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Virgin Atlantic SWOT & PESTLE Analysis

ID : 52402653| Sep 2018| 19 pages

COMPANY PROFILE -Virgin Atlantic

Business Sector :Aviation

Operating Geography :London, Global

About Virgin Atlantic :

Virgin Atlantic is a British airline with its head office in Crawley, United Kingdom. The airline was established in 1984 as British Atlantic Airways by Mr. Richard Branson. The company has a very peculiar history. Before Virgin Atlantic was incepted, Mr. Branson had one of the most successful recording firms in America, called Virgin Records. He gave up the company in order to venture into a new and growing sector at the time- Airlines. The airline, comprising of Virgin Atlantic flights and Virgin Atlantic Cargo along with Virgin Holidays is controlled by a holding company, Virgin Atlantic Limited, which is 51% owned by the Virgin Group and 49% by Delta Air Lines. Currently, the company has extended its reach to many product lines from Virgin Cola to wedding gowns and financial services. This British airline, which is headquartered in Crawley, United Kingdom, nurses a strategic vision “to ensure sustainable growth is delivering an irresistible customer experience.”It was voted #1 for UK-TATL customer satisfaction and has flown close to 5.3 million passengers in 2017. It has approximately 9,800employees as of 2018.

The Company’s mission statement is “to embrace the human spirit and let it fly”. Virgin Atlantic’s USP or Unique selling proposition lies in being a premium British airlines offering luxury at affordable pricing becoming the first European carrier to offer in flight Wi-Fi across its entire fleet.

Virgin Atlantic Revenue :


£2,663.7 million- FY ending 31st December 2017 (y-o-y growth (negative) -1%)
£2,689.9 million - FY ending 31st December 2016

Ownership / Major shareholders :


As of May 2018, the major shareholders of the company are as follows –
1) Delta Airlines (49%)
2) Air France – KLM - (31%)
3) Virgin Group (20%)

Competitive Analysis of Virgin Atlantic

SWOT
PESTLE
The SWOT analysis for Virgin Atlantic is presented below:
Strengths
Weaknesses
1. Strong brand value with top of the mind recall
2. Very innovative and unique branding and advertising by Richard Branson:
3. Strong north Atlantic network
4. Joint venture with Delta
5. Improved IT and support systems
1. Failure of “Little Red”
2. Dependency on Richard Branson
3. Lack of global presence
4. Private Ownership
Opportunities
Threats
1. Relationship with Delta
2. New fleets and routes
3. A new runway at Heathrow
4. Increase business with global alliances
5. Possibility of an Alliance with Air France KLM
1. North Atlantic overcapacity
2. Clash between the Unions
3. Intense competition from Gulf and domestic operators
4. Brexit impact posed to curb traffic
5. Hurricane disruption and engine woes
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Detailed SWOT Analysis of Virgin Atlantic

Strength

1. Strong brand value with top of the mind recall: Virgin airlines enjoys a strong brand reputation and was the only British airline in the global top 10, in a survey conducted by Air Help that included 78 airlines across the globe. This was done to find the best airline based on punctuality, quality and the speed of dealing with compensation claims, where Qatar Airways aced this list. It is very popular and preferred particularly in Europe and North America. One of the largest British airliners, it has a strong and loyal customer base who are very satisfied with the services offered by the airlines. It is recalled as a premium airline brand that offers luxury at a cost effective price. Most of the customers buy tickets based on price – a premium airline with a lower cost is an ideal deal. Hence, brand recognition translates into considerable revenue. In 2017 alone, Virgin flew 5.3 million passengers, transported 230m Kg of cargo and its Virgin Holidays customer base spiked to a record 397K.Virgin became the first European carrier to offer in-flight Wi-Fi services across its entire fleet. They also pioneered in offering accessible in flight entertainment system for the blind customers. With the newly launched transatlantic Joint Venture with Air France-KLM and Delta Air Lines, Virgin expanded to serving over 200 destinations between UK and the US, accounting for 35% share of the total UK-US capacity.

2. Very innovative and unique branding and advertising by Richard Branson: Richard Branson’s antics in promoting Virgin Atlantic were elemental to the brand’s success. A few examples were the Launch of Virgin Cola by driving down Fifth Avenue, New York in a tank. Flying a hot-air balloon or playing a drowning character in a TV Series. In his keynote address at the Adobe Summit in March 2018, he was quoted as saying how his reactive PR stunts were the reason for the brand’s popularity apart from their digital marketing success. When people started stealing the salt and pepper shaker pots from their planes, Richard Branson asked his team to write ‘Pinched from Virgin Atlantic’ on the pots so that it could be a mode of advertisement when the pots reach the dinner table of those who stole them. Richard Branson stresses how important the PR in his organization is with Mr. Will Whitehorn, Virgin’s PR and Communications director as the top paid employee at the firm. Another form of advertisement was when Virgin took on British Airways when the latter was unable to lift off their aircraft from the ground successfully. Branson came up with the London eye titled ‘BA can’t get it up’ which drew instant publicity.

3. Strong north Atlantic network: Nearly2/3rd of the annual revenue of Virgin Airways comes from the North Atlantic region where it is 2nd most popular after British airways. North America and the Caribbean is Virgin’s largest market after the UK. Recent expansions to routes for Detroit and Atlanta and Glasgow have increased focus on this territory and will become the core of Virgin airline's business. Virgin Atlantic dominates routes in the Atlantic region, which account for 83% of its seats and 23 of its 29 routes as of Oct 2017. Virgin's seat share is low at its four UK bases, the biggest being London Heathrow airport. Virgin in fiscal 2017 swapped Detroit service with Delta’s Seattle service to optimize market demand. The British airlines recently expanded their Flybe code share to include their new Heathrow-Scotland services, to beef up traffic on their Heathrow flights and improve travel options for the Scottish customers.

4. Joint venture with Delta: Since Jan-2014, Virgin Atlantic’s North Atlantic routes are now part of a joint venture with 49% of the stake, belonging to Delta Air Lines. With antitrust immunity, the ability to coordinate schedules and pricing should be positive for revenues to be generated. 2Currently, Virgin Atlantic is operating one of Delta’s three daily flights from Delta’s Atlanta airport to London Heathrow with an addition of new flights from Delta’s Detroit hub to Heathrow along with assumption of Delta’s Atlanta-Manchester route. The Delta Joint Venture allowed the carriers to swap two of their US services with daily flights to Seattle now run by Virgin Atlantic, and both London to Detroit flights by Delta, to serve customer preferences. The venture has mutually benefited customers of both carriers by making both players adaptable to customer needs and ultimately improved business. Passenger revenue per available seat kilometre (PRASK) in the fourth quarter of 2017 hiked, reversing several years of PRASK slide. In fact, the last two months of fiscal 2017 witnessed PRASK growth, for the first time since 2014. Virgin Atlantic is optimistic that this trend will continue in 2018.As per the CEO of VA, this venture will make transatlantic more attractive than it used to be. Also, this joint venture has created opportunities for synergies at both ends.

5. Improved IT and support systems: Virgin Atlantic has overhauled its IT systems by outsourcing its revenue accounts, which involved complex inter-airline tracking and billing. WNS, a global business process management company headquartered in Mumbai, India, provided contact centre and data processing services. This included handling e-mails, calls, and mail about reservations, ticketing, fares, baggage tracing, frequent flyer inquiries, and post-flight complaints. Data processing focused on meal allocation, cabin crew reporting, and cargo revenue management. Virgin has also adopted business intelligence software where users can take advantage of a user-friendly business intelligent software tool which hides the complexity of interpreting data. Virgin Atlantic managers are no longer forced to pour over finished and incomplete reports derived from multiple operational sources to track customer activities and entitlements. In short, Virgin Atlantic's users are in control of their data. This has decreased the human efforts and increased the efficiency along with easing the service delivery to the customers. The Commuter service space has been the Virgin group’s latest muse. They have invested in a fully apprised mobile app that is capable of self-service booking technology and updated kiosk functionality. IT Support systems were also an important investment by Virgin including a new tablet devices for the cabin crew of all Virgin Flight Service Managers that enable them to provide a better and customized passenger service.

Weakness

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Opportunity

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Threat

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Major Brands :

  • Virgin Atlantic
  • Virgin Cargo
  • Virgin Holidays

Key Business Segments / Diversification :

Virgin Atlantic
Airlines Holidays Logistics Cargo transportation

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
Air France – KLM, Delta Airlines, Virgin AtlanticAirline2017- underwayJoint VentureAir France-KLM will buy a 31% stake in VA for £220 million. A definitive agreement has been signed by these three carriers to take their trans-atlantic JV ahead. Regulatory approvals are left for this JV to come in to effect.
Delta - VirginAirline 2013Joint VentureThis JV would help Delta and Virgin to bring together their passenger air transport operations on routes between United Kingdom and North America
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Virgin Atlantic Analysis Report

https://virginatlanticannualreport17.com/pdfs/VA-2017-Annual-Report_Full.pdf

https://www.virginatlantic.com/in/en/sustainability/the-big-picture.html

https://www.ibtimes.co.uk/virgin-atlantic-faces-work-rule-pilot-protest-over-christmas-union-recognition-row-1596932

Copyrights and Disclaimer

Virgin Atlantic SWOT and PESTLE analysis has been conducted by Prateek Moroney and reviewed by senior analysts from Barakaat Consulting.

Copyright of Virgin Atlantic SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Virgin Atlantic SWOT & PESTLE Analysis
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