Virgin America

Threat due to new entrants in the market: The threat of new entrants is low. Although there are minimal restrictions to entry because the UK airline industry is highly deregulated (Chernatony et al. 2010), there are several factors that are favourable for BA. The long-distance travel market from the UK is highly saturated, of which BA is a major player, while the short-distance market is also saturated by airlines such Easy Jet and Ryan air, which along with BA account for a large portion of the market (Steves 2010). Moreover, the biggest entry barrier in the airline industry is the cost factor (Azar and Brocks, 2010). The global economic recession weakened the overall air travel demand, which along with entry failures of Zoom and XL in 2008, could create doubts and negativity for new entrants (UK Airline Industry Analysis Researchomatic, 2012; Steves,

From 1968 to 2007, Richard Branson leads the Virgin group to become a conglomerate of more than 200 companies with business in music, airlines, rail transport, soft drinks, radio broadcasting and etc. (Grant 2005a:309) The Virgin Group followed many other companies during the 1950 to1980 period in adopting diversification as a mean for corporate growth. The boom of unrelated diversification of the early 1960s and 1970s was halted abruptly however by the failure of many large diversified companies (Grant 2005b:447). The simple action of bringing various businesses together under a single ownership itself was clearly not sufficient in creating shareholder value. The following years

In airline industry there are three major suppliers; jet-fuel providers, airplane manufactures and labor. Due to the current economic situation and ever-increasing fuel price, the position of the airline industry to its jet-fuel suppliers is worse. While the power of jet-fuel suppliers is stronger, the influence of airplane manufacture and labor on the airline

With low operating margins and high initial investment, a high market share is needed to ensure full flights (maximizing profits on each flight). This would be difficult for a new entrant. The mature airline industry is not attractive to new entrants as distribution channels are focused on current competitors.

International Competition. Internationally, the Company competes not only with U.S. airlines, but also with foreign carriers. International competition has increased and may increase in the future as a result of airline mergers and acquisitions, joint ventures, alliances, restructurings, liberalization of aviation bilateral agreements and new or increased service by competitors, including government subsidized competitors from certain Middle East countries. Competition on international routes is subject to varying degrees of governmental regulation. The Company’s ability to compete successfully with non-U.S. carriers on international routes depends in part on its ability to generate traffic to and from the entire United States via its integrated

In second part we will analyse the external environment by scanning the current trend. The third part covers the strength, weakness, opportunities and threat that will be stimulated from the External marketing environment of the virgin airlines. Final part describe about the conclusion or the summary of the report.

As we know, Virgin Group is a multi-national conglomerate of the Virgin -branded companies that function globally in various industries. Today, Virgin-branded airlines comprise of: Virgin Atlantic, Virgin Australia, Virgin Galactic and Virgin America. In this analysis we will look at the primary resources and core capabilities of Virgin Atlantic, identify the purposeful areas of the airline’s organization, which primary resources and core capabilities are located and its position to the airline’s business strategy and its objectives. Furthermore, reviewing how each resource and capabilities are organized and reinforced in a way that aligns with the airline’s economic advantages, and what prospects exist to exploit the key capabilities of Virgin

Since the merger of U.S. Airways and American Airlines, most people would now agree we are living in the age of airline oligopoly. Oligopolies form when there’s a state of restricted competition, and new companies cannot break into the industry for reasons like high-entry costs or government restrictions. This is the condition of the airline industry, today. In order to breach the oligopolistic nature of the airline industry, airlines must be able to break through high barriers to entry such as: retaining substantial capital requirements, having the need for technical and technological ingenuity and jurisdiction of patent rights. In addition, airplanes must be purchased, employees must be trained and facilities must be procured. Even after all these expenditures, some airlines still experience substantial financial losses. As a result, most of these airlines experiencing a financial hardship are subject to an airline merger. For this reason, the major airlines in the United States now consist of four competing large carriers: American Airlines, Delta Airlines, United Airlines and Southwest Airlines. These companies have survived the deregulation of the airline industry and sustained their places at the top of the industry. In an effort to stand out in an oligopolistic industry, airlines must experience: economy of scale, growth through merger, mutual dependence and price rigidity and non-price competition.

The aviation industry of any nation acts as a contributor to its economic growth, helps in globalisation and creating an international image. It is the best in terms of the fastest, safest and convenient mode of travel. Even though it is an expensive one, it is expanding its markets across the middle-class who are ready to spent money on leisure trips. Thus it is truly stated that aviation forms a vital core infrastructure area without which a country economy is handicapped.

The main reason for the low-cost subsidiaries’ failure is the airlines’ corporate strategy. By launching a LCC as a unit inside the same corporate structure (e.g., single scheduling and pricing centre for United Airlines’ and Shuttle’s low–cost flights), traditional airlines limited the LCC’s flexibility and independence. By building a low-cost carrier on top of a traditional carrier cost-structure, the parent company was also tempted to think low-cost when setting ticket prices, but not trying (or being able) to reduce traditionally high costs: the airline had now two unsustainable business models instead of one!

The five forces of Porter’s model are an exceptional tool that can help Virgin to understand the level of competition in the airline industry. Some of Virgin competitors are Qatar, British Airways etc. The managers at Virgin Atlantic can create strategies that are more successful to tackle competition and to improve Virgin competitive strengths by using this tool.

Low-cost carriers pose a serious threat to traditional "full service" airlines, since the high cost structure of full-service carriers prevents them from competing

By 2006 Virgin had, with mixed results, taken on one established industry after another in an effort to shake up ‘fat and complacent business sectors’. It had further set its sights on the

1) Introduction to airline industry 2) Drivers of globalisation using yip’s model 2.1 Market globalisation 2.2 Cost globalisation 2.3 Globalisation of government policies 2.4 Globalisation of competition 3) Localisation- arguments against globalisation 4) Pestle Analysis 5) Porter’s 5 forces analysis and their application to Airline industry 5.1 Rivalry amongst Existing Firms 5.2 Threat of substitution 5.3 Threat of new entrants 5.4 Power of customers 5.5 Power of buyers 6) Opportunities and Threats of Airline industry 7) Internal analysis of Virgin Airlines: Strengths and Weakness 8) Financial Statics of Virgin Atlantic Airline 9) Strategic Changes of Virgin

Internationalization of the business nowadays apparently became a trend for the organizations to expand their market position and gain the competitive advantage among their contemporaries. The extent and nature of business activities are almost as diverse and comprehensive as the totality of the social and economic interest of a man. Various business activities acknowledged the opportunities that the internationalization may deliver. Through their ability and capacity to expand their business operations, internationalization is highly possible. For most of the time, the high degree of the competition under the umbrella of an industry and the number of competitors that are engaged in the