destinations and 235 & 50 aircrafts respectively.
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VIRGIN ATLANTIC 11
To analyze the competition further, the Egg Diagram in Table 3 of the Appendix
illustrates both direct and indirect competitors in different service categories. A
description is available for further information.
CONSUMER ANALYSIS
The first jetliner was introduced in 1959, but air travel was quite expensive and
only the very wealthy or business people who worked for very profitable companies,
were able to fly. Today, the airline industry has consumers from every demographic
group. Virgin Atlantic customers are typically passengers who expect more out of their
airline and are willing to pay the price for luxury. Apart from the financial restrictions,
Virgin Atlantic carries approximately 4 million passengers annually who come from a
wide array of social backgrounds.
1
Due to the fact that Virgin Atlantic is a British
company, about 60 percent of the passengers are comprised of British citizen.
Virgin Atlantic segments their passengers into two main categories: Upper Class
and Economy Class, with the latter further segmented into a Premium Class and Regular
Economy Class, consisting of regular economy fare and coach fares. The premium class
includes a separate economy cabin for full fares with an option to pay extra for chauffeur
driver cars and clubhouse lounges. The Upper Class is generally comprised of males
between 35 to 45 years of age and that earn more than $75,000 a year. The Premium
Economy is used evenly by business and vacation travelers, typically around 40 years of
age.
1
Datamonitor: Virgin Atlantic, November 2006, pg. 5.
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VIRGIN ATLANTIC 12
Although one might assume that the consumer of Virgin Atlantic is simply buying
a space on an airplane, this is not true. The customer of Virgin Atlantic is interested in the
entire flying experience offered specifically by this company. An important feature that
Virgin Atlantic offers its customers is the Special Assistance program that enables the
traveler to customize their travel from the start by arranging transportation to the airport,
selecting their onboard meals and having transportation at the destination.
Though
limited to British fliers, a vacationing consumer is able to purchase a Virgin Holiday
package ranging from family holidays, beach holidays, city breaks, Disney holidays,
Flydrive or ski holidays.2
With the widespread use of the internet, more and more people are buying their
tickets online directly from the airline’s website www.virgin-atlantic.com.
Another
option is to call the customer service line at 800-821-5438. For consumers who prefer to
go through an intermediary, they can opt to hire a travel agent to book their flight and
handle any other necessary arrangements to make the travel experience enjoyable and
stress-free. Virgin Atlantic consumers use the company’s services year round but during
the summer season, the number of travelers is greatly increased. As stated by the
International Air Transport Association (IATA), the number of international air
passenger number rose by 5.9 percent in 2006 and predicts that totals in air travel will
further increase in 2007, despite rising gas prices.3
2
3
http://www.virginholidays.co.uk/info/holiday_information/
http://money.cnn.com/2007/11/13/news/companies/airline_fuel_fares/index.htm
______________________________________________________________________________________
VIRGIN ATLANTIC 13
There are many competitors in the airline industry. Consumers have a wide range
of options to choose from to accommodate their lifestyle; whether it is a monetary
restrictions or preferences such as comfortable seats at a higher price. The following
perceptual map indicates the location in the consumers mind how Virgin Atlantic is
viewed in comparison to competitors.
High Quality Air Travel
Lufthansa
Frontier
Virgin Atlantic
JetBlue
Air France
AirTran
Delta Air
British Airways
Continental
Japan Airlines
Low-Cost Air
Travel
High -Cost Air
Travel
Ryan Air
Thai Sky Airlines
Sky Airlines
Zoom Air
Air Asia
US Airways
United
Air Canada
Low Quality Air Travel
The two main ratings of air travel is the cost of the travel and how comfortable the
flight will be. The perceptual map shows that travelers seeking low-cost air travel without
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VIRGIN ATLANTIC 14
concerns about comfort, at airlines such as Sky Airlines and Ryan Air, while others are
willing to pay a higher price. The Virgin Atlantic consumer is willing to pay a higher
cost for air travel to receive luxury treatment typically reserved for the elite traveler.
A significant reason for Virgin Atlantic’s success is that CEO Richard Branson
always approached the industry not by emulating what already existing methods of
companies in the market, but sought to approach what was missing and focus on
changing the industry. Some of the unique features Virgin Atlantic offers are:
-
‘Mood lighting’ giving off an aura of ‘hipness’ and ‘futurism.’
-
The ability to accommodate the technological passenger with power plugs for
laptops, USB chargers for MP3 players and in the near future, Virgin Atlantic
will have built in ethernet for internet access.
-
Online ordering system where customers can order in-flight food and pay via a
cashless system. This eliminates the problem of hungry travelers who are lacking
cash funds to purchase meals, such as is required on Southwest and Jetblue.
-
Uses major airports for discount prices. Many discount airlines use obscure
airports that are far from major metropolitan areas in order to lower the ticket
prices. Virgin Atlantic uses major airports, eliminating the hassle of traveling
before starting the actual journey.
-
“Seat-to-seat chat” is an indicator to other passengers that one is willing to
converse during the flight. If one opts to read or sleep during the flight, they will
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VIRGIN ATLANTIC 15
disable this and other passengers will be notified not to disturb the fellow
traveler. 4
-
A new service called Virgin Atlantic Alerts, allows users to download a
“Skinker” application onto their desktop from the Virgin Atlantic website, which
will enable users to be alerted of Virgin Atlantic Airlines’ offers on a periodic
basis. This is a new way of communicating and distributing information direct to
a user’s desktop, bypassing email.
People respond quite positively to Virgin’s marketing programs. One of the main
reason people choose this company is for its brand image. Richard Branson has become
an integrated part of the brand image. Consumers who fly this airline want to be
associated with Branson’s luxurious lifestyle. Branson states that Virgin is, “A brand
name that is known internationally for innovation, quality and a sense of fun…”5
Customers of Virgin Atlantic believe that they too are similar to Branson and his views
on life. One way Branson carries himself within the company’s brand image is by
advertising to the youth market as non-conforming to the traditional traveler, but rather
as an adventure-seeker.
Another marketing program offered by Virgin Atlantic is special deals during the
off season which enables lower income travelers who are curious about the company’s
services to purchase. This is a good marketing strategy because it attracts new
consumers to try out and become familiarized with the service. The next time this
4
5
http://rohitbhargava.typepad.com/weblog/2007/the-not-so=secr.html
http://www.virgin-atlantic.com/ allaboutus/ourstory/forstudents.jsp
______________________________________________________________________________________
VIRGIN ATLANTIC 16
consumer needs to travel, they might be willing to spend a little extra in order to get
high quality service in return. Virgin Atlantic also offers benefits for return customers.
In 1997, it began offering a frequent flier program called, “Flying Club.” The
participants are able to use rewards of free miles with Virgin Atlantic or any of its other
partner airlines such as Singapore Airlines and South African Airways.
According to consumer reviews and the rising number of Virgin Atlantic
customers, people are pleased with the experience and return to this airline. On several
airline travel review websites, Virgin Atlantic received a four out of five stars.6 The
majority of the reviews claimed that the flight attendants were well mannered and
attentive to passengers’ needs. The passengers were also provided generous portions of
food and beverages. To support these ratings, the number of passengers increased by
3.7% to 4.5 million from 2005. Other indicators that people will be buying the Virgin
Atlantic air travel are the many awards that Virgin Atlantic wins year after year. In
2006, Virgin Atlantic won top categories at the Business Travelers Awards with Best
Business Class and Best Premium Economy.7
VIRGIN ATLANTIC STRATEGIC VALUES
Virgin Atlantic positions itself to be viewed as a young, fun and rebellious airline.
The company utilizes differentiation positioning and seeks to target a niche market. As
previously mentioned Virgin Atlantic attempts to reach this niche market via airline
6
http://www.jdpower.com/travel/ratings/airline-ratings/traditional-network
7
Datamonitor: Virgin Atlantic, November 2006, pg. 8.
______________________________________________________________________________________
VIRGIN ATLANTIC 17
services that are unique to the company, which is used to make a distinction from the
broad market. Along with this, the company is a leader in the industry in environmental
conscientiousness. CEO Richard Branson is even offering a $25 million prize for
anyone who invents a viable process for removing carbon dioxide from the atmosphere,
for the Virgin Atlantic Company.
______________________________________________________________________________________
VIRGIN ATLANTIC 18
APENDIX
TABLE 1: Top 25 Global Airlines Revenue 2006
Airline Lists
Air France KLM
Lufthansa
AMR Corporation
Japan Airlines System
Corporation
UAL Corporation
Delta Air Lines, Inc.
Continental AG
Northwest Airlines Corporation
All Nippon Airways Co., Ltd.
US Airways Group, Inc.
British Airways Plc
Qantas Airways
Singapore Airlines Limited
Southwest Airlines Co.
Air Canada Inc
Korean Air Lines Co., Ltd.
SAS Group
Cathay Pacific Airways Limited
Emirates Group
Iberia
Alitalia-Linee Aeree Italiane
S.p.A.
Virgin Group
TAM S.A.
Air India
ExpressJet Holdings, Inc.
Total
2006 Revenues (Million
US)
%
28,945.00
24,903.70
22,563.00
10.28
8.85
8.02
18,905.40
17,882.00
17,171.00
13,128.00
12,568.00
11,765.80
11,557.00
10,654.60
10,272.20
9,119.30
9,086.00
8,934.40
8,328.60
8,236.90
7,823.80
7,423.20
6,473.80
6.72
6.35
6.10
4.66
4.47
4.18
4.11
3.79
3.65
3.24
3.23
3.17
2.96
2.93
2.78
2.64
2.30
5,927.50
3,518.10
2,515.50
2,060.80
1,679.60
281,443.20
2.11
1.25
0.89
0.73
0.60
100.00
Source : Datamonitor (www.computerwire.com)
______________________________________________________________________________________
VIRGIN ATLANTIC 19
TABLE 2: Competitor Features/Strategy Matrix
Virgin Atlantics
Airways
British Airways
British Midland
Airways
Continental
Airlines
American Airlines
Delta Air Lines
1984
1924
1949
1934
1930
1928
Virgin Group
British Airways plc
BMI
Continental AG
AMR Corporation
Delta Air Lines, Inc.
Owner
Virgin Group 51%,
Singapore Airlines
49%
n/a
Sir Michael Bishop
50% , Lufthansa 30%
,SAS 20%
n/a
n/a
n/a
Head Office
Crawley, England,
United Kingdom
London, United
Kingdom
Castle Donington,
England, United
Kingdom
Houston, Texas
Fort Worth, Texas
Atlanta, Georgia
Hubs
London Heathrow
Airport
London Gatwick
Airport
London Heathrow
Airport
London Gatwick
Airport
London Heathrow
Airport
Manchester Airport
Dallas-Fort Worth
George Bush
Hartsfield-Jackson
International Airport
Intercontinental
Atlanta International
Miami International
Airport (Houston)
Airport
Airport
ANA
Oneworld
Star Alliance
SkyTeam
As of Aug 2007 / 38
As of Sep 2007 / 235
As of Nov 2007 / 50
367
Destinations
30
222
51
292
158
332
Target Market
Upper class and
economy class
n/a
n/a
n/a
n/a
n/a
Gerard Arpey
(CEO)
Richard Anderson
(CEO)
Edward Bastian
(President)
Founded
Parent Company
Alliance
Number of
Aircrafts
Management
Employment
Richard Branson
(President)
Stephen Murphy
Willie Walsh (CEO)
(Chairman)
Steve Ridgway (CEO)
Nigel Turner (CEO),
Sir Michael Bishop Larry Kellner (CEO)
(Chairman)
Oneworld
SkyTeam
As of Aug 2007 /
As of Feb 2007 / 443
653
Over 9000
42,755
4312
43,770
86,000
51,300
April
March
December
December
December
December
3
7
2
19
29
13
Offer
Offer
Offer
Offer
Offer
Offer
Cargo handling
Offer
Offer
Offer
Offer
Offer
Offer
Aircraft
maintenance
Offer
Offer
None
n/a
n/a
Offer
Leisure travel
services
Offer
Offer
None
Offer
Offer
Offer
Fiscal Year End
Number of
Incidents and
Accidents
Scheduled
passenger
services
______________________________________________________________________________________
VIRGIN ATLANTIC 20
Egg Diagram Explanation:
Each airline offers scheduled passenger services to their customers. Virgin Atlantic’s
indirect competitors are agents, for example Cheap Ticket Travel, and Virtual Agents
such as Airfare.com, Lowestfare.com, and so forth. These indirect competitors play an
important role in the airline industry. They can easily be approached via the internet and
generate numerous revenues. Most airlines provide cargo services. British Airways and
British Midland Airways are direct competitors of Virgin Atlantic and have offered cargo
services for British people for a longer period of time, while multi-companies, Maersk
Logistic and Evergreen, who are experts in logistics within cargo services, are strong
indirect competitors. Regarding Aircraft Maintenance Services, British Midland Airways,
Cathay Pacific Airways and Lufthansa are examples of direct competitors against Virgin
Atlantic. Many Airlines also have Leisure and Travel Services, which are optional offers
to its customers like Delta Airs Lines, Continental Airlines, Lufthansa, and so on. On the
other hand, Carlson Travel, Pan America Travel Services and Fargo Travel are example
of indirect competitors to Virgin Atlantic in Leisure and Travel Services.
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VIRGIN ATLANTIC 21
REFERENCES
(1) http://www.airlinequality.com/Forum/vir_atl.htm
[1] http://www.virgin-atlantic.com/tridion/images/factsheetcompanyoverview_tcm4426059.pdf
[2] http://www.virgin-atlantic.com/en/gb/allaboutus/ourstory/history.jsp
[3] http://www.caa.co.uk/default.aspx?catid=183&pagetype=90&pageid=340
[4] http://en.wikipedia.org/wiki/Virgin_Atlantic_Airways
[5] http://oceanru.com/travel/Virgin_Atlantic_Airways
[6] http://www.virgin-atlantic.com/tridion/images/factsheetcompanyoverview_tcm4426059.pdf
[7] Virgin Atlantic datamonitor
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