Virgin Atlantic
Background
Virgin Atlantic Airways is Britain's second largest airline, catering to 26 destinations covering all major cities in USA, Caribbean, Asia Pacific and Africa. The airline boasts of one of the world's youngest fleets of 32 aircraft with a current average age of 5 years and 10 months. It was founded in 1984 as an offshoot of Richard Branson's Virgin Group, which was better known at the time, as a leading light in the world of pop and rock music. The Virgin Group has 350 companies including health clubs, hotels and mobile phone businesses in different parts of the world including UK, Australia and Africa.
Virgin Atlantic has shown phenomenal performance in the last year. It had a pre-tax profit of around US$
83 million on a turnover of around US$ 2 billion for the year ending February 2005. This is the company's highest profit figure since 1999. During the 12 months to February 2005 the airline carried 352,095 Upper Class passengers, an increase over 279,714 of the previous year, with its Upper Class load factor at 56 per cent. Virgin Atlantic has recorded a 26 per cent increase in Business Class passenger numbers in the
12 months to February 2005 over the corresponding period in the previous year.
Virgin Atlantic in India
Virgin Atlantic began operations to India in July 2000 with twice-weekly Delhi-London services. Virgin further added weekly flight on 27 October 2003, thereby operating thrice - weekly services on the Delhi-London route. The airline launched daily services on the route with effect from 1 February 2005.
Operating on a code-share agreement with Air India till November 2004, now Virgin flies into India on its own rights. Since 2000 the airline has flown almost 2,50,000 passengers between London and Delhi.
In March 2005, the company expanded its India route network/footprint with the launch of Mumbai operations mounting three weekly flights from Mumbai to London (Heathrow). This new service was most timely, as the route had previously been significantly under served. A large proportion of passengers had been forced to travel through other Indian cities or through other countries, extending their journey time and making their travel inconvenient. Presently, Virgin
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Atlantic operates 10 flights every week from India to UK. Virgin Atlantic is keen on increasing its flights to 14 every week by the end of 2005.
Leveraging the India Advantage
Growing Potential
Virgin Atlantic sees huge potential on the India-UK sector. Close to 1 million passengers travel between India and UK every year. Till last year, half the passengers were flying indirectly via third countries due to unavailability of direct flights on the route.
There was a need gap that offered great potential for Virgin to expand its operations. Moreover, the number of passengers flying to international destinations is growing every year with the increase in per capita incomes, socio-economic changes, increase in ‘lifestyle spends’ and a plethora of choices available to consumers. According to a 2005 KSA Technopak study on consumer outlook, there is a clear growth of 20
per cent in ‘lifestyle spends’. Within two years of operations in India, Virgin had achieved a 15 per cent market share on the India-UK sector, and an increased load factor of 74 per cent. With enhanced operations and flight frequencies, Virgin currently enjoys approximately 20 per cent market share.
Capable Manpower
Virgin Atlantic has employed Indian personnel for its operations out of the country. The company has around 160 employees with two offices (Delhi and Mumbai) in India. Virgin has employed a substantial number of Indian cabin crew for its India operations who speak in both English and Hindi to facilitate their Indian passengers travelling on the route.
Superior Value for Money
The Indian consumer today has evolved and is seeking higher quality of services at a value for money price, as a result, most of the airlines are removing their
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first class and packing in value added features in their business class to satisfy the customer needs at an affordable price. Virgin, first pioneered the concept, by introducing its Upper Class, marketed as a first class service at a business class fare in 1984.
In India Virgin Atlantic operates a three class system:
Upper Class (the airline's business class), Premium Economy Class (a full fare separate economy cabin) and Economy Class (at economy fares). Further, Virgin Atlantic is planning to introduce its revolutionary product, Upper Class Suite, in India by the end of this year. All these classes are aimed at providing maximum value for money and an ‘absolute pampering’
experience to its customers.
Differentiated Services
Virgin Atlantic provides differentiated services to its
passengers like in-flight entertainment, individual seat- back TVs throughout the flight, special movies, varied choice of music, games and menus for children etc.
The company in fact has been a pioneer in offering innovative in-flight services such as an beauty therapy, onboard bar, freedom menu, exciting shopping, massage therapy, chauffeur pick-up and drop for Upper Class passengers. These services differentiate Virgin Atlantic from other airlines and ensure that it delivers on the promise of pampering its customer.
Planned Approach
The company has worked painstakingly to understand the regulations, procedures and systems in India and has been sensitive to them. It has been proactive in anticipating potential procedural or regulatory delays by planning its strategy well in advance, and more importantly, keeping such sensitivities in perspective
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Virgin Atlantic India: At a glance
• Virgin Atlantic: Britain's second largest airline.
Turnover of US$ 2 billion in 2004-05
• Virgin Atlantic in India: Present since 2000.
10 flights per week. 20 per cent market share on India-UK sector
• Flown 2,50,000 passengers since launch.
• For Virgin Atlantic, India is: world’s second largest growing market
• Factors for success: Brand value, Differentiated service, Great commitment to the market. Flying Virgin Atlantic is an experience!
• Future plans, India: To consolidate and expand the operations further, to become the most preferred choice of customers on the route
while implementing them. Virgin is committed to the Indian market and has been very focused in its plans to expand operations in the country, considering the growing potential in the market.
Future Plans
India is the second largest growing market in the world and Virgin Atlantic is looking at expanding its operations in India. The company is looking forward to double its daily services to Delhi and Mumbai, besides extending its services to at least 3-4 more destinations. Flights to Bangalore, Hyderabad and Ahmedabad are also in the offing, though the current focus is on consolidation of operations and increasing market share in Mumbai and Delhi. The Virgin group has interest in the financial services, health club and music sectors. The group also considered the possibility of investing in a domestic airline in India. However, with the changes underway in Government of India regulations, the Group is reviewing its plans.
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