Swot Of Virgin Atlantic And The Airline Industry

Swot Of saturated Atlantic And The Airline IndustryFor its service company is well recognize and has been getting rewards which are providing them with a strong brand image. Zagat, 2009 ranked them as leading players for international inflight services like entertainment and flyer program. in addition by trip weeklys 2009 virgin Atlantic was ranked as the best international ventline.http//www.travelweekly.co.uk/Articles/2009/01/28/30064/globe-travel-awards-2009-all-the-winners-by-category.htmlAlso in Western Europe, company has been ranked on inaugural place in comparison to British Airways, Air France and Lufthansa. Also in January 2010, company has received award of Best Scheduled Airline and Favourite Airline. A good brand is a competitive advantage for the company to make position in international market and excessively to compete with its competitors.http//www.travelweekly.co.uk/Articles/2010/01/20/32852/globe-travel-awards-2010-the-winners-in-full.html all-around(prenom inal) ServicesCompany fork ups a good service to its customers. Services like check in facilities, baggage handling, meal catering, and in-flight entertainment. It is one of the largest British companies which provide bulky haul international airlines. Sometimes they also provide passengers with special treatment i.e. providing them with the special meals, mobility aids and also with the health camps at the time of departure and arrival.virginal Atlantic also offers flying clubs on which they can earns miles and after having a specific number of miles they can have a free ticket. It is one of the largest airlines that provide long haul tours all oer the world.Strong financial performanceCompany is enjoying a strong financial performance even during the financial crisis and scotch system crisis.200720082009Turnover1,816,2002,010,9002,238,800Profit Before Tax31,4006,00049,800Profit Margin1.730.302.22In 2009 the company turnover has appendd by 10.17% as compared to 2008. Also the profit forrader tax increased by 87.95% to reach 49,800 in fiscal year 2009 compared to 6000 in 2008. Also profit margin increased from 0.30 to 1.73 in 2009. From the financial outline we can see that company is enjoying the strong financial performance that has allowed the company to expand its operating activities in both markets i.e. domestic and international.WEAKNESSESPrivate OwnershipIts genuinely difficult for the company to raise capital as it is private owned, which gives unfavourable position to a company in comparison to publically owned company. publicly owned company have healthier access to capital market, and also superior financial flexibility in funding initiatives. Virgin Atlantic airways inevitably extensive capital to grows its business market for that they have to be under public monomania rather than private ownership as private ownership provide limited amount of financing option for the company.Lack of ScaleVirgin Atlantic airways in its operation is lac king behind with large players in the market i.e. large players like British Airways and Air France- KLM operates in 300 and 249 destinations whereas Virgin Atlantic is only functioning in 30 worldwide destinations only. Also British airways and Air France- KLM got fleet base of 245 and 635 aircrafts whereas Virgin Atlantic got fleet base of 38 aircraft only. So we can conclude that its competitors are large in size which gives them a competitive disadvantage.OPPORTUNITIESGrowth of Global Airlines IndustryWith the help of research it has been found that airlines industry has got a tremendous growth in historic few years and is expected to grow more in future. Researchers found that airlines industry worldwide had total revenue enhancement of $467.4 billion in year 2008. By 2013, the airlines industry globally volition get the revenue of $609.3 billion i.e. increase of 23.30%.In 2008, 2.1 billion passengers travelled with the source of airways. Researchers forecasted that by 2013 the volume of passengers will increase to 2.6billion i.e. by 19.23% since 2008. Right now Virgin Atlantic is only operating in 30 destinations globally. In future as the global airlines industry is growing, it will provide an opportunity to company to increase their operating destinations which help them to increase their revenue and market.Global travel and tourism industry is growingAir travel industry is well-known within the transport and tourism industry, as it is the only source of transport for international travellers. With the help of research it has been found that in 2009 over half of the UK population had travel by the source of air travel, which tells that the demand for the air travel is very strong. Even at the time recession, the outlook for the air industry remains stronger for the long term prospective.With the help of World Travel tourism Councils Tourism Satellite Account research we are able to denudation that the revenue passenger-Km has grown to 11.9% in Jun e 2010. This has helped air industry to recover from the volcanic eruption in April. Also it has been found that the Real GDP for the Travel Tourism Economy was -4.8% in 2009 and now in 2010 is expected to be 0.5%. Also they have predicted that the world travel and tourism will produce over $13trillion for the halt of 2008-2017, i.e. is the average growth of 4.3% per annum. We can conclude that in future increasing of global travel and tourism industry will generate additional revenue for the virgin Atlantic airways.(http//www.wttc.org/eng/Tourism_Research/Economic_Research/Monthly_Update_of_Tourism_Indicators/)THREATIntense competition and price discountingIntense competition and price discountingThe airline industry is characterized by substantial price competition, curiously in domestic markets.Carriers use discount fares to stimulate traffic during periods of slack demand.Virgin Atlantic competeson the basis of price, customer service, costs, frequency and convenience of sche duling, frequent beak benefits, efficiency and productivity. Some of its major competitors include, AMR, Air France-KLM,British Airways, Cathay Pacific Airways, Continental Airlines, Delta Air Lines, Japan Airlines System,Lufthansa and UAL.In recent years, the domestic market plow held by low-cost carriers has increased significantly andis expected to continue to increase, which is dramatically changing the airline industry.The increasedmarket presence of low-cost carriers, which let in substantial price discounting, has diminishedthe ability of the network carriers to maintain sufficient pricing structures in domestic markets toachieve profitability.In addition to price competition, airlines also compete for market share by increasing the size of theirroute system and the number of markets they serve. The increased competition in these markets,particularly to the extent the companys competitors engage in price discounting, may have a materialadverse effect on the companys results of operations, financial condition and liquidity.EU patternsThe European Union has passed edict that came into effect beginning early 2005, for compensating airline passengers who have been denied boarding on a flight for which they hold a valid ticket. The legislation also imposes ameliorate levels of compensation to passengers for cancelled flights, except where the airline can prove that such cancellation is caused by extraordinary circumstances, such as weather, air-traffic control resists or safety issues.Passengers cause to long delays (in excess of two hours for short haul flights) would also be entitled to assistance including meals, drinks and telephone calls, as well as hotel accommodation if the delay extends overnight. In addition for delays, over five hours, the airline would be required to reimburse the cost of the ticket or provide rerouting to the passengers final destination. The imposition of the regulation would significantly increase the expenses incurred b y Virgin Atlantic and may affect its profitability.Rising aviation displace pricesDue to the rising oil prices globally, the prices of aviation fuel have gone up substantially in the pastfew years. The average cost of a gallon of commercial jet fuel in the US has increased since 2000,from $0.7 per-gallon in 2000 to $1.9 per-gallon in 2006. According to the Air Transport Association(ATA), at a usage rate of 19.5 billion gallons of fuel a year, each penny increase in price per gallonadds $195 million in annual costs for the airline industry. Aviation fuel, which comprises the largestcost component for a transporter, is responsible for the declining margins of most air transportationcompanies. As a result, some logistics companies incurred huge overheads while operating in manylow-volume destinations. This trend could impact Virgin Atlantics margins too as it is mostly relianton air freight business.Slowdown of global rescueAccording to the IMF world economy outlook, the world econom y will slow sharply in 2008 and in2009, with the US likely to slide into recession triggered by the current financial turmoil. The IMFforecasts, that the global economy, which grew by 5% in 2007, will lose considerable speed slowingto 3.9% in 2008 and 3% in 2009, marking the lowest growth rate since 2002. In the past, the IMFhas called global growth of 3% or less the equivalent to a global recession. Virgin Atlantic operatesthrough 30 countries globally. A weak global scotch outlook is likely to impact demand for airtravel and the company cannot offer any assurances in regards to the performance of its businessmodel under changed economic conditions. Therefore, Virgin Atlantics business is likely to beadversely affected