Virgin Australia Competitive advantage

Document Type:Thesis

Subject Area:Business

Document 1

Currently, Virgin Australia is the second largest of Australia’s airline's company after Qantas. Virgin Australia based in Bowen Hills, Australia, began its operations in 1999 as a low-cost carrier but changed its business strategy to focus on offering premium services (Whyte et al. In May 2011, the Virgin Holdings Company changed its name from Virgin Blue to Virgin Australia as a business strategy to become more competitive in the country. Traveler. com writer Matt O’Sullivan in his article “Virgin Blue gets a new name” termed the strategy as a move to try to reflect a more conservative approach on the Airline’s brand in efforts to get a more significant market share in the lucrative travel industry and to recover its flagging fortunes (Traveller. com, 2018). The airliner has set itself as a leader in developing new business strategies to become one of the best airlines in the world and at the same time ensuring it maintains a competitive advantage regarding customer experience. This essay will evaluate the airline’s organizational resources, competencies and strategies capabilities and its contribution to its competitive advantage and make future recommendations Virgin Australia can improve on. Analysis of the internal markets Market structure The Australian domestic flight industry has been subdivided into three sections based on the service areas; the capital, regional and air freight services. The first section is the passenger in the capital city. This is the biggest portion of industry which provides the largest revenue and costs for the airliner accounting for 74% of the costs and revenue.

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The second category is the passenger air travel sector regionally. This entails the regular basic carrier service to regions or states and accounts for a quarter of the company’s revenue of 21%. The third category is the air freight carriers. This accounts for 5% of airline revenue, but it’s a significant profit since the marginal costs for freight services are lower than the marginal profits (Cameron, 2011). Resources Virgin Australia is well financed because of its direct association with Virgin Group. It has formed strategic alliances with Etihad Airways and Singapore Airlines to increase its market share for leisure travelers. The airliner has sufficient resources which can propel its growth as its competitors face financial challenges. Virgin Australia has a huge debt and consecutive annual losses with the 2016/12 financial report indicating $220 million in losses.

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Following the bond issue of $300 million on the international markets, Virgin has enough cash at hand accounting to $300m (centreforaviation. The challenges facing Virgin Australia’s direct competitors are space that the company could seize to become competitively advantaged. The internal market analysis concludes that there is an opportunity for Virgin Australia to reposition itself as a true Australian brand with an Australian personality. Virgin Australia boasts of wide corporate sustainability by engaging with the Australian communities like the employees, customers, national and local groups in addressing environmental impacts. Virgin Australia is working with SkyNRG in Brisbane to develop a renewable jet fuel sport. Strategic capabilities The Virgin Australia capability which aims to deliver great products at the moment is secure. Qantas efforts to maintain a better customer service advantage has resulted in its weakest cost structure among the three competitors.

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Virgin Australia has the advantage of being able to squeeze itself from Qantas and Tiger Air acting independently. Competitive advantage According to Centre for Aviation (CAPA), Virgin Australia airlines competitive advantage lies in its good brand image and innovativeness. The strong Virgin culture has been recognized for its quality, fun working environment and value for money. The company has been successful over the years registering growth in most of its businesses. To achieve this goal, Virgin can create an emotional bond between the product and target segments through advertisements. Cost leadership Virgin Australia is facing the challenge of lowering the cost structure effectively. The company aims to lower cost by $770 million with the next three years. The fluctuating oil prices have been an advantage to the company, but this is not a permanent cost reduction strategy.

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Virgin Australia should stop flying the old A330s to reduce repairs and oil consumed by the old engines. Grant Martin of Forbes describes the key features which include longest and widest lie-flat beds, HD screens featuring with modern entertainment system, individualized cabin crew. Virgin Australia should ensure this program goes on as planned because it will give the company a competitive advantage over its competitors (Forbes. com, 2018). Competitive advantage Virgin Australia should market the maverick. Marketing the Virgin Australia gives it a more Aussie look, that is, a more Australian personality than their competitors Qantas and Tiger. In Advances in hospitality and leisure (pp. Emerald Group Publishing Limited. CAPA - Centre for Aviation.  Virgin Australia targets cost reduction, improved yields. A group strategy presents opportunities. cameronhorn. com/uploads/2/7/1/1/27117989/virgin_australia_competitive_intelligence_report_2011.

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pdf Forbes. com.  Forbes Welcome.

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