Despite Virgin America’s numerous awards, acclamations and recent success, the airline is still not classified as a major carrier by the Department of Transportation (DOT). To be considered a major carrier, an airline must achieve $1 billion dollars in operating revenue and meet the Department of Transportation’s requirements on baggage handling, on-time performance and other operational statistics. Virgin America currently operates 39 Airbus 320A aircraft to 14 destinations around the United States and Mexico. According to the 2010 financial statements, full year operating revenue was $724 million, a 32% increase YOY. They are the recent recipients of several customer service awards such as: Air transport World’s Industry Achievement Award (2010), Best Domestic Airline (2008, 2009, 2010), Best Business/First Class (2008, 2009, 2010), and Most Eco-Friendly Airline (2010). Virgin America commits itself to a sustainable business model, discovering new and innovative ways to combat climate issues and support community projects. Virgin America is the only airline to document carbon footprint via the Climate Registry’s accepted standards and is 25% more fuel and carbon efficient than the average fleet in the U.S. As a major carrier, brand recognition is stronger and access to more destinations and airports is attainable. Achieving “major carrier” status is crucial to Virgin America’s sustainability. To achieve this designation, several options can be implemented:
Expand destinations internationally to increase revenue.
Acquire a smaller airline company.
Focus on expansion in domestic niche markets by adding aircraft and destinations. The recommendation for Virgin America is to implement option number three. By focusing on expansion domestically, the airline can expand in a niche market without sacrificing their emphasis on customer service and amenities. In order to implement this strategy, Virgin America must focus on three core strategic imperatives: expand domestic destinations, increase fleet size to 60 new airbuses A320 by 2013— continued revenue growth will fund this expansion, and execute an effective marketing campaign based on the “Green Movement” without losing focus on customer service and innovation. Investments in more fuel efficient aircraft will help reduce costs and the savings can be reinvested into R&D of renewable fuel sources. Lastly, the expansion would increase Virgin America’s workforce, providing additional jobs and stimulating growth in the economy.
Case Study Report
Virgin America continues changing the ways of domestic travel with its continuous innovations. Headquartered in California, the airline company has received the highest overall scores of any U.S. airline in the survey of over 8000 frequent flyers. With outstanding service, beautiful design and a host of high-tech amenities, Virgin America has captured a list of industry best-in-class awards since its 2007 launch. (Virginamerica.com) The airline took top honors for the third consecutive year for best service in the “Midsize Domestic Premium Class” and “Midsize Domestic Economy Class” categories. (Virginamerica.com) While remaining focused on their status as one of the top airline companies worldwide, Virgin America is looking to take their services to another plateau. Virgin America is aiming to become a major airline carrier. The airline can achieve this designation by reaching $1 billion dollars in operating revenue and meeting the Department of Transportation’s requirements on baggage handling, on-time performance and other operational statistics. Virgin America currently operates 39 Airbus 320A aircraft to 14 destinations around the United States and Mexico. According to the 2010 financial statements, full year operating revenue was $724 million, a 32% increase YOY. Virgin America’s main obstacle in achieving this distinction is the fact that Virgin America only...
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