AD 104/ Final
Individual Assignment
Due: June 10, 16:30
Virgin America: Flight Service for the Tech Savy
After an exceptionally frustrating day at the office, Jessica set out to unwind in
one of her favorite third places. The mood lighting immediately brought her
blood pressure down as she walked in and took a deep, relaxing breath. She was
happy that her favorite spot was available—a comfy leather chair in the back
corner of the room, where she used the touchscreen at the table in front of her
to order her favorite drink. Then, putting on a set of noise-canceling headphones,
Jessica began catching up on her favorite TV show with her own personal
entertainment portal.
If this sounds like a local Starbucks or trendy nightclub, think again. Jessica had
just boarded a flight on Virgin America, one of the youngest airlines in the United
States. It’s also the hottest airline, besting all competition in various industry and
customer surveys. And after just six years in business, Virgin America also
reached profitability faster than any other airline in all of airdom.
How does a startup airline break into one of the most competitive industries in
the world, notorious for barriers to entry? For Virgin America, the answer is two-
fold—by putting customers first and by targeting the right customer segment.
Targeting the Right Customers
Virgin America first took to the skies in 2007. This wouldn’t be the first shot at
starting an airline for Richard Branson—founder of parent company Virgin Group.
Virgin’s international airline, Virgin Atlantic, had been crossing the pond between
the United States and Europe since 1984. But Virgin America would be an
entirely independent enterprise. And while Branson and other Virgin Group
executives make no day-to-day decisions at Virgin America, the unorthodox
Virgin culture—fun, creative, even whacky—is unmistakable.
One of Branson’s core values that permeates Virgin America is this: Take care of
your people first and profits will follow. In an industry characterized by customer
complaints about service, it would seem that a customer-centric approach would
be enough to gain a foothold in the market. But when Virgin started air service in
the United States, at least a few other airlines had already established
themselves based on a “customer first” mantra, including industry leader
Southwest Airlines. And Virgin America knew that it could not expect to succeed
by playing the low-price game. Not only was Southwest the reigning champion
on 2 value, but the bulk of airline competitors were already beating each other
up for low-price dominance.
Virgin America found a different competitive hook. It targeted a segment of
frequent fliers who were young, savvy, influential, and willing to pay just a little
bit more for an airline that would take care of them—the Silicon Valley faction.
By providing exceptional service and amenities that appeal to this particular slice
of airline customers, Virgin America has been able to charge slightly higher fares
and still establish a growing base of fiercely loyal patrons.
Homing in on the Details
Offering unique amenities in the airline business is a challenge for any company.
But from the beginning, the Virgin America experience was designed with its
target customer in mind. Its fleet consists of 61 Airbus A300 series planes, each
brand new when it went into service, minimizing the unexpected delays due to
maintenance and repairs. Custom-designed leather seats are roomier and more
comfortable than average coach seating. And that mood lighting? Not only does
it bathe the aircraft cabin in an appealing purplish glow, it automatically adjusts
to one of 12 different shades based on outside light.
To appeal to tech gurus, Virgin America focused on equipping its planes with the
latest hardware and software. From day one, Virgin was the only domestic carrier
