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