Virgin Atlantic 3

Virgin Atlantic

3. COMPETITIVE ADVANTAGE
– Generic competitive strategies (cost, differentiation, focusing strategies); Hybrid and advanced strategies

The porter’s generic strategies applicable on Virgin Atlantic Airlines as follows:

(Source: Virgin Australia, 2016)
Cost Leadership: It has been seen that, low cost fares ; mid – range price airlines are appealing more customers these days. Virgin Atlantic Airlines cannot be covered under the low cost fare airlines but it has certain pioneered features which helps them to differentiate their goods and services from other airlines.
Price:
The Virgin Atlantic’s pricing strategy is clear and precise. The company runs numerous influential promotional adverts with one of their attractive message saying ‘price is no object as long as the customer service is of a high standard’. In other words, the businessmen and women demography that prefers luxury to anything else finds no problem paying something higher. You would expect that such a message would mean that the airline is very expensive. Virgin Atlantic’s comparative pricing strategy results in its products being priced less than other companies such as the British Airways among others.

Differentiation: It has been seen that, the recent change in the aviation market has changed the needs of the customers. Virgin Atlantic Airlines offers its customers with flexible and customized services to its passengers. Passengers feel delighted when they are offered services of their choices which help in increasing the customer satisfaction levels. At Virgin Atlantic Airlines, differentiation is everything. The upper class passengers are able to access the in house bar area, spa ; office are. The passengers even have an option to book a limousine or motorcycles for airport transfer (Virgin Australia, 2016).
Focus: The focus of Virgin Atlantic Airlines is to enter the niche markets (flight destinations) as well as understand the dynamics of the market. It shall be taken into consideration that, focus strategy does not work alone and hence it shall be teamed with either cost leadership/ differentiation strategy.
As mentioned in the case study, the key trends of Virgin Atlantic Airlines shows that the turnover for Virgin Atlantic has risen from 1,630 (2005) – 2,870 (2013). The number of passengers using Virgin Atlantic Airlines is on a constant rise but the rise is not huge
It shall be taken into consideration that Bowman’s Strategy Clock in case of Virgin Atlantic Airlines might lead to negative thinking & justify nothing. It can be argued that, the eight different strategies together might hamper the profit levels. The Bowman’s Strategy Clock refers to a tool which is biased towards the direct competitor strategy in order to increase the market share. The strategies of Bowman’s Strategy Clock are not so clear on the profit front in the customer matrix. Therefore, Bowman’ strategy clock are not the best strategies for Virgin Atlantic Airlines as compared to the porter’s generic strategies discussed above.
Virgin Atlantic Airlines has been using porter’s generic strategies in order to be in the competitive airlines run. One of the strategies adopted by Virgin Atlantic Airlines is to promote its brand all over the market place with the help of differentiation. The differentiation strategy has helped Virgin Atlantic to be known as a convenient and well equipped airline locally or internationally. With the help of differentiation, Virgin Atlantic Airlines had over powered other airlines by a deep cut in their service cost and providing outstanding services to their target audience. One of the biggest strengths of Virgin Atlantic Airlines is to use highly modern technology so as to act smart as compared to the other similar airlines (Shaw, 2011). Differentiation in case of Virgin Atlantic Airlines can be seen as mention in the case study, that they were the first airlines to provide personal entertainment to its passengers. Virgin Atlantic Airlines is the first airlines to operate Airbus A340-600. They were the first European airlines to operate Boeing 787-9 in October 2014.
It is seen that Virgin Atlantic Airlines is hybrid in nature (i.e. amalgamation of cost leadership followed by differentiation). They follow the simultaneous strategy i.e. they customize the products at a price which is similar to those of mass products. Customization can be seen by mix ; match of the components. Some of the advantages of being hybrid at Virgin Atlantic Airlines is high innovation closely witness the needs of the customers, organizational learning ; take up strategic decisions. Hybrid strategy has helped Virgin Atlantic Airlines to achieve high levels of differentiation with low prices as compared to its competitors. This hybrid strategy will help the airlines to provide benefits to the customers (Shaw, 2011). Based upon the case study, it can be judges that Virgin Atlantic Airlines is hybrid in nature as it uses a different marketing strategy to market the airlines i.e. each aircraft has a distinguished name usually feminine in nature such as Lady Bird, Ruby Tuesday ; Island Lady.
Competitive Advantage refers to strategies which are looked upon by the businesses in order to have a competitive edge over its competitors. There are various business strategies which helps any given organization to practice competitive advantage. Competitive Advantage has been referred to as the best approach for any organization as it helps the company to have a competitive edge as compared to its rivals (Kotler ; Keller, 2008).Some of the ways in which Virgin Atlantic Airlines has attained competitive advantage as compared to its competitors are providing quality services to the customers. The main focus of Virgin Atlantic is to focus upon quality services as compared to prices for the same. The main aim of Virgin Atlantic Airlines is to provide value for money. Thought the tickets are expensive as compared to its competitors but the service provided by the same is commendable ; much appreciated. It has been seen that, team Virgin Atlantic aims at making the passenger’s journey memorable one. Virgin Atlantic Airlines have different product offerings for different passengers (De Kluyver & Pearce, 2009). As mentioned in the case study, Virgin Atlantic Airlinesoffers its passengers with three types of cabin configuration i.e. economy, premium economy & upper class. As per the facts mentioned in the case study, Virgin Atlantic Airlines was the first airline to provide its passengers with personal entertainment for all the three cabin configurations.

Porter’s differentiation strategy can be observed from all the perspectives including packages, offers, services etc. For example, it has been offering services for more than 30 different destinations with 43 outstanding aircrafts including airbuses, Boeings and aircrafts. Similarly, this airline has bases in Manchester and London’s Heathrow and Gatwick airports and offers services for thirty different destinations including Dubai, Mauritius, Delhi, Sydney and Cape Town, the tourist favorite areas.
Moreover, normally airlines offer business and economy class but Virgin Atlantic has three different classes including upper, premium economy and economy classes. In addition, it has infused differentiation strategy through providing Virgin Atlantic Cargo and Holiday services which offers instant and urgent shipments to different destinations of the world. Similarly, different travel packages with outclass offers have also been facilitated to customers in order to gain competitive advantages through dissimilar features.
All these examples indicate how differentiation strategy of Porter’s Generic model aids an organization to gain benefits but for this purpose, organizations usually charge premium prices as well. Virgin Atlantic is also costly from other airlines in the market but its unique services have made it ample popular that more than five million customers use its services worldwide and all of them are ready to pay high prices for premium services.
The competitive strategy of Virgin Atlantics has been developed keeping the market trends and contemporary needs of the customers under consideration and not only unique and different facilities have been provided but also basic requirements have been fulfilled. Hence, the competitive strategy of Virgin Atlantics has made it successful and preferable for the customers among all large air service providers.

Product
The Virgin Atlantic Airline has three-class cabin. These are:
• The Economy Class
• The Premium Economy Class
• The Upper (Business Class) products
The Premium Economy class riders have a separate check-in area and are given boarding priority. Their cabins are furnished with wider seats and the legroom is satisfactory. The Business Class cabin, on the other hand, features a seat that is convertible into a flat bed. Those in these cabins also have access to chauffeur drives. It is worth noting that Virgin Atlantic was the pioneer of the personal entertainment accorded all passengers aboard.
Flying Club Gold Tier members together with those travelling in the business class have access to some ten lounges that are maintained by Virgin Atlantic. These lounges are referred to as Clubhouses and are located in New York-JFK, Johannesburg, Los Angeles, Washington D.C, Boston, San Francisco, Heathrow, Gatwick, and Newark.

Virgin Atlantic’s Upper Class has changed the face of business travel by offering limousine pick-up and Drive-Thru check-in. Virgin Atlantic also has Clubhouses, Virgin lounges for Upper Class passengers, at many of its destinations. The Virgin Clubhouses are deliberately designed to challenge the conventions of the airline industry and to create a different travelling environment. In 2003 Virgin Atlantic launched its revolutionary Upper Class Suite product. The product consists of a reclining leather seat for take off, a place to sit and eat a proper meal opposite your partner, the longest fully flat bed in the world with a proper mattress for sleeping on, a private on-board bar to drink at with your friends, a private massage room and four limousines per return trip – all at a price thousands of pounds less than other airlines’ First Class.
By charging the same as other airlines’ business class for this first class product, Virgin Atlantic’s new Upper Class Suite is not only attracting former Concorde passengers but BA’s and other airlines’ first and business class passengers as well. The Upper Class Suite has already proved to be a massive success winning the airline all-important market share along with an impressive array of prestigious awards. The ‘Freedom’ meal service was introduced in 1999 which means passengers can eat ‘what they want, when they want’. Virgin Atlantic’s unique in-flight beauty therapy service, which celebrated its tenth anniversary in 2002, has a dedicated area on-board the plane.
Virgin Atlantic also opened its first arrivals lounge called Revivals at Heathrow airport. Revivals is designed to provide everything a passenger could need to awaken, revitalise and prepare for their day ahead after a longhaul flight. Virgin Atlantic also operates ‘flyingclub’, one of the most generous frequent flyer programmes available. flyingclub was re-launched at the end of 1999. As well as restructured membership levels, flyingclub has even more partners with the introduction of more airlines and hotels than ever before.
Premium Economy was first introduced in 1992. It is a service aimed at the cost conscious business traveller who, for budgetary reasons, travels economy but still requires extra space in which to work or relax. Premium Economy features 38″ seat pitch, complimentary champagne at take-off and a fully flexible ticket. Virgin Atlantic’s Economy class was the first to provide every passenger with a seat-back TV screen. It now provides the most advanced inflight entertainment system available with up to 300 hours of video and audio on demand along with a huge selection of computer games. Virgin Atlantic also gives out ‘K-ids Packs’ to children on-board and amenity kits containing useful items like socks and toothbrushes as well as more unusual items such as eye gel and lip cream.

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Promotion
The greatest and most well-known advertisement for Virgin is Richard Branson himself. Branson is often perceived as the consumer’s hero, an entrepreneur operating in a style all of his own, and Virgin’s brand values emanate from his personality. At the same time as being one of Britain’s most admired businessmen, Richard Branson’s daredevil antics, such as ballooning across the Atlantic, have given the Virgin brand additional publicity.
Branson also keeps a shrewd eye on promotional opportunities: when he heard of British Airways’ decision to remove the Union Jack from their plane exteriors, for example, he capitalised on the change by introducing the Union Jack onto Virgin planes.

It is very common for someone to buy something if at all it is being promoted by a female marketer, or the product is just inclined to women. Virgin Atlantic uses this phenomenon to tap customers by simply giving its aeroplanes female names. These include the Ladybird, the Island Lady, the Varga Girl and Ruby Tuesday among others.
As mentioned above, the company does a lot of promotions, most of which are very influential, resulting in positive impacts on potential customers. Richard Branson, who happens to be the founder of the organisation, has been spotted exploring different parts of the company to ensure quality service delivery. This can be proven from the YouTube videos as well as the many instances when the man has been spotted on numerous celebs. The company advertises its brands through the print and electronic media alike.

Virgin Atlantic has proved an astute advertiser over the years. Its logo is highlighted on all its goods and services and is a highly protected property. Virgin Atlantic has implemented an integrated media strategy to promote its brands, including television, newspapers, posters, promotions, direct mail and the internet, often to wide acclaim.
The ‘Grim Reaper’ ad, for example, won numerous marketing awards and creative accolades including a Golden Lion in the Travel Transport and Tourism category at the Cannes International Advertising Festival; a Silver in the British TV Advertising Awards, a Solis award for Travel & Air Transport TV at the International Tourism & Leisure Festival as well as winning the Travel category in the London International Advertising Awards. In 1999 it won The Guardian Newspaper Recruitment award for Best Commercial Advert and Best Written Advert.
Recent television advertisements have been centred around the Upper Class Suite. In addition, a selection of strip advertisements emphasising Virgin Atlantic’s services and fares have featured in the UK press and won several marketing awards. During 2004,Virgin Atlantic is launching the Virgin Atlantic GlobalFlyer record attempt to be piloted by Richard Branson’s former recordbreaking partner, Steve Fossett.
The Virgin Atlantic GlobalFlyer aims to be the first solo piloted aircraft to fly non-stop and without refueling around the world. With this attempt, Virgin Atlantic is going back to its roots. Back in the 1980s when Virgin Atlantic was launched, the airline had limited marketing budgets and by attempting (and setting) a number of marine and aviation records Virgin Atlantic was put firmly on the map.

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Place in the Marketing Mix of Virgin Atlantic :
The Virgin Group is extremely a large distribution company hence an equally large distribution channel. The company is a global entity with a presence in almost all the continents of the world. The comfort that the company assures its users makes it a target airline of the businessmen & women as well as those on the higher-end of the corporate world. On the other hand, the comparatively lower price targets the middle-income earners. In other words, Virgin Atlantic serves everyone everywhere.

Business level strategy
One of the strategies operated by Virgin Atlantic is its ability to professionally promote its brand names all over the marketplace. This strategic promotion has made the airline companies to continuously be known locally and internationally when it comes to travel fulfilment and convenience. Alternative strategy that can be recognised to Virgin Atlantic as a whole is its skill to value their customers. Here, the company has been able to shadow other airline industry to cut their service cost while providing outstanding service to their target marketplace. Lastly, the ability to strategically line up modern technology and it business strategy is the most important strategy that can be involved to Virgin Atlantic.

In contrast, the Virgin Atlantic has considered their neighbour airlines as its competitors. Due to the deregulation of the European Airline, many airlines have been talented to cope with the changes and make a tactical move of entering in this travel business. One of the industries that open its marketplace to the airline industry is the Virgin Atlantic. Virgin Atlantic is regarded as one of the UK’s largest planned airline. It is known for being such because of the strategies executed by the management of the airline industry (Hitt, Ireland ; Hoskisson 2003).
Cost Reducing Strategy

To accomplish its goal of having a sensible position in the airline market, Virgin Atlantic uses a cost reduction strategy. Such cost dropping strategy trusts on five main facts like contracting out services, airport charges and route guidelines, fleet commonality managed staff costs and efficiency and managed marketing charges. With their achievement of aircraft Boeing 787- 9, Virgin Atlantic has been able to gain capacity and reduce the average age of fleet which means savings on maintenace costs and avoiding the fit of European Union conform apparatus on old feet.

The next aspect under the cost reduction strategy of Virgin Atlantic is narrowing out services. In this method, aircraft handling, ticketing, and other functions are contracted out by Virgin Atlantic to third parties. In accumulation, in order to limit their expenditures engine and weighty maintenance are also contracted out however the staff of Virgin Atlantic carries out routine maintenance.

Additional issue for the cost reduction strategy of the corporation is in terms of airport charges and route policies. Here, Virgin Atlantic has made level-headed choice of dealing with secondary and regional-airports, where the traffic is not blocked and fees incomparably lower. Since Virgin Atlantic, is a true bonus for such airports, the airline company has a bartering power which enables it getting favourable access fees. In addition, Virgin Atlantic provides only a direct provision, thus, it has no cost concerning concerning passengers. Furthermore, the company pays superior focus to on-time departures because it means exploiting aircraft use.

Managing staff budgets and productivity is another issue used for reducing the cost for Virgin Atlantic. In this manner, the company pays its staff on modest wage but has set up a performance related pay arrangement which impulses employees to maximize the number of sectors flown regularly. This way, Virgin Atlantic both controls productivty and retains staff cost down.

Airline Alliances strategy

Virgin Atlantic made code-share agreements with Continental Airlines, British Midland, Malaysia Airlines, and a marketing agreement with Ansett. Travelers booked as Virgin Atlantic passengers can earn Virgin Freeway miles on all code-share flights.

The agreement with Continental airlines allows for a higher frequency, high quality service, and efficient competition by enhancing services on the London/New York routes. This offers seven services both ways, connections for Virgin Atlantic flights entering the U.S., with check-in only in London. The code-share agreement with British Midland allows passengers from a number of European destinations access to Virgin Atlantic’s worldwide service. The alliance with Malaysia Airlines offers a twice-daily service between London and Kuala Lumpar. The alliance allows for connections to Sydney and Melbourne.

The marketing association with Ansett Australia provides customers travel via Hong Kong to various Australian cities. In cooperation with Air India, Virgin Atlantic now offers increased service between the United Kingdom and India. Virgin Atlantic offers higher frequency flights into South Africa, at Johannesburg and Cape Town, through an agreement with Nationwide Airlines, which allows Virgin to capitalize on their service throughout South Africa.
Airline partnerships strategy

In December 1999, Virgin Atlantic announced a distinctive worldwide partnership with Singapore Airlines. Virgin Atlantic has continued to partner with other airlines to improve their customer’s satisfaction. Virgin Atlantic airline partners include other partner Airlines, hotels, car rental, shopping (which helps you earn if you are shopping in the UK airports with BAA world points), financial services and other rewarding schemes that help the customer’s to earn miles, spend miles or both. Earn miles is a scheme that enables a customer to earn points that can be converted to free flights or into other services. Airline partnership improves Virgin Atlantic connectivity to various parts of the world, but to enjoy some of this services you need to be a Flying Club member. Local partners in areas which Virgin group operate enable traveler’s access quick and reliable services away from home, and thereby improving their satisfaction. Some of the Virgin Atlantic Airlines partners include; Air China, Air New Zealand, Continental Airlines, Jet Airways, Singapore Airlines, Virgin America, South African Airways, Gulf Air, Virgin Blue, Hawaiian Airways and many others.
However, there are also alliances that do not have to do with the industry, for example, when booking flights have alliances with Rakuten, CJ affiliate and affiliate window to take a commission (2.5%) for each flight reservation.
https://www.virginatlantic.com/gb/en/footer/affiliates.html

4.2 BUSINESS MODEL CANVAS

buscar

– Resources and Competencies analysis – Core and distinctive competencies – VRIO framework

VRIO FRAMEWORK
Value: Virgin Atlantic Airlines cabin crew is known for its high degree customer orientation ; one of the best service providers in the airline industry.
Rarity: Rarity provides competitive advantage. It has been seen that, the engine technology used at Virgin Atlantic Airlines is rare in nature.
Imitability: A strong established brand and reputation attached along Virgin Atlantic Airlines is not easy to imitate.
Organized: Virgin Atlantic Airlines tends to support a valuable rare ; a difficult to imitate resource. This will help the airlines to have benefit in the long run.

4.1 Strengths

• Virgin Atlantic enjoys strong brand reputation and was ranked sixth in a survey of the world’s best airlines, the only British carrier to make the global top 10. The survey carried out by AirHelp, rated 78 airlines around the world to find the best based on punctuality, quality and the speed of dealing with compensation claims. Qatar Airways was rated the best in the world (Morris 2016).
• Fleet has been modernized.
• New VHQ headquarters opened in September.
• AIR4, Virgin Atlantic’s biggest technological transformation in company history, saw Virgin invest in passenger service systems such as a new mobile app, self-service technology booking technology and improved kiosk functionality. Virgin also invested in IT new support systems such as new crew tablet devices for Virgin Flight Service Managers that help them deliver a more seamless and personalized service to passengers (annual report 2016).
• A part of the Virgin Group of Companies portfolio means it has a financial umbrella that gives the company financial leverage. The joint venture with Delta also provides more flexibility and choices for its customers in travel.
• Virgin Atlantic is a very powerful brand, well known, especially in Europe and North America. It is one of Britain’s largest airline companies with a loyal base of customers who are attracted to the company’s focus on customer comfort and reliability. In 2016, Virgin Atlantic scooped the Best Cabin Crew Award of Airlineratings.com Airline Excellence Awards, with Airlineratings.com praising them as “a benchmark or what cabin service should be” (O’Hare, 2016).
4.2 Weaknesses

• Unfortunately, Branson’s connection to Virgin Atlantic seems to be so inextricable, because of his accomplishments for the company, which may be a risk to the company’s future. The weakness of this consists in the possibility that when Branson is gone, Virgin Atlantic is likely to struggle due to a possible over-dependence on him. The company needs to start have a good succession plan, if it does not have one, and to groom other people who will take over from Branson.
• Another weakness of Virgin Atlantic’s is stiff competition not only British Airways or American carriers, but also from cash rich gulf airlines such as Emirates, or Etihad, which also ply the same routes as Virgin Atlantic.
• Virgin Atlantic has minimal global presence. The Airline concentrates on Europe and especially North America, and has not taken advantage of emerging markets in Asia. For instance, in Asia, the Airline operates routes to Shanghai, Hong Kong, and Delhi, only; while in the Middle East, they fly to Dubai only (Virgin Atlantic, 2017). With the strong brand and a firm aviation background the Airline boasts, Virgin Atlantic should expand its routes to more emerging markets such as Mumbai, Doha, Abu Dhabi, Kuala Lumpur, Seoul, among others.
4.3 Opportunities

• Government approved third run away at Heathrow is great opportunity for Virgin Atlantic.The proposed expansion will create new and affordable extra capacity at Heathrow. It will also reduce the cost of operating to or from Heathrow which is currently the world’s most expensive hub airport (Johnson 2016). Further, expansion of Heathrow post-Brexit will allow carriers like Virgin Atlantic to offer more direct flights to not only UK destinations but also up to 40 new cities abroad such as Wuhan, Osaka and Quito (BBC 2016)
• 2016 was characterized by low fuel prices and interest rates, and if such favourable economic factors continue, it will help promote growth in market capacity, benefiting Virgin Atlantic as well as other airlines.
4.4 Threats

• Brexit uncertainty is bad for many businesses including Virgin Atlantic
• Continued Air traffic controller (ATC) strikes in France continue to cause massive cancellations and delays for Virgin Atlantic and other airlines. This is not helped by the continued sole union recognition fight between the two Virgin Atlantic pilots union, Professional Pilots’ Union (PPU) which represents over 70% of Virgins 900 plus pilots, and British Airline Pilots Association (Balpa) which is the one currently recognized by the airline (The Guardian 2016).
• Digital disruption continues to pose risk
• Adverseweather conditions in the UK such as thunderstorms and extreme winter conditions are only becoming more frequent, not less, leading to more future scenarios of cancellations and delays for Virgin Atlantic and other airlines.

VALUE CHAIN ANALYSIS
Value chain Analysis
Primary Activities
Inbound
In service organizations, inbound and outbound logistics always means R;D
(research and development) and designs and solutions. As part of efforts to
improve to improve logistics of its supply chain, Virgin Atlantic was the first
airline to implement an RFID tagging technology, to track assets at its warehouse
in London Heathrow airport.
Virgin Atlantic and Boeing, one of its aircraft suppliers are linked by an Airplane
Health Management System. This is an environmental friendly system that
allows them to gather and monitor critical inflight data (Supply Chain Digital,
2008). In an industry where safety and quality is of utmost importance, this is an
excellent control system.
Operations
Last month, Virgin Atlantic, deployed a cutting-edge solution for proactive
operations management. This Aviation Decision Support solution designed by
Weather Service International (WSI) provides virgin to superior global weather
information and flight planning decision support (Weather Service International,
2011).
Also, Virgin has been using environmental friendly operations to achieve
competitive advantage; they were the first airline to start using fair-trade tea,
coffee and chocolates. They have also recently ordered 15 Boeing 787
environmental aircrafts, making it the largest single order in Europe. Their
aircraft seat covers are recycled to produce fashion bags.
Virgin Atlantic | 29
Outbound logistics
Outbound logistics is about distributing products or service to customers or
buyers (Dess et al, 2010). Teaming up with NIIT technologies, Virgin Atlantic
offered the world fastest airline check –in for its upper class wing in heathrow
airport. This allows the upper class passengers walk straight from the chaffeur
driven limo to the clubhouse with less effort.
Virgin has also upgraded its website security with latest SSL certificate security.
This provides a visual reassurance for customers assuring them that their online
transaction is secure by the highest standards thereby increasing buyer trust.
Marketing and sales
Last year, Virgin Atlantic invested £10 million in a marketing campaign in a drive
to boost its value adding benefits among its business class travellers. The theme
of the campaign “Your airline’s either got it or it hasn’t”. This is a follow-up
campaign strategy to their 25th anniversary in 2009 and about £80 million sales
revenue has been made as a result of this campaign (Marketing week, 2010).
It would use TV, cinemas and the internet as a medium for the campaign. It’s
well defined customer segments are First Class passengers are predominately 35
to 45 years old male, travelling on business class offering a limousine service at
both ends. Passengers in Premium Economy are split fairly evenly between
travelling for business or leisure, most are middle aged male. Economy
passengers are a much broader group and travelling mainly for leisure. At the
same time, some less profitable ticket offices were replaced by high performing
telephone reservation and sales centers. Virgin Atlantic also operates a flying
club to encourage loyalty in existing customers.
Service
The customer service of First Class of Virgin Atlantic is superior and constantly
improved to achieve competitive advantage. Virgin Atlantic offers massage,
cleaning and hairdressing services for all First Class passengers. Virgin Atlantic
designed the full fare of Economy Class products in 1992. This product is
targeted to the passengers who are price sensitive but still have comfort
requirements. It had been praised as “the best Economy Class airline” by the
British travel awards (The Virgin Atlantic Press Office, 2010).
Support Activities
Human Resource Management
Virgin Atlantic is an equal opportunity employer. Among the various benefits to
staff to motivate them, virgin gives each staff 7 free flights to any destination
they want in a year. (Virgin Atlantic, 2006)
Further more, Richard Branson, creates a sense of fun amongst the employees,
this makes them work better without undue pressure.
Virgin Atlantic CEO Steve ridgeway is the current of Association of European
Airlines shows that the company maintains cordial relations with trade unions.
Procurement
Virgin Atlantic suppliers are audited based on a Sustainable Procurement Policy;
this This policy sets out a range of conditions, from ensuring that no child labour
is used in the manufacture of the products they buy, to reducing the
environmental impact of their supply chain. So far, over £100million of Virgin’s
Atlantic spends has been covered by suppliers signing up this policy. (Virgin
Atlantic, 2010)
Furthermore, with last month’s implementation of a global e-invoicing solution,
virgin has created a win-win relationship with suppliers where virgin benefits
from a tax compliant invoice receipt and suppliers benefits from enhanced
service delivery.
Technology Development
Virgin Atlantic has a culture of that enhances creativity and innovation.
Technological innovation has permeated every aspect of their business, this
include the RFID tagging technology at the warehouse, an e-invoicing solutions,
an airline decision support solutions, etc.

4. INNOVATION AND COMPETITIVE ADVANTAGE

Virgin atlantic
Virgin Atlantic has pioneered a range of innovations setting new standards of service, which its competitors have subsequently sought to follow. Virgin Atlantic has introduced a string of firsts including individual seat-back televisions for all economy passengers and the introduction of automatic defibrillators. Despite Virgin Atlantic’s growth the service still remains customer driven with an emphasis on value for money, quality, fun and innovation.
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– Strategic, organizational, and marketing innovation
– Web-based innovation

Recent Developments
Virgin Atlantic continues to launch several new routes. In summer 2002, the airline took its newest delivery becoming the launch customer for the A340-600 – the longest plane in the world. In total, ten aircraft will be delivered by 2006 in a deal worth US$1.9 billion. The aircraft was named ‘Claudia Nine’ by supermodel Claudia Schiffer in front of an audience of media and VIPs. In 2004, the Queen named one of Virgin Atlantic’s new A340-600s during a state visit to France. The aircraft was named ‘Queen of the Skies’ in commemoration of the centenary of the Entente Cordiale.

The new aircraft offers passengers many new on-board features including a redesigned on-board bar and in-flight beauty therapy area in Upper Class and new seats for both Premium Economy and Economy passengers. The aircraft has the most advanced in-flight entertainment system in the world which provides passengers with up to 300 hours of video on demand, fourteen audio on demand channels, fifteen computer games including multi-player games, on-board SMS text messaging service and a quick find search facility. In 2003 the airline commenced new services to Port Harcourt, Nigeria in February and Grenada and Tobago in May.

Early in 2004, Virgin Atlantic Airways Chairman Richard Branson announced that the airline is embarking on a period of sustained growth which will feature the launch of a series of new routes including Australia, Cuba, and The Bahamas, an increase in services to the US, Caribbean, Asia and the Far East, orders for two more A340-600 aircraft and the recruitment of 1,400 staff over the next year.

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5. PERFORMANCE
Financial performance (3-4 years analysis; comparative analysis with main competitors’ results)
Highlights 2014:
-Profit before tax and exceptional items improves by £65.4m year on year to a profit of £14.4m (statutory profit before tax of £17.6m)
• Airline revenue for the year down 1.6% (up 1.5% at constant currency)
• Airline passenger unit revenue up 0.5% (3.5% at constant currency)
• Airline operating costs before exceptional items have fallen year on year by £109.3m
• Virgin Holidays revenue saw a 1.1% year on year increase in 2014
• Airline operating margin improvement of 2.6pts year on year
• Total operating profit for the year to 31 December 2014 of £9.7m
• Return on invested capital improves 4.2pts to 6.4%

https://www.virginatlantic.com/content/dam/vaa/documents/footer/mediacentre/VAL_FY14_Annual_Report.pdf
Highlights 2015:
– Profit before tax and exceptional items improves by £10.1m year on year to £22.5m (statutory profit before tax of £87.5m, 2014: restated loss before tax of £174.7m)
– Total revenue for the year down £45.6m
– Airline passenger unit revenue down 2.9%
– Airline operating costs have fallen year on year by £196m, driven by fuel cost reduction of £191m
– Non-fuel unit costs remained flat year on year, despite regulated cost increases
– Virgin Holidays saw a £5.0m year on year improvement in profit before tax and exceptional items in 2015 to £10.9m
– Return on invested capital improves 0.4pts to 6.8%
– The completion of a landmark senior secured note bond financing transaction raising £220m
– Total cash (including restricted cash) increased by £300m to £596m

https://www.virginatlantic.com/content/dam/vaa/documents/footer/mediacentre/VAL_FY15_Annual_Report.pdf
Highlights 2016

– Profit before tax and exceptional items improves by £0.5m year on year to £23.0m (statutory profit before tax of £231.6m, up from the £87.5m profit before tax achieved in 2015)
– Total revenue for the year down 3.3% (£92m) driven by Airline passenger unit reve-nue down 4.3% (at constant currency)
– Airline operating costs have been further reduced year on year by £225m, driven by fuel cost reduction of £191m
– Underlying non-fuel unit costs (excluding the costs associated with the delivery of AIR4) are 0.6% better year on year, on 2.5% less capacity
– Virgin Holidays saw a year on year improvement of over 75.2% (£8.2m) in profit be-fore tax and exceptional items in 2016 to £19.1m (statutory profit before tax of £29.3m, up from the £1.6m loss before tax made in 2015)
– Cargo tonnage increased by 1.8%
– Cash and cash equivalents remained steady year on year at £526m after the pur-chase of one Boeing 787-9 aircraft unencumbered
– EBITDAR improved by 11% year on year

https://www.virginatlantic.com/content/dam/vaa/documents/footer/mediacentre/VAL_FY16_Annual_Report.pdf
Comparative with the mayor competitor: British Airways