Virgin Australia Essay

Virgin Atlantic is clearly the cash cow of the Virgin Empire but we have undertaken a

Global airline alliances in another issue included in Virgin’s external environment. Alliances benefit airlines in many ways as they enable them more market access, convergence of technologies and even help overcome legal barriers (Anon., 2009). One weakness for Virgin therefore is not being part of an alliance such as Oneworld Alliance (Anon., 2009), in order to take full advantage of its potential Virgin should look into adjusting their market strategy and look into joining an alliance, if not form its own.

The risk of entry into the airline industry by potential competitors is low due to the “liberalization of market access, a result of globalization. According to the IATA (International Air Transport Association), about 1,300 new airlines were established in the last 40 years,” (Cederholm, 2016). The cost structure of businesses in an industry is a determinant of rivalry. In the Airlines Industry, fixed costs are high, because before the organization can make any sales, they must invest in air crafts, fuel and service employees. These items come attached with hefty price tags. Industries that require such enormous amounts of start-up capital as predicted by many analysts

Competitive rivalry: Airline industry can be characterized as imperfect oligopoly. There are several big airlines that dominate in long-distance flights and several smaller airlines compete for short-distance flights. The competition and price sensitive buyers lower the returns airlines receive. This market situation is favorable for a company like JetBlue, which differentiated itself by comfort at low price, but this can be easily duplicated by other companies.

1. There are a few trends in the US airline industry. One is consolidation, wherein existing players merge in an attempt to lower their costs and generate operating synergies. The most recent major merger was the United Continental merger, which is still an ongoing affair, but has created the largest airline in the United States by market share (Martin, 2012). Another trend is towards low-cost carriers. In the US, Southwest has been a long-running success and JetBlue a strong new competitor, but in other countries this business model has proven exceptionally successful. The third major trend is the upward trend in jet fuel prices, and the increasing importance that this puts on hedging fuel prices and capacity management (Hinton, 2011).

Market structure can be defined as patterns of behaviour by enterprises in an effort to adjust to the markets in which they operate (buy or sell). Pricing strategies and collusive behaviour mergers are a few dimensions of market conduct. It is the industry norm for a legacy carrier to offer service to most popular destinations; Delta reducing routes to a similar schedule as the low-cost airlines is not an option in the multi-billion dollar industry. In order to gain market share from low-cost airlines, Delta must create a value proposition that differentiates itself from its competitors. Many customers will pay a premium if the level of service provided is higher than the low-cost, no-frills

The first part of this report provides a broad introduction into the business of Virgin Australian by examining its principal sources of revenue, its nature of operating, its competitors, the market share and the regulations affecting its operations. From this, it can be seen that Virgin Australia operates in a very competitive environment and generates revenue by the core business of passenger and cargo transport.

Being in the service sector it is important for Virgin Atlantic to study its marketing mix as it works as an efficient tool, while building up marketing plans. It comprises of the seven P’s which are as follows.

The airline industry has always been a fiercely competitive sector. Since the invention of low-cost carriers, also known as no-frills or

Virgin Australia is Australia’s second largest domestic airline, commenced in operations back in 2000 as a low-cost carrier (LCC) and has successfully survived in the market. Major shareholders include Air New Zealand, Singapore Airline and Etihad Airways. The airline rebranded in 2011 as a part of their 5-year turnaround

The most important inputs are craft and technology, aviation fuel, and skilled labour. Due to the reasons of political and economic, the fuel price is subjected to fluctuate. Also, the technology suppliers and craft suppliers are very limited and Virgin brands solely relies upon the supplier for them to supply very fast and aircraft that is well designed and fast. Boeing and Airbus are the two leading manufacturing aircraft that supply Virgin. The Virgin Group is constantly being technologically developed by suppliers with its touchscreen seat back entertainment, Wi-Fi accessibility, health club maintenance, cutting edge smart phones, and new space

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

It may be lower risk in in the aviation markets because of entry regulations that a high level of governmental barriers to open the freedom of flights, also the industry needs high fixed costs and assets of airline operation, but based on the increasing demand of travelers by air, it's given the high intensity of rivalry.

The bargaining power of buyers is affected by the concentration and number of consumers, when buyer power is strong, they gain the power to choose between producers and ultimately equip themselves with bargaining power which then the producers will have to conform to in order to produce profit, under these conditions the buyer has the most influence in determining the price of products. Also when buyers have strong bargaining power in the exchange relationship, competition can be affected in several ways. Powerful buyers can bargain for lower prices, better

The success of budget airlines forced traditional operators to lower their prices by adapting internet sales and yield management techniques. However they still struggle to compete with low prices offered by the LCCs. Further reductions in traditional airline ticket prices are expected.