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Virgin Atlantic Airways Ten Years After Essay (Article)

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Updated: Nov 1st, 2021

Virgin Atlantics celebrated its 10th year during June 1994 in the remarkable history and a glorious disposition of an airline company that became Britain’s second largest haul airline in just ten years boasting of highest quality, innovative ideas and all at affordable prices. Richard Branson had always been the witty sort and his sensibility proved with the success of Virgin Airlines.

Branson had always been fond of celebrities and the first company Branson worked for had excessive sales that year and soon after that he started with his own entrepreneurial venture of a magazine.

During 1970, Branson founded the mail order record business called Virgin and soon after that he had his own recording studio, label, night club and also stakes in the London stock exchange. The company went public but that did not suit the sensibilities of Branson so he shed the burden off in order to continue with his entrepreneurial ventures.

In 1994, Virgin Group had Virgin retail group, Virgin Communication and Virgin Investments which controlled over 100 entities in 12 countries. When Richard Branson noticed the downfall Laker Air that is when Branson got the idea of hiring executives from Laker namely, Roy Gardner, David Tait and Virgin Atlantic was created.

Branson did not want a simple upper class airline since he wanted unique service offerings but at affordable prices. Virgin was quick in response to customer complaints and also to make use of opportunities.

The marketing strategies used by the company have always been straight forward, witty and unique enough to attract all customers from competitors especially British Airways.

The Early Years of Virgin (1984-89) were challenging but chaotic yet having a disposition of Richard Branson the time was challenging and fun in its own way. During 1989 the airline celebrated its “one millionth customer” and the customers on board were surprised with special offerings like a beautician or tailor on board. Branson befriended all rock stars and the company got into setting unique records such as the speedboat set the fastest time to have ever crosses the Atlantic with Branson on board. Virgin Atlantic also had a hot air balloon that flew across Atlantic and soon one of the balloons broke all records.

During 1989-94 Richard Branson realized that the management of the company needed to be professionalized. The company was formerly a flat structure with 27 people reporting directly to Branson since now it was important to convert the company into a more customer driven organization. Branson met with a Marks and Spencer retailer Syd Pennington soon after that Pennington was made joint managing director of the company. Roy Gardner enjoyed the same position as well and Nigel Primrose was Finance Director so now only three people were reporting directly to Branson.

Richard then focused on expanding the fleet to 18 planes with Boeings (747’s) and airbuses. The logo of Virgin Atlantic became the scantily dressed red-headed lady dressed in red and carrying a scarf.

Virgin Atlantic had upper and economy classes but they realized the need for a middle class specifically for economy passengers traveling for business. The value for money that they provided helped them cater to a wide spectrum of customers. Fun was always an essential element of the airline’s strategy.

The staff at Virgin is a dynamic team since they are hard-working, motivated and quality staff working for low salaries. All employees including the airline crew is allowed to call Branson at his land line number for 24 hours in order to make any unique suggestion or give a constructive and healthy criticism that can help the company grow. In the 10th year the company had 2602 valuable employees.

The Deregulation of the Airline industry affected Virgin Atlantic as well. The deregulation took place in three phases that was between 1987 when the price controls were relaxed, then in 1992 when airlines were allowed to set their own prices and also practice controls. Lastly, in 1990 when the global recession busted a lot of organizations and during the time when all airlines were laying off and downsizing Virgin maintained all employees and recruited new ones by the end of the year. Virgin Atlantic saw the worst recession and failures but today its one of the largest and the most popular airline companies in the world.

Steve Ridgeway, the Marketing Head at Virgin had a unique set of promotional activities but the company spent only 2% of their turnover on advertisement which is well below 5%-7% the usual airline companies spend on promotion. Virgin filed a case against BA to have illegally logged onto their systems to spread rumors. Virgin won the case. The battle continued when Virgin filed another case on BA. Virgin announced its first alliance with Delta Airlines which raised Virgin’s profits by $150 million.

Bibliography

ECCH (1995) Virgin Atlantic Airways- Ten years after. Case Study. France: INSEAD.

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