Transformation of Virgin Australia from Virgin Blue
Virgin Australia is unique in its path of transformation. The potential to swiftly respond to the changes that appeared in the airline’s operational environment is perhaps the critical factor that facilitated a successful transformation of this airline.
Essentially, the development of the Virgin Australia is explained in two forms: rapid change to the unforeseen events and planned response to the events that the management had long identified through the understanding of the operational environment (Chen, 2012). The business model adopted by the Australia airline paralleled that of other low-cost airlines such as EasyJet, Ryanair, and Jet Blue. The initial operational plans of the airline were to develop a national network founded on the Low-Cost Carriers (LCC) model, but the environmental changes created a rapid response to reevaluate the operational strategies of this company.
Virgin’s market entry occupied the gap that was due to the failures of previous LCC carriers. Therefore, to create a center of uniqueness from the rest competitors, the management deliberately focused on fostering the image of “cheekiness” along a youthful appearance. Among the alterations made includes the advertising header of “harmonizing the airfare” to be agreeable with the travelers needs for low-cost air travels (Lewitowicz, 2010). Still, never before had any other airline transportation company introduced one-route fare in Australia. Thus, the Virgin Blue took the direction of Sir Richard Branson’s other Virgin brands since they were assumed as the ‘primary holders of the consumers.’
With the collapsing of Ansett, the Virgin Blue occupied the gap created, becoming the nation’s second best carrier. In 2009, Virgin Australia commenced its operations between Melbourne and Johannesburg. Due to the competitions surrounding the Atlantic regions, Virgin Australia entered into the code-share agreement with Singapore Airlines (SIA) to further strengthen its airline global presence.
Brett Godfrey, the co-founder and first CEO of Virgin Airlines developed a business model that saw the company boasting 30% market share and a rapid growth of staff from 300 to 2800 within three years. Brett employed the strategy of price leaders and cheeky maverick to boost the airline operations across the Atlantic countries. The penetration of the company in the international market was retaliated by the invasion of the Qantas. However, Brett devised an ‘encirclement” marketing strategy that worked against the competition presented by the Qantas and other airplane industry at that time. By the time Brett Godfrey was resigning in 2010, the Virgin Blue had grown considerably from LCC to an FSA (Lewitowicz, 2010).
The incoming CEO, John Borghetti created a ‘game changer,’ a game plan that focused on modifying the previous operation behaviors of the company, with the interest to boost the performance of both domestic and international markets. Borghetti focused on integrating the Virgin’s subsidiaries into Virgin Australia brand but without including the Polynesian Blue since the Samoan government partly owned it (Chen, 2012). He made reshuffles on the former team, with his management comprising of young and innovative leaders, experienced and positive persons. The lounges of the airline were upgraded to match them with the corporate style offered by the Qantas. The transition was also evident through a new more formal wardrobe for the flight attendants and changes in the livery and the interior designs. Aside from the Brett’s approach, Borghetti believed that changing the appearance of their airlines would be effective means of building new markets.
Since leadership transition, with Borghetti as the new CEO of the Virgin Australia, the company has been able to exploit airline liberalization and modifications in the operating environments. This approach has assisted in developing its business operations by capitalizing on opportunities in both the domestic and international markets, and identifying several approaches that have resulted in a sustained pattern of growth. The Virgin Australia has a strong culture based on the worldwide phenomenon where people recognize it through the quality of services, ability to challenge for new fun environments and the value of money. To sustain such a culture, the Virgin Australia focuses on making right recruitment for different positions. In fact, the company is among the prolific spenders on recruitment, hence building optimistic, enthusiastic and perfectionist team.
While Borghetti believed in changing the appearance of the carrier and building the management around a competent team, Branson believed in monitoring the external markets. In this case, the external business environment was assessed outside the intermediate operation environment. Accordingly, the Australian aircraft business was upgraded enormously since the airplanes were reaching a diverse market.
Branson also perceived different approaches to sustaining the operation advantage over the Qantas. While small retail shareholders typically held the Qantas shares, Branson institutionalized the company in a mix that comprised of large institutions such as Etihad Airways, Singapore Airlines, and the Air New Zealand. “Partnership with the Singapore was an important step to enable the company market its brand to vast regions across the globe” (Ind, Fuller & Trevail, 2012).
Concerning working with competitive persons within the industry, Branson perceives that passion in the task is a necessity. He implemented transformational management systems, where the best candidates would fill different positions. It is the same reason he replaced Brett with Borghetti. Branson acknowledges Borghetti as passionate and determined to maintain the competitive advantage of the company above the Qantas Airlines.
Lewitowicz (2010) shows that Virgin Australia is climbing the global ranking, been crowned with a prestigious Skytrax World Airline Awards in 2012. Still, the company improved its ranking from positions thirty-two to twelve in the same year. Rebranding and repositioning of different products have changed the operations of the Virgin Australia, putting it in pole position to overtake the Qantas in the domestic market. Again, the possibility of attaining this level has advanced with Virgin Australia replications and improving Qantas products, portraying an image to providing better services. Initially, the Australian domestic market was unable to support two Full Service Airlines (FSAs) and Low Cost Carriers. In fact, Ansett was not able to survive the deregulated environment, therefore, collapsed. With the Virgin’s ability to respond to the modifications of the external environment, this company is unlikely to face demise similar to that of Ansett (Ind, Fuller & Trevail, 2012).
Virgin Australia is also renowned for offering diverse destinations, thus significantly supporting the tourism industry. It falls in the same category with Air New Zealand, Etihad Airways and Singapore Airlines in providing the best transport services in Europe, Australia, and Asia countries. The Australian destinations are 40 while the international destinations are above 20, including USA, Indonesia, Fiji, and Thailand. Virgin Australia operates both short haul and long haul destinations covering services at domestic, regional and international levels.
In fact for the fourth consecutive time, the Virgin Australia has been acknowledged with the ‘Best Airline Staff Service’ in the world. Virgin Australia also won the Best Food and Beverage Passengers Experience in 2011. Currently, it is the second best airline in Australia, with the richest growth in the number of the customers across the world.
The Corporate Reputation Index indicates that Virgin Australia has the most devolved approach to explore new external markets across the world. This goes along understanding the strategic planning behaviors; therefore, making decisions whether to consider repositioning of the brands into higher-priced markets or lower-priced markets.
Chen, J. S. (2012). Advances in hospitality and leisure: Vol. 8.
Ind, N., Fuller, C., & Trevail, C. (2012). Brand together: How co-creation generates innovation and re-energizes brands. London: Kogan Page.
Lewitowicz, J. (2010). Uncertainty and Dependability of the Risk Model Applicable to Operation of Aircrafts. Journal of Konbin, 13(1). http://dx.doi.org/10.2478/v10040-008-0159-7