Another reason for Virgins success has been their closure of gap 3. Employees have been able to deliver the high quality service desired by customers. For example, Virgin employees are taught to serve the “Virgin Way,” they realize that they are not a bus service, but a memorable experience in the sky. They are not just there to accommodate guests; they are part of each customer’s experience and have the opportunity to turn each trip into an outstanding experience. Although airline stewardesses have a tough job filled with emotional labor, the stewardesses at Virgin are so committed to the “Virgin Way” that instead of focusing on small issues, they see the larger picture, exceeding expectations of the customer. Virgin has realized the importance of service employees and has worked hard to hire the right people who fit into their vision.
Now that Branson wishes to expand Virgin, he should draw on the customers and employees that have become loyal to his company. Virgin should not change the service they offer or their atmosphere in anyway. The off and onboard ambiance is what personifies Virgin and keeps its customers loyal, despite Virgins’ timeliness issues. They operate a successful long-haul international carrier and they must be sure they do not lose quality as they expand to serve more locations.
Market research should be conducted to see which new routes customers would value being added to the Virgin line. A survey should be formed and sent out a measurable market. By defining a measurable market, Virgin will be able to recognize the markets needs and periodically assess how they are serving that market (which will be useful once the new routes are established.) This market should encompass everyone in the Virgin Freeway travelers’ program. Targeting the frequent travelers would ensure that the research is gathered from the target market and also let those customers feel like they are part of the company.
Additionally, the surveys should be distributed amongst employees to reinforce and confirm their ownership within the organization. Until this point in the case, the culture of Virgin had been open and flat. They had a loose organization and a high level of communication and interaction within all levels of employees. This culture was fostered by Branson who gave his home phone number to all staff members and encouraged them to call him at any time with suggestions or complaints. It was this investment in employees that lead them to love their job despite the fact that Virgin paid relatively low salaries. Letting employees have a say in new routes will only reinforce this culture by showing them that management really does care about their suggestions. Virgin employees were highly satisfied and so were their customers, thus the groups fed off each other to produce profits for the company (figure 11.3).
The surveys distributed to these two groups should be used to determine two major issues; which city they should expand to and second when the customers would most use this route and for what purpose (business/pleasure).
The survey should be concise, asking employees and customers which of the following routes they would most desire service to (Washington D.C., Chicago, Auckland, Sydney or Johannesburg), how often they travel and how often they would use the new route/s. An extra questions should be added to the customers’ questionnaire to find out why customers chose the routes they did, was it for business or pleasure? After this data is compiled and combined with industry trends, Branson should roll out the top three routes in a progressive manner using the same flashy advertising he is famous for.
Execution
With the addition of three new routes, Virgin needs to insure that they are able to maintain the high load factors that they pride themselves on. To accomplish this, they should use yield management methods to determine their optimum capacity for cargo and passengers. For passengers, this data could be accomplished by analyzing the seasonal travel trends from previous years in addition to monitoring their competition in those new markets. To determine the amount of space needed for cargo, Virgin should approach their frequent customers to see when their peak cargo times are. Additionally, they should work closely with travel agents and brokers (1994 was pre-internet travel boom), selling them blocks of seating so that they are able to reach or come closer to the optimum capacity on each flight. By working with travel intermediaries such as tour packagers, retail travel agents, and specialty channelers as well as with the cargo industry, the Virgin sales department will be positioned to match their capacity with demand.
Another way to manage their capacity is to shift the demand to meet capacity on all flights. By following the suggestions in figure 14.3, Virgin will be able to manage their demand and capacity during peak travel times and also slower times. First, a computerized reservation system should be created that constantly tracks the capacity on each plane. This system will be pivotal in determining trends facing capacity and demand.
When the demand is high, Virgin could offer incentives to customers who are willing to travel during non-peak times. Additionally, there could be an express check in for all Upper and Middle Class flyers to eliminate the waiting time and buildup at the ticketing counter. Finally, during peak hours, no discounts should be accepted or offered because that would only encourage people to fly during already busy times.
Although shifting demand could help Virgin manage their capacity, the must realize that it will mostly apply to pleasure travelers since business travelers are usually not able to shift their needs as they please. To account for this, the blocks sold to travel intermediaries should be lowered during peak times to allow more space for pleasure travelers and last minute business travelers.
An issue that may surfaces while managing capacity is Virgins pricing scheme. However, looking at exhibit 9, their closest competitor has higher prices for the majority of their flights. Therefore, if Virgin raised fares during peak times, it is feasible to believe that the other airlines would be doing so as well and not cause hardship for Virgin.
Conclusion
At the time of this case, Branson managed a successful airline company with a unique corporate culture. The arrival of a new decade is perfect timing for new routes to be offered. However, for its success, Virgin must pay close attention to internal happenings as well as expansion. They must insure that their corporate culture is not diluted during the expansion. Sometimes when a company expands, their distinguishing factors are muddled and the profitability and well being of the company declines. Virgin Atlantic Airways is built on its originality and attentiveness to customer desires. Without those factors they are nothing more than their closest competitor.
