VIRGIN ATLANTIC AIRLINES

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VIRGIN ATLANTIC AIRLINES

• Tim Dunlea
• Tristan Richards
• Bob Dunoskovic
• Philip Winchester
• Lindsay Charles

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HISTORY
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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

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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)

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CURRENT SITUATION

• Average Growth Rate Through 2000 was 26.4
• September 11, 2001

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ALLIANCES

• Singapore Airlines
• Continental Airlines
• Malaysia Airlines
• BMI British Midland
• Nationwide (South African)
• Air India

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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

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FLIGHTS

• From UK to
• Caribbean
• Barbados
• St Lucia
• Antigua
• Tobago
• Grenada

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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)

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MARKETING
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PROBLEMS

• The Richard Branson Factor

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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

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SWOT

• Weaknesses
• Richard Branson
• Cash Flow
• Direct Routes
• One Hub
• Limited Destinations

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SWOT

• Opportunities
• More Cities
• Bankruptcy of US Airline Companies
• European Union

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SWOT

• Threats
• World Economy
• New Airline Restrictions
• Fuel Cost
• Terrorism
• Over Flight Restrictions
• New Airline Companies

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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

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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

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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

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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

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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 Virgins market
• The U.S. needs an airline that will provide
  consistently high-quality service

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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

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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)

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GATWICK

• Gatwick Airport is located 28 miles south of
  London, and cannot be reached using the citys
  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

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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

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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