Virgin Atlantic
Christopher Pierre
Keiser University
Professor Jaime Medina
ECO1023

When it comes to having an interesting life or life style, one should look no further and admire Sir Richard Branson’s. He is a financially well of individual thanks to his entrepreneurship, an adventurous rock star that seems to just party and have fun every single time one sees him in the media. In order to live such a fabulous lifestyle, an individual should be able to have access to a lot of financial assets, such as credit cards, checks, and more importantly cash. In Sir Richard Branson’s case he has all that and more because of ways he created businesses and critical decisions he made since a young age and throughout his life.
Born in July 18 1950, in the outskirts of London, Richard Charles Nicolas Branson was the oldest of Edward Branson and Eve Huntley Branson’s three kids. Because of a severe Dyslexia Richard had a very painful time in elementary, he barely knew how to read at eight years old and was completely lost when it came to numbers.
“School was painful; I’d look at a blackboard and could not understand anything that was going on…Interestingly, if you look at the history of dyslexics, they often exceed quite exceptionally because they concentrate on the area where they are good at…” (Nr, 2013)
Richard Branson’s created his first business when he was fifteen years old, this business was a magazine called Student. With a circulation of fifty thousand, the magazine was an instant hit. In 1970, because of need of money for the magazine, Richard Branson being the entrepreneur that he is created a record store, where you could order the record by mail at a discounted price. It is to creating this record company that Richard Branson and his colleagues came with the name Virgin.
“…Why not Virgin, we are all virgins…and I suddenly thought I am virgin at business and I might be a virgin at other things as well, and why not Virgin…” (Richard, 2011)
In 1971 a postal strike almost closed the newly established record company. Because of this Richard decided to open a record store where people would actually come in and buy the records and other items such as headphones and water pillows mostly catering to a younger generation. Five months after opening the virgin store, Richard was arrested for tax evasion. The reason for the arrest was because he first of all sold the records at a discounted price, which he was the only store doing so in England at the time. And the way he could sell them at such price is because he had figured out a way to work around a thirty three percent record tax. Richard spent a night in jail and got bailed out the next morning because his parents had taken a second mortgage on their house. Richard Branson took full responsibility for his actions and he also had to pay a one hundred fifty thousand pounds penalty.
In order to pay off the one hundred fifty thousand pound debt Richard Branson decided to expand and venture. Being already in the music record sale, Richard decided to open a recording studio and launch a record label. The first signed group of the label, which they did not expect to do big, sold a recording sixteen million records copies overnight and that put Virgin Record on the map. Richard was only twenty three at the time and was already a millionaire. By 1984 Virgin Records was making millions, with platinum and multi-platinum artists at the time such as the Sex Pistols, Simple Minds, and Culture Club. Richard Branson had a lot of cash and was looking for ways to spend it.
One day out of the blue, Randolph Fields which was an insurance lawyer called Richard Branson and asked him to financially back him up in an airline that would go directly from England to New York. Richard agreed “… I hate travelling out of other people’s airline, and we can do it better…” (Richard, 2011)
In the beginning it was not easy for Virgin Atlantic, up against giants Such as British Airways Virgin Atlantic had to strategize a way of economically advertise itself to the world. Because of good marketing, whether regular commercials, or Richard Branson’s eccentric trips around the world, the company managed to get worldwide attention. Sir Richard Branson States that the cheapest way of telemarketing is free advertising. By doing so a new company will get the attention of the desired customer, putting out the least amount of money. And this did work for Virgin Atlantic making it the second largest long-haul airline in the United Kingdom and the third largest European carrier over the North Atlantic.
With flights almost all around the world, Virgin Atlantic is known for its affordable lengthy flights. Passengers that flies Virgin Atlantic range from celebrities to business man, tourist or people traveling for leisure. Throughout the airplanes these groups are evenly spread through different classes, meeting their economic needs. A way to attract customers, is to come with new, interesting ideas, innovation that would even make old costumers come back. When it comes to being innovative one could leave it to Virgin Atlantics CEO, Richard Branson. Virgin Atlantic is top ten when it comes to inflight entertainment. From the virgin flight till now Virgin Atlantic takes pride in the wellbeing of their passengers. First, business, or economy class, the service is excellent. Being a fairly young airline company Virgin Atlantic was ranked number fifty worldwide within the industry in 2013, regarding all around customer satisfaction. It is pretty tough especially with all the rules and regulation the company as to abide by. (N.D.)
Virgin Atlantic like every airline companies, is regulated in the United States of America by the Department of Transportation (DOT) and the Department of Homeland Security (DHS). To be more specific they have to follow the rules and the regulations through the Federal Code of Regulations (FCR). Those rules are made up as incidents happen day by day in the industry from biggest to smallest. For example, the industry was facing employees sleeping in the tower, because of that the authorities came with the rule that a tower employee has a minimum hour of sleep before working. The most recent problem is the one of the autopilot, due to advances in technology pilots, as reported, are getting lazy and letting the computers do the work for them, which makes them forget part if not all the training, which in turn might result to a catastrophe. This latest example is among many speculations regarding what happened recently with Flight 370 of Malaysia Airline. When such incidents happen the first entity to be held liable, is the airline company to which it happened. Through some thorough investigation the authorities will come to a conclusion and come up with high fines for the airline company. This sort of penalties from regulation affect any airline companies negatively because instead of being proactive and come up with scenarios to let people know what would happen in different situations, they wait until an incident occurs to come up with a new rule or regulation. (Karen A., 2014)
As far as the Department of Homeland Security (DHS) is concerned, they regulate the industry for homeland security reasons. Since 9/11 the Department of Homeland Security requires all airline flying to the United States from foreign countries to provide advance Passenger Information and Passenger Name Records prior to departure and has expanded trusted traveler programs, expediting travel for passengers who provide biometric identification and pass rigorous, recurrent security checks. ("Aviation security”)
Like every big companies, regulations would sometimes unable a company to maximize in profit because of certain restrictions. Most of those times the company’s financial advisors, due to previous trend of the company’s growth could foresee whether the company would lose or gain. All companies have what is called a SWOT analysis which basically shows the company’s strengths, weaknesses, opportunities, and threats. Virgin Atlantic SWOT analysis is not as different as many others in the airline industry except for the opportunities part since every companies are in pursuit of different goals. (Virgin Atlantic what,)
As far as strength Virgin Atlantic is known throughout the industry for its rapid success and innovative spirit. Virgin has a good customer base, they are considered to be the preferred airline of high paying consumers. They’ve also carried over five million passengers in a year. For a fairly young company they are one of the largest British Airlines with over thirty five destinations. Last but not least is the biggest part of their strength, telemarketing. Thanks to their CEO, Richard Branson is a genius when it comes to advertising his company through all sorts of venues, whether its trips around the world by air or sea, or by doing stunts in aircrafts or costumes with the name Virgin all over it.
Virgin Atlantics Weaknesses are not many but are quite threatening because of the severity of those threats. One of the threats is the competition that it automatically got into from the Middle Eastern destinations that it got into which also fly in and out of England. Airlines companies such as Emirate, Etihad Airways, and Air Arabia are what could weakened Virgin Atlantic because those companies are backed up by a lots of cash and as far as fuel probably would also have advantages to a certain extinct due from their origins. As a fairly young company, Virgin Atlantic’s presence is still globally limited especially in developing countries.
The later mentioned could be also an opportunity because already reported, Virgin Atlantic dispatch some of its representatives to countries with emerging economies and emerging tourism, including Richard Branson who recently visited Haiti for such reasons. Another opportunity is the fact that Virgin Airlines’ presence in Heathrow Airport is major, and since Heathrow is an international hub this ensure Virgin to get more passengers through the years to come whether they fly the company or not. Now that Branson made Virgin an household name, the company could go ahead and use it to their advantage in any way possible.
Threats to this company is what threatens the travel industry. Primarily with the rising of fuel cost. A change in fuel price would automatically cause a change in taxes, flight charges or surcharges, and prices of the airfare. A constant change in aviation regulations also threatens the company which have to be as flexible as possible to any change or to make any changes if requested by the regulating authorities. The rising in labor costs could also bring a rise to the airfare as well. And last the forming of new airline companies bringing new competition to Virgin would definitely be a threat to this still developing company. ("Virgin Atlantic airways”)
From a company that grew and reach success at a rapid rate, Virgin Atlantic today is facing record annual loss. From the following charts we could have a glimpse of the company’s finances.

Virgin Atlantic Airways Ltd revenue, operating profit and pre-tax profit (GBP000): 2012 and 2013 (financial year to end Feb) GBP million | FY2012 | FY2013 | change | Revenue | 2,402.1 | 2,505.2 | 4.3% | Operating costs | 2,494.2 | 2,625.5 | 5.3% | Operating profit* | -92.1 | -120.3 | 30.6% | Pre-tax profit | -98.6 | -93 | -5.7% | Pax million | 5.3 | 5.5 | 3.5% | ASK million | 49.2 | 50.2 | 2.1% | Passenger load factor % | 77.5 | 78.7 | +1.2 ppts | RASK GBP pence | 4.88 | 4.99 | 2.1% | CASK GBP pence | 5.07 | 5.23 | 3.0% |

Virgin Atlantic Airways Ltd revenue, operating profit and pre-tax profit (GBP000): 2003* to 2013 (financial year to end Feb)

Note: operating profit in FY2013 is before positive exceptional item of GBP35.4 million *2003 year to end April. **2004 10 months only (Civil Aviation Authority, Virgin Atlantic Airways, Companies House)
Virgin Atlantic Airways scheduled revenue by destination: FY2012 and FY2013 (Feb year end) GBP million | FY2012 | FY2013 | Change | % of 2013 total | N America | 1,278 | 1,334 | 4.4% | 54% | Caribbean | 230 | 231 | 0.4% | 9% | Far East | 319 | 333 | 4.4% | 13% | Africa | 304 | 289 | -4.9% | 12% | Other | 254 | 302 | 18.9% | 12% | Total | 2,385 | 2,489 | 4.4% | 100% |

Virgin Atlantic Airways development of passenger capacity (ASKs), traffic (RPKs) and load factor (%): 2003* to 2013 (financial year to end Feb)

*2003 year to end April. **2004 10 months only (Civil Aviation Authority)

Virgin Atlantic Airways international capacity by region (% of seats): 16-Sep-2013 to 23-Sep-2013

Centre for Aviation and Innovata (CAPA)
I do believe I could work for this company and also buy stocks from it. Even though in the past two years the company has faced deficit, the chief executive officer Craig Kreeger pledged to return Sir Richard Branson’s airline to profit in 2015. (Parker) By making such promise it gives present and future investors a hope. Also if Mr. Kreeger was not up for this job, Sir Branson would have not chosen him to head one of his main companies. I really feel that Virgin Atlantic stands a chance to come out of this deficit and be one of the top twenty overall airlines of the world.

Reference * “Famous People With Dylexia”. Dyslexiaonline.com * Richard , B. (2011). Loosing my virginity. (updated ed.). London, England: Crown Business. * Nr, B. (2013). Failure and success:the history of a billionnaire. London,England: CreateSpace Independent Publishing Platform * Aviation security. (n.d.). Retrieved from https://www.dhs.gov/es/aviation-security * Ed , H. (n.d.). The top five airlines for in-flight entertainment. Retrieved from http://www.independenttraveler.com/travel-tips/travelers-ed/the-top-five-airlines-for-in-flight-entertainment * Karen, A. (2014, March 13). Interview by C Pierre []. * Virgin atlantic airways' track record of losses: partnerships should help. cost cutting would. (n.d.). Retrieved from http://centreforaviation.com/analysis/virgin-atlantic-airways-track-record-of-losses-partnerships-should-help-cost-cutting-would-129215 * Virgin atlantic what when where who why. (n.d.). Retrieved from http://www.virgin-atlantic.com/en/us/allaboutus/ourstory/forstudents * Parker, A. (n.d.). Virgin atlantic chief vows return to profit. Retrieved from http://www.ft.com/cms/s/0/970cdbca-be22-11e2-9b27-00144feab7de.html