Swot Of Virgin Atlantic And The Airline Industry

Swot Of double-dyed(a) Atlantic And The Airline constancyFor its service social club is well recognized and has been getting rewards which are providing them with a backbreaking brand image. Zagat, 2009 ranked them as leading players for international inflight run like entertainment and flyer program. overly by touch off weeklys 2009 pure Atlantic was ranked as the best international directline.http//www.travelweekly.co.uk/Articles/2009/01/28/30064/globe-travel-awards-2009- all told-the-winners-by-category.htmlAlso in Western Europe, political party has been ranked on first buns in comparison to British Airways, Air France and Lufthansa. Also in January 2010, lodge has received award of Best Scheduled Airline and Favourite Airline. A good brand is a competitive advantage for the company to urinate position in global commercial messageize and also to compete with its competitors.http//www.travelweekly.co.uk/Articles/2010/01/20/32852/globe-travel-awards-2010-the-winners -in-full.htmlComprehensive serveCompany set asides a good service to its customers. Services like check in facilities, baggage handling, meal catering, and in-flight entertainment. It is one of the superst British companies which provide coarse haul international channellines. 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.Virgin Atlantic also offers flying clubs on which they can earns miles and after having a specific number of miles they can crap a free ticket. It is one of the largest airlines that provide long haul tours all over the world.Strong financial military operationCompany is enjoying a strong financial performance even during the financial crisis and saving crisis.200720082009Turnover1,816,2002,010,9002,238,800 loot Before Tax31,4006,00049,800Profit Margin1.730.302.22In 2009 the company disorder has cast upd by 10.17% a s compared to 2008. Also the profit before levy 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 digest 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. municipal and international.WEAKNESSESPrivate self-possessionIts really difficult for the company to raise capital as it is hugger-mugger owned, which gives unfavour adapted position to a company in comparison to publicly owned company. Publically owned company go through healthier devil to capital market, and also superior financial flexibility in sustenance initiatives. Virgin Atlantic airways needs extensive capital to grows its business market for that they have to be under public ownership rather than hugger-mugger ownership as private ownership provide limited count of financing option for the company.Lack o f ScaleVirgin Atlantic airways in its operation is lacking behind with large players in the market i.e. large players like British Airways and Air France- KLM ope locates 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 solution of 245 and 635 aircrafts whereas Virgin Atlantic got fleet base of 38 aircraft only. So we can close up that its competitors are large in size which gives them a competitive disadvantage.OPPORTUNITIESGrowth of Global Airlines IndustryWith the assist of research it has been found that airlines industry has got a tremendous growth in past few years and is evaluate to grow more in next. Researchers found that airlines industry worldwide had total gross of $467.4 billion in year 2008. By 2013, the airlines industry globally impart 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 canalise 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 one-half of the UK population had travel by the source of air travel, which tells that the indigence 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 trigger off Tourism Councils Tourism Satellite Account research we are able to discove ry that the revenue passenger-Km has grown to 11.9% in June 2010. This has helped air industry to convalesce from the volcanic eruption in April. Also it has been found that the Real gross domestic product 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 period of 2008-2017, i.e. is the average growth of 4.3% per annum. We can conclude that in future change magnitude of global travel and tourism industry will generate entreeal revenue for the virgin Atlantic airways.(http//www.wttc.org/eng/Tourism_Research/Economic_Research/Monthly_Update_of_Tourism_Indicators/) holy terrorIntense competition and price discountingIntense competition and price discountingThe airline industry is characterized by substantial price competition, especially in domestic markets.Carriers use discount fares to stimulate traffic during periods of slack demand.Virgin Atla ntic competeson the basis of price, customer service, cost, frequency and convenience of scheduling, frequentflier benefits, might 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 office 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 contract in substantial price discounting, has diminishedthe ability of the network carriers to support 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 co mpetitors engage in price discounting, may have a materialadverse effect on the companys results of operations, financial dispose and liquidity.EU regulationsThe European Union has passed legislation that came into effect beginning primeval 2005, for compensating airline passengers who have been denied boarding on a flight for which they dominate a valid ticket. The legislation also imposes fixed levels of compensation to passengers for cancelled flights, except where the airline can prove that such cancellation is caused by iniquitous circumstances, such as weather, air-traffic control disciplines or safety issues.Passengers subject to long delays (in excess of two hours for short haul flights) would also be authorise 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 infallible 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 by Virgin Atlantic and may affect its profitability.Rising aviation fuel pricesDue to the rising vegetable 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 role 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 close air transportationcompanies. As a result, some logistics companies incurred huge overheads speckle operating in manylow-volume destinations. This trend could impact Virgin Atlantics margins too as it is mostly relianton air freight business. slow down of global economyAccording to the IMF world economy outlook, the world economy will slow sharply in 2008 and in2009, with the US belike 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 alike to a global recession. Virgin Atlantic operatesthrough 30 countries globally. A weak global economic outlook is credibly 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