Virgin America
Executive Summary
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:
1. Expand destinations internationally to increase revenue.
2. Acquire a smaller airline company.
3. 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
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:
1. Expand destinations internationally to increase revenue.
2. Acquire a smaller airline company.
3. 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
References: BLS.gov. (2011). Regional and State Unemployment: 2010 annual averages. Retrieved from http://www.bls.gov/news.release/srgune.nr0.htm Smith, P. (2010). Who benefits when airlines merge? Retrieved from http://nytimes.com/2010/05/04/who-benefits-when-airlines-merge/ Smith, P. (2010). Southwest looks likely to gain sway over Boeing . Retrieved from http://.wsj.com/article/SB10001424052748704654004575518293648206492.html Virginamerica.com. (n.d.). Virgin America corporate fact sheet. Retrieved from http://www.virginamerica.com/html/virgin-america-corporate-fact-sheet.pdf Virginamerica.com. (2011). Virgin America reports fourth quarter and full year 2010 financial results. Retrieved from http://finance.yahoo.com/news/Virgin-America-Reports-Fourth-prnews Virginamerica.com. (2010). Virgin America rated number one U.S. airline in 2010 Zagat survey. Retrieved from http://www.virginamerica.com/press-release/2010/virgin-america-2010-zagat-survey.html Virginamerica.com. (2008). Virgin America launches new national ad campaign. Retrieved from http://www.virginamerica.com/va/press/2008/Feb/National-Ad-Campaign.html Virginamerica.com. (2010). Start-up airline reports strong performance in second full year of operation . Retrieved from http://www.virginamerica.com/va/press/2010/Apr/pressRelease_20100422_Q409_Financials_VA.html Virginamerica.com. (2011). Virgin America places airbus’s 10,000th order: signs firm order for 60 new aircraft, including first order for eco-efficient a320neo. Retrieved from http://www.virginamerica.com/press-release/2011/Virgin-America-Confirms-Order-for-60-New-Aircraft.html