Virgin America Airline Operations
Virgin America Airline Operations
Introduction
Airplanes are usually scary and equally expensive to a number of people. Under most occasions, people depend on road and rail to travel. These are the most affordable to many people. However, there are situations when one has to use air to reach a given destination. Comfort is very important especially when someone is paying a lot to use a given service. In America Virgin America Airline Operation is a renowned company. It is headquarter is based in California. In addition, the airline operates in many countries. The idea behind Virgin America Airline Operations was introduced by a British entrepreneur known as Sir Richard Branson. This was in the year 2004 when the idea was discussed. However, it was implemented in 2007 with the aim of making it affordable to most users. The other objectives of the airline were to provide quality air services at low rates for long and short distance travelers. The paramount base of operation is San Francisco Airport. However, due to various challenges, facing management of the airline company, there was a fall in the operations. This situation triggered an alarm that something was to be done to make things better.
Challenging situations faced by Virgin Airline operations
It is logical to state that people get poor airline services because they do not want to spend a lot for good services (Yglesias, 2012, para.1). Therefore, Virgin Airlines took the initiative of making a risk to provide services at a cheaper cost. This was to attract customers within America but putting in mind that they should make profits. (Smallen, 2013, para. 3). Considering that concept, Virgin Airlines had to work extra hard to maintain their excellent services. However, due to federal regulations on an approximate air charge limited price competition. It is common that most people will go for the least affordable services but in the end demand for proper service delivery. Tight regulations by a state or government hinder competition. The treason being people will be at per in terms of sales. Therefore, it is vital to consider deregulation in order to have price competition. In spite of being known for its well-established services, Virgin America is not considered financially stable. For example in December 2011, Virgin America airlines registered huge loses worth billings of shillings (Credeur, 2012, para. 3). The Economy of the US had broke loose. Inflation rose high making things expensive. Like any other airline company, Virgin was faced with the challenges of maintenance. Statistics pulled out that some employees were laid off for voluntary work because the airline could not manage to pay them effectively. On the contrary, it is approximated that San Francisco base alone posted a loss of USD3.3 million. There are certain times when people properties get lost in the airplanes. This is enough to show mismanagement of property by the airlines (Silberman, 2011, para. 4). Therefore, it has been frustrating for the company to find ways of raising revenue especially when there are high loses experienced. To control the situation Virgin had to make up their mind and make a stand. For example, they opted to close one operating line. They closed 3Q due to insufficient funds and use the available resources to become stable. Considering the nature of economic downfall in the US the company opted for deregulation. Their main goal was to encourage price competition. They removed some taxes to make their fare charges bearable (Maximize monday: Choosing the best site and credit card for purchasing airfare, 2013, para 2). In addition, they reduced number of employees on a temporary basis to cut some costs. Seasonality problem also faces Virgin America Airline Operation (Virgin America closes 3Q facing stiff headwinds for 2012, but still breaking even, 2011, para 24). This can be experienced in Toronto bas where the demand for business thirsty travelers was miscalculated. Therefore, there were times people could not get tickets at the required time due to insufficient planes. In order to correct this problem, the need for reducing certain aeroplanes in bases where demand is low to high demand areas could benefit the company. This would increase their profits or maintain their revenue as desired. More to that, other side businesses like hotels and restaurants should be equally affordable for the travelers or other people who want to enjoy their services. This can be a shortcut of paying certain dues incase of any shortcomings in their plane services. The need for proper management by the financial body is a concern. When funds are mismanaged, the company can easily go down. Therefore, a reshuffle in the financial team should be considered. This will give a picture of what happens when different employees are placed in that department. Therefore, the route taken by the Virgin Airlines to correct their problems will put them in a better position to increase their revenue. In addition, it is predicted in the next decade that more people will venture and sign supper deals with the company to increase their flight modes.
Issues experienced within the Airports
There is never a short cut to success. Hard work and determination is the key. Considering the situation faced by Virgin American Airline Operations, several factors are involved that contribute to their failure in service operation. According to a route map designed in June 2012, it reveals that the airline operations work in many states within America. There are approximately 28 stations that the airline operates (Virgin America attempts to strike a challenging balance between growth and achieving profitability, 2012, para 5). The route structure can be challenging due to seasonal demand. With the attempt of building an economy of scale the problem of cost benefit ratio may be at stake. The reason being, more costs are incurred than the revenue got. Most people prefer paying less to get premium services. This is not logical in c business focus. Therefore, with the use of comparative advantage, it would be proper to determine need for differentiation and niche focus. The two strategies should fit within the goals set by the company. For example, Virgin America Airline operation’s objective is to provide affordable flights to the people. In order to compete with other airlines they should find a unique way of doing so. This can be in terms of providing restaurants and affordable sleeping lodges for the people. This can be uses by anyone to increase profits. Considering the niche focus strategy will enable the airlines aware of seasonal demands. Therefore, it will be easier to realign the number of airplane in different routes. In addition, encouraging international flights can benefit the company. For example, many people like to go to on vacations to other countries for tourism purposes. Kenya, Zanzibar Egypt has wonderful scenery. Therefore signing a contract with these countries that can allow them to operate in these areas can increase their revenues. Like any other airline, Virgin airlines encourage airport hubs. The reason being taking a direct flight is expensive. On the other hand, it is costly to the company if the passengers are few. Therefore, introduction of more hubs can handle the situation of reducing costs. They can have contracts with other countries that deal with international flights. Connecting passengers with trusted companies can reduces fuel costs and eventually increase revenues. Strategically the airline hubs should be located in the busiest and biggest airports. Virgin airlines can have one in San Francisco that will see people to their final destinations. In the end it will fight hub capacity issues and seasonal demand.
Airline fleet management
Management of airlines is the most crucial thing to do. When a company is poorly managed automatically, it will not prosper. Its products and services will be on poor demand. There are situations when demand is high in some places than others. This would be hard to control if there is no common system that can be optimized by different stations (Flouris, 2010, para.1).. Therefore, Virgin Airlines uses a fleet management system that controls order of flights. Delays may occur in one airport and passengers get furious if they are not told. Therefore, to maximize profits and keep more customers the airline may decide to put the passengers on a different plane that may have space. This is usually a challenging situation, but if handled with care, then scheduling processes can be ok. In case of high demand, the fleet management strategy team can figure out the most appropriate way of helping the travelers. For example, a seasonal factor like high traveling opportunities for tourist from San Francisco will demand more airplanes than other airports. On the contrary, there are times when there may be spoilage. Strategically this can be solved by rescheduling flights so that they can follow routes that have more passengers but shares the approximate distance as the previous route. The key features that should be considered in fleet management strategy include higher profitability, improved customer satisfaction, increased flexibility and company-wide transparency (Chang, & Shao, 2011, P.4). These features will reduces transportation coats and control delays due to few flight cancellations. In addition, there will be a positive response to last minute changes of flight routes and the consequences of planning modifications are immediately clear to all planners.
Each company has its own share of problems. For example, they can be in terms of political, social, economic, environmental or even social aspects. However, having a team of professionals can help in solving various situations. Employees usually have personal problems at home or work. Pressure can make someone depressed at times. Virgin airline operations make it a point to help their employees work on their problems. Through monitoring and evaluation of their duties they can know where they go wrong and try to help them. For instance, the employees go on regular counseling. This helps them to stay focused in their daily job responsibilities. It is usually a huge task to work in an airline and without advice then management can be poor. In 2011, it forced the company to lay off some workers. It was not their wish but something had to be done to reduce certain costs. Therefore, it is always advisable to be at the top niche in terms of performance to avoid search situations. The company also allows their staff to go for further education and get more training. The world is becoming more complex and new things cope in on a daily basis. Therefore encouraging the employees to increase their knowledge also helps them be acquitted with the current situations.
In the world of business, the main motif is to make profits and expand the business. There is no company, which gets satisfied with its work especially when their competitors smile every time. Virgin airlines thought of a strategy to be top of other airline operations. Through their operations, they found the best alternative of attracting customers. Strategizing their program with the aim of provision of low cost flights made it easy to attract travelers of all class and status. As stated earlier, most people want good services but cannot afford it. However, when they get places that charge lower and good services they opt for that. For example, the pricing schemes used by virgin America airlines attract more customers. They are cheaper than most airlines. They also have other side investments that help them increase the company’s revenue. Therefore, with proper management, they are in a better position to increase revenues and minimize costs. In addition, due to competition among various airlines, Virgin America airline decided to improve on operation efficiency of the company (Kuuchi, n.d., p.4). These were done to reduce unnecessary costs. For example, engaging in airport hub and air fleet management to work on demand challenges. Finally, through management program’s it would be easy to determine where problems exist and then issues are solved strategically.
When people travel, they carry luggage. There are other situations when the airlines have to spare certain planes for language purposes. This is for the safety of the passengers. However, there are many illegal activities that usually happen when moving huge cargo from different countries. For, example, there are businessmen who like shortcuts. They prefer to sell drugs in order to have money. Such people do not care about the health of others nor the eefects that may befall organizations that do their transportation. On the contrary, cargo charges are usually expensive. This discourages many investors who decided to use water. However, this takes time before the goods reach their destination. According to Virgin airlines, they make it a bit easier for those who have cargos. They reduce taxes on the goods and make them affordable to pay for their transportation. They also make it a point to recover any lost item. As long as the problem is on the side of the company, they compensate it. Through international operations, it is vital to have a good relationship with other airlines. They may have a problem, which would require the help of a different airline. Therefore, social inclusion is necessary to expand business.
In conclusion, Virgin airlines have its share of difficulties and prosperities. However, with the spirit of growth and determination to prosper, they have taken a step to achieve their goals. Management strategies, route structures pricing schemes and other things will determine their outcome results. It is predicted that if Virgin America airline operations consider the above they will succeed in rebuilding the company.
Reference list
Chang, Y & Shao, P. (2011). Operating cost control strategies for airlines. Retrieved January
29, 2013, from
http://www.academicjournals.org/ajbm/pdf/pdf2011/28Oct/Chang%20and%20Shao.pdf
Credeur, M. J. (2012). Virgin america trims flights, labor cost on slower winter. Retrieved January 29, 2013, from
http://www.bloomberg.com/news/2012-10-17/virgin-america-trims-flights-labor-cost-on-slower-winter.html
Flouris, T. (2010). Rationalizing aircraft performance dynamic modeling in airline fleet
planning decisions. Retrieved January 29, 2013, from
http://www.macrothink.org/journal/index.php/erm/article/view/317
Maximize monday: Choosing the best site and credit card for purchasing airfare. (2013).
Retrieved January 29, 2013, from
http://thepointsguy.com/2013/01/maximize-monday-choosing-the-best-site-and-credit-card-for-purchasing-airfare/
Silberman, S. (2011). Dear united airlines: I want my kindle, and my dignity, back. Retrieved
January 29, 2013, from
http://blogs.plos.org/neurotribes/2011/08/30/dear-united-airlines-i-want-my-kindle-and-my-dignity-back/
Smallen, D. (2013). 3rd-quarter 2012 domestic air fares rose 1.8% from 3rd quarter 2011.
Retrieved January 29, 2013, from
http://www.rita.dot.gov/bts/press_releases/bts004_13
Virgin America closes 3Q facing stiff headwinds for 2012, but still breaking even.
(2012). Retrieved January 29, 2013, from
http://centreforaviation.com/analysis/virgin-america-closes-3q-facing-stiff-headwinds-for-2012-but-still-breaking-even-65342
Virgin America attempts to strike a challenging balance between growth and achieving
profitability. (2012). Retrieved January 29, 2013, from
http://centreforaviation.com/analysis/virgin-america-attempts-to-strike-a-challenging-balance-between-growth-and-achieving-profitability-76856
Yglesias, M. (2012). The failure of virgin america and the hypocrisy of the american air
traveler. Retrieved January 29, 2013, from
http://www.slate.com/blogs/moneybox/2012/11/01/virgin_america_the_best_airline_in_america_is_failing_and_it_s_all_your.html
Kuuchi, R. (n.d.). Ancillary revenue – the new craze for airlines. Retrieved January 29, 2013,
from
http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0CD8QFjAB&url=http%3A%2F%2Fwww.afraa.org%2Findex.php%2Fcomponent%2Fdocman%2Fdoc_download%2F163-ancillary-revenue–the-new-craze-for-airlines-by-mr-raphael-kuuchi&ei=s94HUYL5MIz9rAe0qICYBQ&usg=AFQjCNHtaNgKm2BYvxHCPawEEt7MjiuFMw&bvm=bv.41524429,d.bmk
