Lessons from Virgin Australia Essay

Open, View, and/or
Download this Document

Total Length: 2905 words ( 10 double-spaced pages)

Total Sources: 10

Page 1 of 10

How Successful was Virgin Australia?Word Count: 2586How Successful was Virgin Australia?Virgin Blue was established in the year 2000 as an airline that sought to bring low fares to a continent that was characterized by high fares. The airline first took the skies on August 31, 2000, and relied on the low fare promise as its key marketing concept (CF, 2020). The airline was established as a wholly-owned subsidiary of the Virgin Group. Since its inception, the airline remains committed to lessening the cost of airfares in Australia by half. Virgin Blue also had a strong commitment to become one of the leading low fare airlines in the country and across the globe. While the company experienced tremendous growth in the initial years of its establishment, it also experienced challenges that forced it to go into administration in 2020 because of the impact of the COVID-19 pandemic. This report discusses how successful Virgin Australia was during its life and what contributed to its going into administration due to the coronavirus pandemic. The analysis is based on Aviation Economics theories and principles and focuses on the airline’s operations in the domestic market. In addition, this report discusses the reason for the decision to transition from the Low-Cost Carrier model of Virgin Blue and the impact of Jetstar as part of the transition, and the role of Tiger Air.Brief History of Virgin AustraliaVirgin Blue started in August 2000 and succeeded as a Low-Cost Carrier until the Global Financial Crisis in 2009 where soon after it restructured to a full-service, or legacy, carrier model to be known as Virgin Australia (VA). The airline, which was founded by Brett Godfrey and Rob Sherrard, first took the skies on August 31, 2000, from Brisbane to Sidney. In 2001, Richard Branson rejected a buyout offer from the then Air New Zealand, which owned Ansett Australia. Virgin Blue then came into an agreement with Patrick Corporation to invest in the airline and promote its growth domestically to fill the void left by the collapse of Ansett Australia in 2002 (West, 2009). The airline was floated on the Australian Securities Exchange in 2003 as Virgin Group in efforts to sell down its holdings.Virgin Blue’s expansion to the international market took place from 2004 when it launched Pacific Blue. The Pacific Blue was the airline’s New Zealand-based leisure-focused international airline. It offered flights between different countries including New Zealand, Australia, Fiji, the Cook Islands, and Vanuatu. Following a partnership with the Government of Samoa, Virgin Blue launched Polynesian Blue in 2005. Polynesian Blue was an innovative joint venture airline that offered affordable and essential air services between Australia, New Zealand, and Samoa.Following the Global Financial Crisis in 2009, Virgin Blue experienced losses and a decline in market share, which implied that its future as a low-cost carrier was unsustainable. As a result, the airline sought a major revitalization to help maintain its profitability and market share.

Stuck Writing Your "Lessons from Virgin Australia" Essay?

View All Our Example Lessons from Virgin Australia Essay

Have A Custom Example Essay Written

The revitalization entailed redefining the brand in Australia to become a genuine competitor to rivals in the domestic market such as Qantas (“From Virgin Blue to Virgin Australia”, 2012). Additionally, the revitalization efforts involved rebranding Virgin Blue to Virgin Australia as part of complete brand repositioning. Consequently, Virgin Blue restructured to a full-service, or legacy, carrier model to be known as Virgin Australia after the Global Financial Crisis in 2009.The Success of Virgin AustraliaVirgin Blue was largely a successful airline in the Australian domestic market due to its effective business model and strategy. According to West (2009), VA had a market share of between 30% and 40% and competed on all key domestic routes…

[…… parts of this paper are missing, click here to view the entire document ]

…Davies, 2020). As the virus continues to spread, the airline has struggled to find a survival plan for continued operations and profitability (McMah, 2020).In conclusion, Virgin Blue was founded in 2000 as a low-cost airline whose operations were based on a low-cost business model. Since its inception, the airline has experienced tremendous growth and profitability in Australia’s low-cost air travel market. The growth and profitability of the airline are attributable to its use of sound business strategies and models. LCC business model has played a critical role in promoting the success of this airline before the restructuring to a full-service airline in 2011. As evident in this report, Virgin Blue’s restructuring to a full-service, legacy carrier was influenced by factors in the external environment, particularly the effects of the Global Financial Crisis in 2009. The adoption of a new business model played a major role in enhancing its profitability. However, the change of the business model resulted in a decline in the firm’s market share in the low-cost air travel market in Australia. Additionally, this new business strategy has failed to prepare the airline to respond adequately to the rapidly changing business environment. Following the impact of COVID-19, the air travel market has experienced tremendous changes and necessitated new business strategies for airlines. VA’s business model is not ideal for a rapidly changing business model, especially amidst COVID-19.RecommendationsThe experience of Virgin Australia provides important lessons for the aviation sector and airlines. Some of the lessons that can be learned by airlines today from VA’s experience include:· Airlines should utilize business models and strategies that are responsible and adaptable to the rapidly changing environment.· The levels of debt of a business organization should be proportional to its market share and profitability levels since excessive debt could result in collapse.· Business organizations including….....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Lessons From Virgin Australia" (2021, April 20) Retrieved June 4, 2026, from
https://www.aceyourpaper.com/essays/lessons-virgin-australia-2181173

Latest MLA Format (8th edition)

Copy Reference
"Lessons From Virgin Australia" 20 April 2021. Web.4 June. 2026. <
https://www.aceyourpaper.com/essays/lessons-virgin-australia-2181173>

Latest Chicago Format (16th edition)

Copy Reference
"Lessons From Virgin Australia", 20 April 2021, Accessed.4 June. 2026,
https://www.aceyourpaper.com/essays/lessons-virgin-australia-2181173
   

Open, View, and/or
Download this Document
order custom essay example