INDIVIDUAL ASSIGNMENT

VIRGIN ATLANTIC CASE STUDY

NAME ANGEL KARISHMA KAUR A/P MANMOHAN SINGH

STUDENT ID I18014977

COURSE BBUS – FINANCE

SUBJECT MKT 4220 – GLOBAL MARKETING

LECTURER DR. ARASU RAMAN

WORD COUNT 2,712 WORDS

SUBMISSION 27 OCTOBER 2020 (AUGUST 2020 SESSION)

COMMENTS AND
MARKS

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Contents

1.0 Introduction

Virgin Atlantic Airline was established and has been set up since 1984. It has been working
for a long time and the aircraft has consistently kept up an ideal market position. For
example, the aircraft has gotten popular among travellers around the world. Virgin Atlantic
carrier is the main aircraft in the UK. Atlantic Airline expects to offer excellent travel insight
and administration to their clients at a moderate expense. Other than that, Virgin Atlantic

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Airlines has consistently stood apart from the remainder of the aircrafts due to their
trademarks that picked up the public's consideration and got celebrated for their fashion
awareness which most carriers don't have. To further study the success and marketing
strategies, this case study is to analyse Virgin Atlantic Airlines’ from the aspects of market
positioning, marketing mix, and an analysis of their competitive advantage.

2.0 Virgin Atlantic’s Market

2.1 Market Positioning

The marketing positioning system encourages an association to arrive at an ideal market

position and it likewise assists with upgrading and make a decent brand picture in the
perspective of the clients. Virgin Atlantic has actualized a gap positioning methodology
which make a correspondence connect between their targeted market group and the
association's brand image idea. The association has exceptionally special attributes of their
items and services, great assistance is served to their clients consistently and the association
is inventive and imaginative in their promoting to pull in client and make a decent image for
their brand.

In addition, Virgin Atlantic is a big obstacle for British Airways on all routes. Virgin
Atlantic, right off the bat, was extremely good at getting space at Heathrow International
Airport. In addition, the planned British aviation routes were targeted by Virgin Atlantic and
the American airline association conveyed that competition was unfortunate.
(VirginAtlantic.com, 2019) Finally, on all courses into and out of London, Virgin Atlantic
has sought to compete with British aviation routes.

By being trendy and creative, Virgin Atlantic draws in customers. Travelers discover detailed
setting plans on the aircraft, cutting-edge in-flight theatre setup and, above all, a high degree
of customer assistance. Moreover, Virgin Atlantic provides a specific privileged assistance at
the expense of business class. In addition, Virgin Atlantic is adding online capabilities and is
implementing a groundbreaking stock management system for Galileo 's internal accessibility
®. (2019 VirginAtlantic.com)

2.2 Target Market

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Virgin Atlantic offers services that are individualized to their clients, because of their
confidence in the belief of people’s significance. Virgin Atlantic has focused on high classed
clients who are principally business travellers going on overseas courses. Virgin Atlantic
understood the occasion to increase an impressive piece of the pie through powerful
advertising of their entertaining yet comfortable aircraft. (Jack Cowdrey, 2018)

Business voyages are regularly the individuals who travel a few times as the year progressed,
and frequently will in general buy updated services and products, which is gainful for the
aircraft. Then again, relaxation explorers who are spontaneous travellers are more averse to
buy these top-notch administrations as they are generally not that affordable in price. During
monetary vulnerability or sharp decrease in buyer certainty it is normal for the measure of
recreation explorers to lessen. For instance, the global pandemic that is happening currently
has stopped a lot of people to travel therefore, the airline is currently losing money in their
business.

2.3 Market Segmentation

Market division is characterized as the way toward partitioning a market into gatherings of
comparative buyer and choosing the most proper group for the firm to support. This idea is
accomplished through the division of business sectors on pertinent angles and deciding needs
and needs of the specific portion.

The percent of UK starting travellers’ changes from course to course, however overall, there's
a 60/40 predisposition to the UK. High society travellers are predominately going on business
are male, 35 to 45 years of age and are winning more than 50k dollars in a year.

Premium Economy travellers are part of going for business or leisure equally, most are male
in addition and have a position with the usual age group of 41. (Jack Cowdrey, 2018) In view
of the fact that their company maintains an economic travel schedule, those going on business
also do so. Economy passengers, who go for recreation and are similarly distributed
throughout most financial gatherings and age officers, are much more comprehensive
gatherings.

3.0 Competition

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As an autonomous aircraft, Virgin Atlantic effectively contends on the entirety of its courses
with a large portion of the business' significant public transporters. These incorporate British
Airways, American Airlines, Continental, Delta and United.

Virgin Atlantic’s strong competitor is British Airways. British Airways is the most
established and greatest association in UK and keeps up it's driving edge over Virgin Atlantic
in the travelling industry.

British Airways has a method in gaining a huge pool of customers by being an innovative
airline. Their method is viewed as a benchmark to other airlines in the industry. The system
has put British Airways in the top spot therefore, it has an upper hand over Virgin Atlantics.
(AirFleets.net, 2017).

British Airway's union has demonstrated a positive effect over Virgin Airline, and they have
increase upper hand on the lookout. Subsequently, BA business has demonstrated some
development openings and spread it activity through 675 destinations, 135 regions and motto
in 500 air terminals take off relax universally. (One World, 2017)

In addition, because of BA's particular arrival spaces at London Heathrow Airport, it has
increased upper hand over its adversary Virgin Atlantic. Virgin seems, by all accounts, to be
on the debilitated situation in this regard. British Airways needs to keep it’s mission and aims
lined up with the development of the travelling industry currently so be on part with the
customers and their targeted market’s expectations. On the other hand, Virgin Atlantic
airlines has a wide pool of customers from all over the world. Therefore, Virgin Atlantic has
picked the upper hands over British Airways. After a close analysis of Virgin Atlantic’s
quality, British Airways are yet to achieve that quality. This puts Virgin Atlantic at the lead
market because they are an all-rounder company that is good with marketing and PR
department as well as their flying experience and quality.

4.0 SWOT Analysis

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Strengths

 Virgin Atlantic is known to have a strong brand image which is because this
organisation is part of the Richard Branson’s Virgin Group. This UK airlines is
known by people around the world. For instance, Richard Branson has consistently
marketed it's product in the most imaginative manners and simultaneously promoting
Virgin Atlantic. His PR stunts are the purpose for the brand's fame and their
computerized showcasing achievement. He generally focused on the significance of
PR in an association.
 Besides that, in 2016, Virgin Atlantic recorded a high number of customers and a
cargo traffic. This increment has led the company to increase their growth by 3.7%
which is to 4.5 million passengers. (Virginatlantic.com, 2016)
 The organisation has a very healthy and strong financial position. This is because the
airline was faced with a high revenue growth in year 2006. The revenues for that year
was recorded as £1,912 million which shows an increment of 17.3% from the
previous year. The profits obtained by the organisation was double the amount from
the previous year which is £41.6 million. The organisation increased their operating
margin from 1.2% to 2.2%. (Virgin Atlantic Financial Reports, 2006)
 Virgin Atlantic Airline joint ventures with Delta since the right on time of 2014.
Virgin Atlantic's north Atlantic courses are presently essential for a joint venture with
49% of the stake, having a place with delta aircrafts. This joint partnership permitted
the conveys to snap two of their US administrations with day by day trips to Seattle
currently run by Virgin Atlantic, and both London to Detroit trips by Delta, to serve
customers inclinations. The joint venture with Delta has commonly profited clients of
the two transporters by making the two players versatile to client needs and at last
improved business. It additionally has made more open doors for collaborations at the
two ends. (Simon Bowers, 2012)

Weakness

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  With the existence of Brexit, Virgin Atlantic’s market share has been declining. They
have been facing financial difficulties. The company has been spending large amount
of their money in the currency dollar yet they receive it back in the currency of
pounds. Due to Brexit, the currency pounds has dropped therefore, the business has
also suffered losses. (Josh Spero, 2019)

Figure 1: Shows the annual operating profit/loss of Virgin Atlantic airline from
year 2013 to 2018.

Source: (Statista.com, 2020)

 The Virgin Atlantic airlines has been a pioneer in the airline and travel industry,
especially in the UK. Many other airline companies have been duplicating Virgin
Atlantic’s management style and business procedures, however, Virgin Atlantic has
always been supportive in giving services and products in a fruitful yet superior
nature to these companies. However, it brought losses to the business and therefore,
the airline has to take a different approach to this matter. (Hitesh Bhasin, 2018)
 Many travellers who want to travel economy class do not consider Virgin Atlantic as
one of their alternatives since it is seen as being generally costly than its opposition.

Opportunities

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  The business travellers are always increasing because more people are always joining
and venturing into the corporate world. This will certainly have a positive impact on
Virgin Atlantic as these business travellers will choose to be seated comfortably in a
business class as long as it guarantees the flight to the needed destination and a safe
and comfortable ride which Virgin Atlantic provides. (Hitesh Bhasin, 2018)

Figure 2: Shows the number of passengers that are customers of Virgin Atlantic
from year 2008 to 2019

Source: (Statista.com, 2020)

 In September 2006, Virgin Atlantic reported that it has collaborated with one of the
world's ten biggest carriers, All Nippon Airways (ANA), which permits Virgin
Atlantic travellers to travel to Japan on ANA's homegrown administrations. This new
course of action with ANA would empower the organization to offer better support of
its clients. (Ethan Speinberg, 2019)
 China and India, interest for air travel to the Asia Pacific is rising. Virgin Atlantic as
of now has huge presence in this district and is all around situated to profit by
expanding air travel to Asia.

Threats

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  Virgin Atlantic airlines have a few different competitors around from other successful
brands, for instance, Emirates, Air France, Cathay Pacific and their major competitor,
British Airways.
 Due to the rising oil costs all around the world, the costs of flying fuel have expanded
generously. This could affect Virgin Atlantic's edges as it is generally dependent on
airship cargo business. (cnn.com, 2018)
 When terrorist assaults happen, it places dread in expected clients, and can prevent
people from flying.

5.0 Marketing Mix

5.1 Four P’s

5.1.1 Product

For a carrier, an advertising blend must be created keeping both in-flight administrations, and
ground administrations as a main priority, while additionally thinking about it as a substantial
item, just as an assistance.

On the ground, transportation to and from the air terminal, online appointments, and check in
administrations just as obligation free shopping, and parking alternatives.

In-flight benefits are most clients' essential core interest. Staff preparing gets fundamental
here, to permit clients to feel drew closer as they would acknowledge, to frame client
steadfastness and fulfilment.

Virgin Atlantic has three different flight classes which are premium, economy and upper
class. The most expensive flight tickets would be the upper class, followed by the premium
class and then the economy class.

Virgin Atlantic also offer cargo product which comes with great service and reliability which
is called “just ride” and the upper class service is called “must ride”. Secondly, they all offer
courier services called “vex” and also a shipment for life and sciences which is called
Pharma, (virginatlanticcargo.com, 2020)

5.1.2 Price

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The Virgin Atlantic airline aims to deliver serious valuing for both economy and business
travellers and bring value for the cost that is being paid for. The ticket prices are dependant
on the class, destination, insurance, Inland Aviation Travel Tax (IATT) and Traveller Service
Fee (PSF).

Likewise carriers utilize occasional evaluating. Tickets are generally more costly when
bought during top seasons, for example, holiday season.

5.1.3 Promotion

In the UK publicizing comprises essentially of TV, press, magazines, open air banners and
taxi sides, all including the logo. Publicizing permits attention to be raised of current items,
their upgrades, and new items, just as appeal to shoppers. Postal assistance permits more
straightforward publicizing to target markets and purchasers, while illuminating realized
clients regarding enhancements.

During customarily low seasons, strategic advancements and value publicizing are likewise
used to amplify airplane limit.

Virgin Atlantic works a regular customer program, flying club to empower unwaveringness
in existing flyers. (Hitesh Bhasin, 2018)

Virgin additionally markets to travel planners, who are the essential merchants of their carrier
seats. Alongside the standard commercials, the business group offers different exchange
motivators, acclimation trips, and instructive/get-together arrangements.

5.1.4 Place

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 (Source: virginatlantic.com)

Above is the route map for Virgin Atlantic Airlines. Those are the destinations that the
airlines can travel to. It covers Asia, Africa, Caribbean and USA.

(Source: Virginatlantic.com)

These are the routes that the airlines and partnered airlines are travelling to. The partnered
airlines are Delta Air and Air France. This brings more customers from different parts of the

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world to the organisation. It also gives customers more options to travel with via Virgin
Atlantic.

6.0 Impact of COVID-19 Pandemic on Virgin Atlantic Airlines

The global pandemic has affected a lot of organisations in the world especially the airlines
industry because visiting other countries are prohibited for the time being. Recently, the
Virgin Atlantic airways has applied for financial bankruptcy insurance for the business in
United States. The airlines has also made a £1.2 billion salvage plan reported from a month
ago. Virgin Australia, another one of Richard Branson’s aircraft also applied a type of
insolvency in Australia and England prior this year. (Financial Times, 2020) However, if the
salvage plan isn’t confirmed and carried out, the airline will run out of money in a month
time. Therefore, Virgin Atlantic is currently renegotiating leases on it’s plans.

The organization has a benefit the board firm standing by to advance it £170 million ($222
million) to stop the prompt budgetary seeping when the five-year plan gets the alright from
partners and leasers. The remainder of the estimation of the salvage plan originates from
investors, including £200 million ($261 million) from Branson's bigger Virgin Group, cost
reserve funds, and potentially private speculators. (Financial Times, 2020) In court filings,
Virgin Atlantic's attorneys state the organization as of now has uphold for the arrangement
from a "generous extent of its partners."

The carrier had just eliminated more than 3,500 positions out of the 10,000 workers it had
toward the start of the year. Virgin Atlantics said it needed to reduce expenses so as to
endure. This is until the movement control order between the countries and states are
restricted. As stated by Virgin Atlantic in BBC News, this is one of the hardest obstacles that
the airline has been through. (BBC.com, 2020)

7.0 Recommendations and Conclusion

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In conclusion, Virgin Atlantic airlines has always delivered value with their products and
services. They have prioritised customer’s benefits and ensured they will always capture
customer’s emotional responses and be remembered for innovative and fun sense of
branding. The company has managed to stay and remain it’s competitive advantage by
constantly growing and being innovative with their branding and travel experience.

However, as can be seen the recent financial shows that the company is not performing well
due to the global pandemic, therefore the company has to apply for a rescue financial plan.
There are some recommendations, firstly, Virgin Atlantic has to become a public company
rather than a privately owned one. For now, Sir Richard Branson owns 51% stake of the
company and the remaining is from Singapore Airlines.

Due to the global pandemic, Virgin Atlantic will have to reschedule their flights and routes
based on demands of the customer. There will be a reduction of flights per day. Secondly, the
airline will also reduce their services to focus on core routes due to the movement restriction
between states and countries. Therefore, the airlines will have to reduce it’s cost base.
Unfortunately, their employees will be asked to take eight weeks unpaid leave over the next
three months, with the cost spread over six months’ salary, to drastically reduce costs without
job losses.

References

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