With Virgin America recently expanding its service to include flights to Philadelphia its clear that the airline is in rude health, much to the delight of Richard Branson. On a recent trip to America the Virgin Group founder talked to CNBC about how his airline has managed to succeed in a market where so many others have failed, giving five key pointers which can be applied to any business sector:
1. Improve the quality of service
Richard Branson explained that the reason he set up Virgin America was to offer Americans a better quality of air travel, there would be no point in offering a customer a new service that doesnt give them something superior to whats already in the market. One of the key ways in which Virgin has succeeded is entering into markets where customers are being badly failed and offering them an alternative. You need to better what's already out there.
2. Good quality equipment
US Airways doesnt have any plugs for plugging in your equipment, no entertainment system. But with Virgin America, we have the kind of airline that people from Philadelphia and the West Coast enjoy to fly and I think well do well on this route, explained Branson. The Channel 11 service on Virgin America, which has original content from Virgin Produced, is a great example of the different approach Virgin takes.
3. Dont nickel and dime your customers
Virgin likes to come in to businesses where people are being nickeled and dimed and where the quality of services is pretty dire. Whats happened in America is you have got these enormous airlines that are getting bigger and bigger and, now, the last thing they seem to think about is quality of service. In every other industry in America - hotels, restaurants, clubs, et cetera - quality is of paramount importance. However on a competitive basis, the airlines play into our hands, the more they make decisions like this which the public dislike.
4. Welcome competition
Consolidation is not good for the consumer and its incredible that the competition authorities keep allowing it to happen. In Britain, in their wisdom, the Competition Authoriy has just allowed British Airways to take over British Midland. You wonder how they got the title, Competition Authority. A competition authority should be telling airlines to compete and if you dont compete successfully to go away so you can make room for new up and coming companies with better ideas. You shouldnt be able to be propped up by getting together with an even bigger carrier and then being able to monopolize and put fares up because you have no competition. Its madness in whats happening in the airline industry in the last five years. Virgin was able to make its name in the UK by going up against British Airways, who at the time had a virtual monopoly.
5. Let dead companies die
You have this bizarre thing in America where if a company goes bust, it doesnt actually go bust: it goes into Chapter 11. It screws its competitors by screwing its creditors, comes back out of Chapter 11 and then most likely goes back into Chapter 11 again few years later. Continental has been in chapter 11 four or five times. Theres not one carrier in America that we competed with over the last 25 years that hasnt gone bust, at least once. Generally four or five times.