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VIRGIN ATLANTIC AIRLINES
Tim Dunlea Tristan Richards Bob Dunoskovic Philip Winchester Lindsay Charles
HISTORY
VIRGIN GROUP
Parent Company– Virgin Atlantic– Virgin Holidays– Virgin Trains– Virgin Balloon Flights– Virgin Mobile– V2 Music– V.Shop– Virgin Bride
– London Broncos– Virgin Express– Virgin Wines– Virgin Cosmetics– Virgin Cola– Virgin Publishing– Virgin Megastores– Virgin Energy– Virgin Direct
CURRENT SITUATION
Second Largest Long Haul Carrier in UK Third Largest European Airliner operating in
US Fifth Busiest Trans-Continental Airliner in
1999 Behind:– Continental (1,947,000 Passengers)– Delta (1,827,000 Passengers)– British Airways (1,611,000 Passengers)– Lufthansa (877,000 Passengers)– Virgin (872,000 Passengers)
CURRENT SITUATION
Average Growth Rate Through 2000 was 26.4%
September 11, 2001
ALLIANCES
Singapore Airlines Continental Airlines Malaysia Airlines BMI British Midland Nationwide (South African) Air India
FLIGHTS
From UK to:– North America
• New York (Newark, NJ)• Miami• Los Angeles• Boston• Orlando• San Francisco• Washington DC• Las Vegas• Chicago• Toronto
– Africa• Johannesburg, SA• Cape Town, SA• Lagos, Nigeria• Port Harcourt, Nigeria
– Asia• Tokyo, Japan• Hong Kong, China• Shanghia, China• Delhi, India
FLIGHTS
From UK to:– Caribbean
• Barbados• St Lucia• Antigua• Tobago• Grenada
US DOMESTIC AIRLINE FLIGHTS (1998) (Business Ranking Annual 2001)
New York to Los Angeles * (3,625,000) New York to Chicago * (3,069,000) New York to Miami * (2,834,000) New York to San Francisco * (2,683,000) New York to Boston * (2,651,000) Honalulu to Kahului, Maui (2,541,000) New York to Orlando * (2,251,000) New York to Atlanta (2,377,000) New York to Washington * (2,372,000) Dallas to Fort Worth-Houston (2,313,000)
MARKETING
PROBLEMS
The Richard Branson Factor
SWOT Strengths
– Richard Branson– Privately Owned– Good Image / Good Marketing – Youngest Aircrafts in the Industry– Low overhead– Leased Aircrafts– Flights to Major World Cities– Alliances– Sr. Leadership Team
SWOT
Weaknesses– Richard Branson– Cash Flow– Direct Routes– One Hub– Limited Destinations
SWOT
Opportunities– More Cities– Bankruptcy of US Airline Companies– European Union
SWOT
Threats– World Economy– New Airline Restrictions– Fuel Cost– Terrorism– Over Flight Restrictions– New Airline Companies
POSSIBLE STRATEGIES OVERVIEW Expand partnerships to broaden service Invest in U.S. expansion, more cities Increase service between cities Increase advertising Explore alternative marketing strategies Reconsider use of Gatwick Airport
EXPAND ALLIANCES
Currently, Virgin has five alliance airlines Three partners offer service from London to
only one other city The fourth offers connections from London to
five cities: Amsterdam, Brussels, Dublin, Milan, and Madrid
The fifth offers service only between South African cities
EXPAND ALLIANCES
To reduce risk and costs, Virgin could partner with other high-quality airlines to broaden the area covered
Frequent flier miles would transfer easily between alliance airlines
Virgin could provide service to smaller markets
U.S. EXPANSION
Virgin offers service from London to NINE cities in the United States
Cities such as Chicago, Detroit, Atlanta, and Philadelphia are not on the list
Possibility of capturing market share in cities not currently being served by Virgin
INTERCITY SERVICE
Currently, Virgin only offers flights to or from London
There is a great opportunity to offer flights between cities in which Virgin already offers service
The London market, while large, is very limited – intercity service could increase Virgin’s market
The U.S. needs an airline that will provide consistently high-quality service
INCREASE ADVERTISING
Virgin spends only 2% of turnover on advertising
The industry standard is 5 – 7% Virgin has marketed itself very successfully
using only 2% of turnover; the possibility exists to increase advertising while still staying well below the industry standard
MARKETING STRATEGIES
Introduce a credit card that offers airline miles for every dollar charged
Use Richard Branson, the charismatic Chairman of Virgin, in some of its advertisements
Emphasize the quality of British service in American advertisements
(case in point: the English butler)
GATWICK
Gatwick Airport is located 28 miles south of London, and cannot be reached using the city’s extensive Underground system
The airport has only one runway When travelers think of London, they think of
Heathrow – Gatwick is out of the way and not an option that springs to mind
Virgin may want to reconsider using Gatwick
OPTIMAL SOLUTION
Broaden service by:– Partnering with other high-class, high-
quality airlines to provide service to cities currently not being served
– Offering service between U.S. cities currently served by Virgin
– If these strategies are successful, gain entry to other airports in the U.S. to expand to more cities
OPTIMAL SOLUTION cont.
Increase advertising slightly to cover new markets in the United States
Strive for better recognition in the United States, as Virgin is not necessarily regarded as an option by travelers
Offer a Virgin Atlantic credit card in partnership with Visa or American Express, with a good rewards program for cardholders