Virgin Atlantic - India Entry
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TASMAC LONDON SCHOOL OF BUSINESS Professor: Mr.
Group Members − Chakradhari Pratapagiri − Ezika John Chieme − Kasun Prabasara − Sonam Rinzin − Rachana Lamichhane
INTERNATIONAL MARKETING Entry of Virgin Atlantic Airways into INDIA
Submitted: 25 August 2010
Table of Contents Virgin Atlantic operations in various countries .............................................................................. 3 Virgin Atlantic Entry In India ......................................................................................................... 5 Politico-Legal Problems For Virgin Atlantic In India .................................................................... 6 Figure 2 Pestel Forces on virgin Atlantic when ente red INDIA .................................................... 6 Virgin Atlantic‘s Competitors In Indian Market ............................................................................ 7 Economic And Cultural Problems Faced By Virgin Atlantic In India ........................................... 8 Cross-Cultural Impact.............................................................................................................. 8 Impact of Economic Conditions ................................................................................................. 8 Consumption Behavior of Indian Market V/s UK Market ........................................................... 10 Virgin Atlantic’s Adaptation to Indian requirements ................................................................... 11 Virgin Atlantic Fares for Indian Market ....................................................................................... 13 Virgin Atlantic’s Promotion Campaigns for Indian Market ......................................................... 14 Distribution and Payment Systems of Virgin Atlantic in India .................................................... 15 Analysis And Recommendations By Ezika John Chieme (9100031) .......................................... 16 Analysis Section Of Kasun Prabasara (9100155) ......................................................................... 18 Analysis by Rachana (9100140) ................................................................................................... 20 Analysis and Recommendation by Sonam Rinzin ........................................................................ 23 Analysis by Chakradhari Pratapagiri : 9100088 .......................................................................... 26 References ..................................................................................................................................... 30
Table of Figures Figure 1: Fleet of Virgin Atlantic compiled by Wikipedia via Main source of CAA……………………………………………………………………………………………………………3
Figure 2 Pestel Forces on virgin Atlantic when ente red INDIA ...............................................5
Virgin Atlantic operations in various countries Virgin Atlantic
Virgin which is synonymous with Richard Branson, who by 1984 earned reputation of a visionary headed into aviation sector and within 16 years of his successful regime in aviation industry starting its route from Great Britian to North America, he expanded across the globe through various international streams but still a British Company, by year 2000 he positioned Virgin Atlantic Airways as one of the major ventures of Virgin Group with achievements like UK’s second ranked long haul airline’s, making its way through countries like Australia, Caribbean, Asia and Africa operating chiefly from USA. By Year 2000 Virgin Atlantic had an international establishment with London (UK) to be its head office and alike a typical international marketing company, it had its administrative centers spread across various countries including Caribbean Islands, Africa, Japan, China, INDIA and USA being its host country. The fleet of Virgin Atlantic has a chart as given below
Aircraft Airbus A330-300
Total Orders Options
Passengers (Upper/Premium Economy/Economy) TBA
Notes Entry into service: 2011 1 Not in use
Exit from service: 2013
Entry into service: 2013
Boeing 74712 400
344 (54/62/228) 451 (14/58/379) 452 (14/58/380)
Boeing 7870 9
Entry into service: 2013
Figure 1: Fleet of Virgin Atlantic compiled by Wikipedia via Main source of CAA
Richard sold 49% stake in its hay days to Singapore Airlines on a profit sharing model with a strategy of international market penetration at a decent 1.225 Billion pounds (Virgin History) with a reputed player like Singapore Airlines, a reputed south Asian airlines during late 1999 (Virgin Atlantic) and early 2000 was a turning point on strategic international expansion which will be our area of study in this assignment. VA’s entry into international arena; by August 2000 as ‘Virgin Blue’ in Australia where it also introduced a premium brand airline called Virgin Australia in 2009. In September, 2004, Virgin Nigeria came into existence by providing good air services within Nigeria. West Africa as well as North America and Europe were all connected with Virgin Atlantic. By August 2007 Virgin started hoisting its flag in most of America’s regions. In May 2010, virgin started its first operation of Virgin Atlantic services in Ghana.
Virgin Atlantic Entry In India The factors that drove Virgin Atlantic to spread its aviation business into India were mainly market attractiveness apart from profit motivation. The air traffic from India to London was observed quite early by Richard Branson, the over whelming progress and young globalized country with not so rigid government policies was buttering on ice. As proven not to be wrong the long haul journeys between Delhi to London of twice a week eventually went up by thrice a day. Virgin Atlantic entered into a joint venture of 5 years with Air India on December 1999 through a code- sharing arrangement of sharing A-I flight quotas. Virgin Atlantic had its major competitor in British airways for Indian Market. (Grant 2000)
Politico-Legal Problems For Virgin Atlantic In India Virgin Atlantic did have major obstacles in the form of PESTEL factors, with Politico-Legal dominating the rest, Richard went on with Air India’s code-sharing agreement to enter the market arena with the support of strongly existing airways AIRINDIA, however the agreement restricted Virgin Atlantic from expanding to other bases other than Delhi individually, which later hampered Virgin Atlantic Strategic movements into the sub-continent, As Air-India and British Airways had a bilateral pact signed for 16 return journeys. This agreement between British Airways and Air-India restricted Virgin Atlantic to fly only 2 flights from India. Virgin Atlantic lobbied although at a late stage to procure a license to initiate its spread from Bombay as a second base other than Delhi (Grant 2000). A Mix of Traditional Indian and Western Customers
AIR INDIA Lobbying with Indian Government, British Airways strong relations with Indian Government
Figure 2 Pestel Forces on virgin Atlantic when ente red INDIA
Virgin Atlantic‘s Competitors In Indian Market Virgin Atlantic when launched its project in july 2000, it envisioned competition but on level platforms however with changing times Virgin Atlantic got a last pie when British Airways its direct competitor was sanctioned by indian government 3 more journeys to london, while Virgin Atlantic had to confine to just 2 which was not in competitive spirit, with a healthy and attacking spirit Virgin Atlantic is still successfully running over a decade now, its competitors are still running behind on line with Virgin Atlantic like Air Sahara, and Jet Airways. (India Infoline Limited, 2010).
8 Economic And Cultural Problems Faced By Virgin Atlantic In India Cross-Cultural Impact Virgin Atlantic is equally stressed with cultural factors that differed drastically from its western approach, right through variation in food recipes to pricing choices, life styles of people more often than not is a reflection of economic profiles of customers which differed between USA, UK, Japan and INDIA, although INDIA was an emerging or developing country could not be on par with developed countries in expense patterns, Virgin Atlantic at a cost learnt to understand the Indian Customers habits and attitudes, opinions and emotions. Indian Consumers are culturally too diverse although with in the same country, expectations and perceptions vary in accordance to their origins in the sub-continent, this was quite a challenge for Virgin Atlantic which over a period of time adapted to its local customer expectations and delivered services nearing their perceptions on Virgin Atlantic. Indian Customers grow extremely concerned on their Vegetarian and Non vegetarian food habits unlike in some of the nations. Similarly Virgin Atlantic had to take into consideration each and every subtle aspect that relates to culture and sub cultures of India for its long-standing relationship ambition with the country. They have a varied music taste too.
Impact of Economic Conditions India is a developing country with an estimated 80% middle class families at varied levels of upper, medium and lower. This presents a not so positive picture to any enterpreneur but not to Richard, as he anticipated its growth quite early and designed the pricing policies in accordance to consumer mindsets, which is more economic seeking population than luxury lifestyles that come at a huge expense, to fit in favor of indian consumers Virgin Atlantic introduced a new premium economy class layer between business and economic classes, indian flights of Virgin
9 Atlantic have a large quota alloted to Economic classes then Premium Economic followed by Business class with a meagre 2 to 5% of seating arrangement.
Consumption Behavior of Indian Market V/s UK Market Since It gives new and fantastic service comparing to Indian market had before (e.g.: Air India), Virgin Atlantic kept on grabbing market share of frequent flyers between India and UK. They positioned itself as a unique aviation provider in consumers mind in India. Yearly, the growing flow of traffic is nearing about 1.5 Million passengers between India and UK. As there was lack of direct flights, passengers used to travel using transit flights. Virgin Atlantic Airways is Britain’s second largest long haul airline and currently operates 7 flights between India and the UK, with daily services to London from Delhi that grab 20% market share of those passengers. By May 2009, heat of recessionary period affected the Virgin Atlantic’s services on Mumbai – London. Even though they had to stop the flights, they have made code sharing agreements with Jet Airways to keep the customers with them, that is customers can fly from Mumbai to London on Jet Airways and from there they can move onto Virgin Atlantic for their further journey to New York, San Francisco and other places. According to Michael Burke, General Manager – India Virgin Atlantic, they are market leader on Delhi – London route and are outstanding in providing the best value for the money and customer service. (India Info line Limited, 2010).
Virgin Atlantic’s Adaptation to Indian requirements Since its launch in the year 1984, Virgin Atlantic has enjoyed huge popularity, winning top business, consumer and trade awards from around the world. Differentiation of their product by taking the customers’ expectations one step further through communication with their customers and service innovation is the specialty of Virgin Atlantic. Drive-thru check in and in-flight beauty therapy are some unique offerings made by Virgin Atlantic. India is the country known for its diversified cultures all around the nation. So before launching its services there, Virgin Atlantic had to take into account Indian traditions and customs. Indians have the traditions of treating guests with utmost respect, they have varied music taste and the most important thing was the food. Beef is strongly prohibited in Indian culture. Thus, keeping these things into mind, Virgin Atlantic had made changes in their standard menus by serving their passengers with Indian food. India is a nation with a growing population with 25% (2007 est.) of population still below the poverty line. That means most of the Indian people who opt to travel would prefer economic class. Different people have different needs and tastes and that needs and tastes are greatly influenced by their country’s culture and traditions. Thus, In order to survive in that market (where IndiaUK is supposed to be one of the busiest route), Virgin Atlantic had to make some changes to meet Indian Customers’ needs. So Virgin Atlantic provided services to Indian Customers with a mix of traditional Indian standards, on flight entertainment, music and games and many more onboard amenities. Virgin Atlantic offers three classes in its flights initially but to make Indian passengers feel pampered they introduced a new class named “Upper Class Suite”. Moreover,
12 local Indian staffs were hired so to overcome the cultural conflicts alike language convenience. Arrival timing at Heathrow was 21:00 hours which was later changed to 18:00 hours for the convenience of their passengers in commuting to destinations without having to look for a costly temporary accomodation nearby. Most importantly, Virgin Atlantic had to make serious changes in its food menus because of raising concerns from passengers like Martin (Mr. Martin Smith, 2010)
Virgin Atlantic Fares for Indian Market Virgin Atlantic positioned itself on a value for money grounding rather than price leadership although the market was intensely growing competitve and the indian customers economic choice of flights was acting against Virgin Atlantic‘s pricing philosophy, in order to accomodate the prices virgin atlantic offered bundled packages and early registration offers along with its famous mile club memberships that adds points adding to it there were no extra charges for any auxillary services like picking up from origin, food and luggage charges unlike traditional budget airlines. At one point of time Virgin Atlantic had to make its way out on bombay to london long haul journeys for quite some time that it cited to be on pricing grounds which were not generating revenue to meet its running expenditure. However later it resumed with the intervention of Air India supported by aviation ministry of indian government. (Telegraph, December 2008), currently Virgin Atlantic charges about 500 GBP for a return journey from delhi to london when booked a month before, which is quite reasonable when compared to other airways. (VirginAtlantic,2010)
Virgin Atlantic’s Promotion Campaigns for Indian Market Virgin Atlantic is not known for it to be trumpeting with massive promotional campaigns but it believes in a quality speaks for itself policy with a long-standing relationship vision with its customers that being is its fundamentals behind promotions, but its messages have been very catchy, fun but marketwise different like “Our Crew talk back” to convey that customer service is different as when compared with orthodox Air India, “Ours is longer” for a long journy together in a single go, “We do it thrice a day” – frequency of flights between delhi and london as then it was the only airways with such a frequency, Virgin Atlantic stressed its medium of advertising on print media. Different to its approach of television promotions in UK, they opted for print media advert annually in India. Low cost but effective channels of reaching customers like Direct mails, FM radio campaigns, SMS Marketing, Tele-Sales, selective product placements are Virgin Atlantic’s usual marketing activities. Different to note with Virgin Atlantic is the owner and CEO Richard Branson himself projecting freely in advertisements quite casually and promoting the brand via his persona reflection of being fun loving but professional, committed individual, etc. Unlike brands that spend on celebrities. Virgin Atlantic did modify its strategy of promotions and advertisements narrowly and subtly according to the Indian consumer market, nevertheless the brand ambassador remained himself both in UK and Indian Advertisements.
Distribution and Payment Systems of Virgin Atlantic in India As the product is intangible, the distribution channels doesn’t involve physical transportation of goods like in case of any tangible products, Virgin Atlantic Airways running its operations from Delhi and Mumbai as of now although it has plans of expanding it to other metropolitan cities by 2014 provides customers with online booking facility . ‘Authorized Agents’ of Virgin Atlantic has networking across all major cities in India majorly with Delhi and Mumbai as their head offices, Virgin Atlantic Airwaays (VG), Travel Planners (P) Ltd. A-244, etc. are some of them and passengers as well book through sub agents of such authorized agents registered with financial
http://www.ebookers.com/flights/India/Goa/ (22 August 2010). While Virgin Atlantic’s ‘General Sales Agents’ takes care of cargo apart from passenger bookings. Some of the major generals Sales Agents for Virgin Atlantic are ‘INTERGLOBE’, JBW Aviation Pvt. Ltd, Group Concorde, Ajanta
http://www.azfreight.com/azworld/aw17504.cfm, Virgin Atlantic pays around 7% towards agent commissions to its ‘Authorized Agents’. Also on availability a passenger may buy a ticket from the counter at Mumbai or Delhi just before boarding directly through Virgin Atlantic counters. Almost all commonly available payment channels are open for a passenger to buy his tickets like credit cards and debit cards, cheque payments to agents and Cash purchases. Unlike earlier there are only online tickets issued to passengers with journey and passenger information.
Analysis And Recommendations By Ezika John Chieme (9100031) Virgin Atlantic is a renowned company established by Richard Branson and has a lot of intangible assets in its portfolio. The whole Virgin Businesses indicate Richard Branson image. Before Virgin Atlantic entered into Indian market they should have taking into account that they will be competing with the strong competitor in the market, which was British Airways. British Airways is a powerful player in international carriers, in relation to other competitors. Virgin Atlantic did not have the great influence that British Airways had in Indian government and this affected their businesses in India. Recently, they are overcoming this problem and becoming steady in the busiest aviation route. When Virgin Atlantic entered into Delhi market they had so many problems in starting their third flight in Delhi-London route, because they did not take into consideration the business behaviour of Indian companies when signing the Code-Sharing Agreement with Air India and Bilateral Agreement between the two countries. In 2005, Virgin Atlantic had great negotiations and fought with the Indian Aviation Authorities for their business expansions. When they obtained this right to expand from the authority, they started their business expansions by establishing Mumbai-London route in that same year. But, for four years now their businesses had not being doing so well in India which they said it was caused by economic depression that adversely affected their businesses. Virgin Atlantic made use of outdated aircrafts when they originally entered India, which was not suitable for their customers. This made most of their customers to be switching to British Airways, which was their immediate competitor.
17 Although, by the end of this year Virgin Atlantic is completing their ten years in Indian subcontinent, but they are still finding it very difficult to get used to Indian culture. Most of the times Virgin Atlantic delivered bad services to their Indian customers, which their customers many times neglect it. According to open letter written by the founder and CEO of “Justmeans” Mr Martin Smith (2010), he complained badly about the food served in the Virgin Atlantic aircraft during a journey. He said that Virgin Atlantic is promising their customers to be the world’s most sustainable airline, but when it relates to provision of good food they are disappointing their Indian customers and which is not morally right. When Virgin Atlantic initially entered into Indian market they did not take their Indian customers’ service delivery expectations very serious and recently they are becoming aware of its bad impact on their business. Virgin Atlantic failed to consider their domestic competitors such as Kingfisher and Jet Airways, which created a lot of problems for them in Indian market. Virgin Atlantic was not giving their yearly annual report to their Indian customers that will enable them to know more about the company’s overall services delivery and financial performance. They planned themselves to possess different rock style and pop of culture, but they are still not considered as having good corporate goodwill sometimes, which they suppose to work on properly.
Analysis Section Of Kasun Prabasara (9100155) Dominating his enduring value to his unbeatable businesses, Richard Branson, the 48-year- old chairman of the London-based Virgin Group, has parlayed a for conventional business wisdom into a $3.5 billion international conglomerate and one of the world's most powerful and recognizable brands. The goal of Virgin Atlantic was to “provide all classes of travelers with the highest quality of travel at the lowest cost.” After teaser advertising entitled “WAIT FOR THE ENGLISH VIRGIN…,” Virgin Atlantic launched their introductory flight from London to New York on June 22, 1984. There are Upper Class, Premium Economy, and Economy, which are the main positions of products. Each class is differentiated by the benefits associated with the products. After entering to the aviation businesses, virgin could introduce new technological ideas like personal music, movies, games, special J-class with lounges etc… After signing the Code-Sharing Agreement with Singapore an airline which is a minority shareholder at 49%, virgin could increase their destinations expand services by getting experience from established airliner. They build their image as a new, innovative, “RED Hot”, has superb customer service etc…those positioning characters they used to entering to Indian market. India was the virgin’s first south Asian experience that they had to face a big challenge. For the first instant they had to compete with well established and experienced giants such as British Airways and Air India. Although virgin had competitive advantage over Air India with new technology, innovations and attractiveness they couldn’t understand the Indian culture as Indian local air lines such as Jet. For compete with BA, they could use innovations to attract customers for India – UK route, but at that time BA had great influence from the Indian government that virgin didn’t have and this affected their businesses in India. In 2005 virgin had to face number of problems regarding expansion of their flight frequent and they had to negotiate
19 with Indian Aviation Authorities and Air India to make some bilateral agreements. From the result of virgin could initialise the Mumbai – UK route. Even though virgin celebrating their 10th anniversary in 2010 for India – UK route, they are still finding problems for their business. Main reasons for this are, didn’t analysis the Indian culture and customers in deep. For an example they started India – UK route with old Boeing 707 aircrafts that Indian didn’t prefer (Indian didn’t want to treat them as 3rd world customers), they had more trouble with catering as Indian customers like more spicy foods than they provided. Other reason is virgin totally depends on Branson’s image and his innovative ideas that can be a reasonable for UK. But in India Branson is not a very popular as in UK, so that didn’t apply for Indian Market. For marketing aspect virgin still can’t position its service clearly in customer’s mind, like whether it is a budget airliner or a premium quality airliner. Though they tried to differentiate by innovations mentioned above, it was not enough for grab the market share from excising competitors. By May 2009, heat of recessionary period affected the Virgin Atlantic’s services on Mumbai –London and they had to stop the service. This kind of highly economic vulnerability, High break-even point and Lack of economies of scope are still creating problems for virgin. What virgin can do for win the Indian customers? First they have to transform core values into unambiguous positioning strategy by make more innovations and use more marketing communications with Hindi language as well. Apart from those, they have to use new strategic way, like they have to show that they have local values such as spicy food. Finally they can use strategic alliances with Indian government to expand the width of their business.
Analysis by Rachana (9100140) Richard Branson, the founder and the President of Virgin Atlantic is himself a brand ambassador by doing extensive publicity of his image associated with the brand Virgin Atlantic. This might prove to be good to some extent however, Branson’s face appearing everywhere in the in-flying magazine to IFE (In-flight-entertainment), can be annoying to passengers. Advertisement plays an important role in selling products and services. Bollywood is famous all around the world because of its excessive publicity. In spite of this, the Virgin Atlantic Airlines has very few adverts. Thus, more expending can be done on advertisements and publicities of Virgin Atlantic using some famous sportspersons or celebrities or singers rather than Branson all the time and everywhere. Because of the influence of globalization, India is experiencing a huge increase in the number of passengers, travelling to and from the country via air. Thus this share of passengers can be grabbed by Virgin Atlantic (one with reasonable price) with some efforts made on improvement on the quality of food and services offered. British Airways is the major competitor of Virgin Atlantic from the initial period. British Airways has this very established and strong brand image. British Airways is quite traditional whereas Virgin Atlantic is ‘modern’. If one has to choose comfort, British Airways is the better option than Virgin Atlantic according to one of the customers Captainks, 2006. Since long haul travelling is all about safety and comfort, Virgin Atlantic should not compromise on the seat comforts be it in economic class. British Airways is renowned for its professional service; good food etc. Whereas Virgin Atlantic’s offering is more of the differentiated product and services. Thus, proper trainings to the amateur crew members of Virgin Atlantic can definitely assist the Virgin Atlantic to give the edge over its competitors.
21 Virgin Atlantic has been operating in India since 2000. Thus with already ten years of its service in India, Virgin Atlantic is still unable to adapt Indian culture properly. And since Indians are very strict with their culture, customs and traditions, it becomes vital for Virgin Atlantic to move as per the demands of Indian Culture. Quitting its Mumbai-London route because of drastic price drop, might have created bad impression among its customers. Thus to compensate that loss of brand image and to regain its lost customers, Virgin Atlantic should offer average price with high qualitative service. Lufthansa, Jet Airways, Fly Emirates, British airways etc have increased their clients in India. Moreover, because of their offering of world-class on board services, they have not just been successful to attract the passengers but also attract them to use their services time and again. Thus, to survive in the aviation industry with such strong competition and beat its strong competitors, Virgin Atlantic must stick to its ‘product and service innovation’ theme and value based pricing.
22 As a step of Corporate Social Responsibility (CSR), Virgin Atlantic became the first commercial airplane operator to fly a plane partially powered by bio fuels. Bio fuels are the cleaner and cheaper method of reducing global warming. Considering itself a challenger brand and with a strong commitment to challenge itself its coming up with rebranding so as to maximize impact across social media channels. (Clark, 2010) Winning the best Transatlantic Airline award at the 2010 World Airline Awards in itself is the proof of Virgin Atlantic Airways clearly achieving some good levels of customer satisfaction and satisfying the actual air travellers. (www.worldairlineawards.com) Thus, Virgin Atlantic has started its journey to become the world’s most sustainable airline and with Richard Branson they will be able to soon reach that destination by taking the customer’s expectations, needs and demands.
Analysis and Recommendation by Sonam Rinzin Virgin the name itself conveys the brand image to the customers. On top of it Richard Branson (chief executive and owner of Virgin) plays an important role in their company portfolio. During virgin promotional adverts they don’t use celebrity; instead they use their CEO Mr Richard Branson. Every customer associates Mr Branson with Virgin brand image. Virgin has created 300 branded companies worldwide and it currently employs 50,000 employees in 30 countries.
In July 2010, Virgin Atlantic celebrated its 10th anniversary of flying between London and New Delhi. This particular flight route was success to the company. This route was launched in 2000 and was virgin’s twentieth destination with flights initially operating twice weekly. The flight was extended to daily services from February 2005. Over the past decade, virgin has played a major role in ensuring that India was an accessible destination for both business travellers as well as leisure travellers. Before virgin came people were forced to fly via third countries and made their journey extended by 5 hours more. Their direct flight service has reduced travelling times between those two countries.
During the ten years’ service. Virgin Atlantic flew over a million passengers to and fro India. During this year 2010, Virgin plans to carry over 140,000 passengers. Due to recent ash cloud the flights were severely affected. In their decade over services. Virgin Atlantic had made changes in their customer services especially their in-flight services. Initially in the beginning of their operations they were not accustomed to Indian culture. Hence there was mismatch in customers’ expectations and what Virgin Atlantic have to offer in flight service. Mainly the problems were communication barriers, food (since Indian prefer their own food) so changes
24 were made, for passengers travelling in all cabins three meals choices were made available- one of which caters for the Indian palate and the British love of Indian foods. As a part off in-flight entertainment services, Virgin Atlantic offers new releases of movies so that people can be entertained in best possible ways. Even subtitles are available in English for Hindi movies. Virgin have also recruited Indian employees on the flight to make the communication easier.
Initially in the beginning of its operations in India, Virgin was having difficult time finding its own place since its niche market were narrowed down by their competitors ( British Airways) which operates in more than 150 routes. Slowly they put on their momentum by giving good services to the people. Even they have scheme going extra miles, which are given to those customers who always travel in Virgin Flights. Virgin on the other hand has been trying its best to get approval from Indian government to start their domestic flight. There had been three meeting between Virgin Atlantic and Indian communication minister. Indian on other side fear of market capitalization by the Virgin group and its influences on their other flights services. They also don’t want foreign influences on their domestic market. Virgin stated that if they compete in India’s domestic market, Jet airlines will be their closest competitor. Virgin also showed interest on other markets such as Indian Telecom, music, financial services but Indian government was not keen on the ideas showed by Virgin, since they are foreign company.
25 Fighting in an airlines industry is difficult for any airline’s company. Virgin have come across their hardship and maintained their niche market. Several factors have contributed to their success: the power of their Virgin name which makes them Unique among any other brands, Mr Richard Branson personal reputation, and their unrivalled network of contacts, partners, good employees and services. Over all virgin atlantic runs as a family rather than hierachy and this makes them one of the unique airlines in the world develping at higher pace.
Analysis by Chakradhari Pratapagiri : 9100088 Virgin Atlantic airways has passed through many ups and downs ever since its entry into India in 2000, as the market was gaining momentum and entry barriers were not too many, as there were other airlines that were readily competing on prices like Air France, Iberia and a serious competition with British Airways, which are even today offering low prices for a long haul journey from Delhi or Mumbai to London, any new company can lease aircrafts alike kingfisher which started as a domestic player by hiring a few and now operating internationally, because of low barriers of entry and low exit barriers the market has grown competitive with low price operators running on wafer thin margins. The impact of economic factors combined with competition leading to a closure of its services in 2009 of its Mumbai to London long haul operations leaving it with just Delhi to London, to and fro services for some time although they have restarted their operations recently. Richard Branson chose to be a brand ambassador himself by extensive publicity of his image associated with the brand Virgin Atlantic. Virgin Atlantic although chosen not to be a price leader in the market but offer value for money as a strategy with a qualitative market penetration, the brand made a firm standing now,
popularly advertised across through various marketing channels like TV advertisements, video broadcastings at cinema halls, etc., some of popular brand mantras were “Let’s Get Physical”, “Our Crew Talks Back”, “We Do It Thrice a Week”, “Hello Gorgeous”, trying to reflect the funloving attitude of crew on flight. There was no consistency in frequency of advertisements and took quite a time in striking a balance between its professional and fun cultures; it could be because it has already established its name in the market. Its philosophy of difference in operations is quite appreciable as the challenge with Indian market was intense. There are many
27 firsts in Virgin Atlantic like first operator to introduce on flight ticketing system, first to have passenger control video screens at the back of the seat also ‘The premium economy’ started by Virgin Atlantic was between economy and business class many of which are replicated by its competitors. The under estimation of Air India on its code-sharing agreement which did not permit Virgin Atlantic to expand with ease, certain procedural obstacles led to delay in expansion which caused quite a situation to handle for management of Virgin Atlantic. Indian culture is different and it took time for Richard to adjust to the cultural shocks when on board massages and other luxury provisions were introduced in its business class which eventually slowed down on Indian journeys and limited to its US and other international destinations. Richard is a quick learner who catered to customers what was needed although failed on certain instances in proper prior planning like caterers who serve food on flight to customers which he readily admitted to the faults and catered what was liked by Indian customers. Corporate Social Responsibility: Gold Standard certified as per KYOTO protocol specifications on energy efficiency projects taken up by Virgin Atlantic towards its responsibility on climate. The emission reductions are reported between 2001 and 2006, while Indonesia project is still in progress. Richard promised 10 years profit of travel business towards climate which is a pledge of around 3 Billion USD. http://www.virgin-atlantic.com/en/us/allaboutus/environment/bransonpledge.jsp
Conclusion: Virgin made a quick and serious headway into the business with majority of its decade, operating in losses. Virgin Atlantic has learnt on its journey through many crux situations which could have been avoided had it well planned like Competitors Hold on the market, Indian consumer behavior are being two important aspects of all. Now, stabilized with decent profits despite decline in aviation industry due to recession impact, there is an immense possibility of vertical growth with its current positioning in the industry and would not be surprising if it becomes a largest private player in the business of aviation in the world.
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