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					                         Virgin Atlantic 1




    Virgin Atlantic:

   Airline Portfolio




     Joe Halpern




ASCI 602, Section 03D4

     Dr. Gallogly

   October 10, 2010
                                                                                   Virgin Atlantic 2


                                          Virgin Atlantic:

                                          Airline Portfolio

       Founded in 1984, Virgin Atlantic has become the second largest carrier headquartered in

the United Kingdom. Virgin is based out of London‟s Heathrow and Gatwick airports as well as

the Manchester airport. It provides long-haul services to thirty destinations world-wide. Virgin

aircraft have flown around 58 million passengers since its inception and it currently employs

over 9000 people across the globe (Virgin Atlantic, n.d., p. 1).

       Virgin currently offers three classes of travel on twelve routes to the United States, six

Asia Pacific routes, four African routes, two Australian routes, as well as eight flights to

Caribbean destinations. It currently operates thirty-four aircraft, including thirteen Boeing 747s,

six Airbus A340-300s, and nineteen Airbus A340-600s. In March 2007, it announced the order

of fifteen Boeing 787-9 Dreamliners, with delivery to be taken between 2011 and 2014 (Virgin

Atlantic, n.d., p. 2). A380s??

                                           Brief History

       Virgin Atlantic, as we know it today, can actually trace its roots to an American Lawyer

named Randolph Fields. Following the Falklands War in 1982, Fields along with a pilot named

Alan Hellary established Laker Airways, hoping to provide service from the Falkland Islands to

London. The pair soon discovered that the runway at Port Stanley in the Falklands was not long

enough to support the type of aircraft they would be operating. They then turned their attention

to establishing service from Gatwick to both New York‟s JFK Airport and nearby Newark

Liberty International Airport, and both times their license applications were rejected by the

British Airports Authority [BAA] due to objections raised by competing airlines. Fields,

undeterred, took the idea to Richard Branson, approaching him at a party and asking for his help
                                                                                    Virgin Atlantic 3


in getting the new airline off the ground. Fields offered to drop his share of the company to 25%

and to rename the airline “Virgin Atlantic”. Branson agreed and Fields was emplaced as the

chairman of the new corporation, though his tenure would be short as Fields did not agree with

many of the decisions later made regarding operating procedure. Branson shortly bought him out

of his share of the company for £1 million (Compare Airport Parking, 2008).

       Richard Branson officially launched Virgin Atlantic as a subsidiary of his Virgin Group

in 1984 – a move that the Virgin Group‟s board of directors opposed. At the time, Virgin Group

was much better known for its record company subsidiary, Virgin Music (Virgin Atlantic, 2010).

The airline‟s inaugural flight from Heathrow to Newark, occurred on 22 June 1984. Branson‟s

company packed this first 747 flight with friends, celebrities, and media to publicize the new

airline‟s launch. The airline was initially marketed as providing “the highest quality innovative

service at excellent value for money for all classes of travelers” (Virgin Atlantic, n.d., p. 1). Of

note, it was the first airline to offer personal televisions to business class passengers (Virgin

Atlantic, 2010). Subsidiaries Virgin Cargo and Virgin Holidays were created in October 1985

and Virgin Sun was launched in May 1994 (Air Transport Intelligence [ATI], 2010) .The airline

was such a success that Branson sold his share in Virgin Music in 1992 and invested the profits

into Virgin Atlantic. Branson later sold a 49% share in the airline to Singapore Airlines in 1999

(Virgin Atlantic, 2010).

                                       Financial Performance

       Virgin was founded with the intention of undercutting the established competition,

namely British Airways, in the U.K. trans-Atlantic market. Starting flights during the “summer

rush” and the backing of the larger corporation ensured that the airline was immediately

profitable. Virgin Group‟s capital infusion also allowed the airline to overcome typical start-up
                                                                                    Virgin Atlantic 4


costs for an airline in grand fashion, with its first aircraft being the iconic Boeing 747 jumbo jets.

Starting relatively small, with only a few routes, the upstart airline grew rapidly. It introduced the

Virgin Freeway frequent flyer program in the U.K. in 1990 (ATI, 2010). In 1991, the airline was

given the go-ahead to commence operations from London Heathrow Airport (Compare Airport

Parking, 2008).

       Over its short history, Virgin Atlantic has appeared to handily survive some of the years

that were considered the worst by its major competitors. Despite surviving the first years

following several major downturns, Virgin‟s profits eventually dropped off like those of its

larger competitor British Airways. As examples, let us look at the years 1990, 2001, and 2008.In

1990, the crisis in the Persian Gulf, rising fuel prices, growing debt, fare wars, and a slowdown

of the U.S. economy all contributed to a severe slowdown in the market for air travel. British

Airways, Virgin‟s largest competitor, had profits decrease by $221 million (a fifty-six percent

decrease) in 1990 alone (International Civil Aviation Organization [ICAO], n.d.). Somehow

Virgin Atlantic only posted an eight percent decrease in profits for 1990.

       Virgin‟s seeming immunity to the 1990 crisis didn‟t last long as it posted a loss of $29.3

million in 1992 (ICAO, 2010). This resistance to the market forces is probably best explained

with the small size of the Virgin fleet and schedule during 1990. The company was simply not

serving very many markets at that time and the introduction of Virgin Freeway, the airline‟s

frequent flyer program around the same time also likely provided cushion for its bankroll (ATI,

2010). Also, Virgin at the time was still largely a trans-Atlantic only operation, subjecting it to

tight controls by both the U.S. and U.K. governments, which probably contributed to its

continued success on those routes.
                                                                                    Virgin Atlantic 5


       In 2001, the September 11th terrorist attacks caused another major setback for the market.

Virgin Atlantic a loss of $114 million for that year – with only $6 million of that being an actual

operating loss. The rest is likely related to the accompanying economic slowdown following the

attacks. By 2001, Virgin had also successfully spawned a leisure subsidiary, Virgin Sun, and

added both domestic and intra-continental routes to the principal airline, thus adding more

industry-related risk (ATI, 2010). Having sold Virgin Records in 1992 (Compare Airport

Parking, 2008), Branson and the airline‟s parent company relied more on the airline for income

than in the past. The mid to late nineties had been boom years for the company and it is likely

that Virgin Group was left without much ability to absorb the vast deficit that resulted after this

recession. Again, Virgin survived the recent rise in the cost of jet fuel that started in 2004,

faltering slightly in 2006 and 2007, but overall posting a profit of almost $61 million in 2008

(ICAO, 2010).

       Virgin has achieved these recent successes, though modest, through various non-price

competitive means. In 2003, Virgin received an award for best in-flight entertainment (Compare

Airport Parking, 2008) and in 2007 it introduced a dedicated business class service for flights

between European and U.S. locations (ATI, 2010). It also appears that the company‟s private

owners have developed a further ability to counterbalance some losses, as only a quarter of its

profits were gained from operating yield (ICAO, 2010). Virgin will continue to be competitive as

a low-cost airline, and by increasing non-price competition with the majors will continue to gain

market share. In 2001 Virgin was named the Official Airline Guide [OAG] Airline of the Year

and subsequently became a roll-out customer for Airbus‟s new passenger liner, the A340-600.
                                                                                           Virgin Atlantic 6


                                                Route Structure

       Virgin Atlantic operates twelve routes to the U.S., eight to the Caribbean, four to Africa,

six to Asia, and two to Australia. Its hubs are at London‟s Gatwick and Heathrow airports, with a

small hub operation out of Manchester, U.K. The airline currently has thirty-four aircraft in

service including six Airbus A340-300s, seventeen Airbus A340-600s, and eleven Boeing 747-

400s operating on its exclusively long-haul routes (Air Transport Intelligence [ATI], 2010).

       Virgin originally conducted hub operations exclusively from Gatwick starting in 1984

and, after a long battle with the incumbent mega-airline British Airways, were able to finally

break into the Heathrow market in 1991 (Compare Airport Parking, 2008). A long haul-only

airline, it also conducts lower-tier hub operations from Manchester, U.K., and Hong Kong. A

codeshare partnership with Continental Airlines established in 1997 allows service on nine more

U.S. routes (Frank, 1997) and a similar partnership with Singapore Airlines established in 1999

provides flights to Singapore from both Manchester and Heathrow (Virgin Atlantic, 2010). See

Table 1 for a full route summary.

              USA          CARIBBEAN          AFRICA              ASIA         AUSTRALIA
       Base     Dest   Base     Dest   Base      Dest      Base     Dest   Base     Dest
       LGW      LAS    LGW      ANU    LHR       CPT       LHR      DEL    HKG      SYD
       LGW      NAS    LGW      BGI    LHR       JNB       LHR      DXB    LHR      SYD
       LGW      MCO    LGW      GND    LHR       LOS       LHR      HKG
       LHR      BOS    LGW      MBJ    LHR       NBO       LHR      BOM
       LHR      ORD    LGW      UVF                        LHR      PVG
       LHR      LAX    LGW      TAB                        LHR      NRT
       LHR      MIA    MAN      BGI                        SIN      LHR
       LHR      EWR    MAN      UVF                        SIN      MAN
       LHR      JFK
       LHR      SFO
       LHR      IAD
       MAN      MCO                    Virgin Atlantic
       EWR      ALB                    Continental Airlines Codeshares
       EWR      CLE                    Singapore Airlines Codeshares
       EWR      DTW
       EWR      IAH
       EWR      LGW
       EWR      ORF
       EWR      PVD
       EWR      RIC
       EWR      ROC


       Table 1. Virgin Atlantic full route summary (Virgin Atlantic, 2010).
                                                                                   Virgin Atlantic 7


                                              Aircraft Fleet

       Virgin Atlantic currently has thirty-four aircraft in service, thirty-one on order, and

fourteen options to buy from Boeing and Airbus. The airline owns approximately one-third of its

fleet, leasing the other two-thirds from private companies. It also owns two A340-600s and one

747-400 that are presently in storage. The fleet‟s average age is nine years, on the high side for

airliners. Comparatively though, British Airways average fleet age is almost twelve years, and

with roughly enough firm orders to replace its entire fleet it appears that Virgin Atlantic may

actually have the upper hand. Currently, Virgin‟s fleet consists only of Airbus A340-300s (six),

A340-600s (seventeen), and Boeing 747-400s (eleven). This amounts to a relatively homogenous

fleet of just three aircraft models, compared to British Airways‟ twelve distinct models (ATI,

2010). See Table 2 for a summary of the Virgin Atlantic fleet. This homogeneity provides for

ease of maintenance and these airframes fit Virgin Atlantic well as they are ideal for long-haul

routes. Virgin Atlantic has no short-haul routes, and as such the risk of owning only wide-body

aircraft is minimized.

                                  In Active            On       In
        Manufacturer      Model              On Order
                                   Service            Option Storage
        Airbus           A330-300          -       10       -        -
        Airbus           A340-300         6         -       -        -
        Airbus           A340-600       17             -        -       2
        Airbus           A380-800         -           6        6         -
        Boeing           747-400        11             -        -       1
        Boeing           787-9            -          15        8         -
        Total                           34           31        14       3

       Table 2. Summary of the Virgin Atlantic fleet (ATI, 2010).

Virgin Atlantic‟s lean hub-and-spoke route structure along with its homogenous fleet of just

three models appears to be the perfect mix for the market that the airline serves. It has added

routes to Asia, Africa, the Caribbean, and Australia in recent years and is now among the few
                                                                                      Virgin Atlantic 8


salient airlines left which have placed firm orders for new aircraft. Using a system of codeshares

and worldwide partnerships combined with its so-simple-it‟s-elegant structure, the airline is able

to provide long-haul service to virtually every corner of the world.

                                           Personnel Issues

        Like any major airline, Virgin Atlantic‟s staff as increased and declined with the rise and

fall of the market and general economic conditions. Prior to 9/11, Virgin‟s strategy of expansion

had necessitated adding jobs on a regular basis. The airline added 1,700 jobs during the year

prior to the terrorist attacks alone, its largest ever recruitment drive (Virgin creates 1,700 airline

jobs, 2000). Conversely, after 9/11, Branson‟s airline was the first British airline to cut its staff,

laying off and furloughing 1,200 employees. These cuts were claimed by the executives to be the

result of exceptional circumstances, accompanying the general downturn of the market and the

grounding of five of the airlines aircraft. The airline also reduced its flights by twenty percent in

an effort to hedge the lost revenues (Harper, 2001). Evidently, these measures were effective

because Virgin was able to activate 300 new jobs in the following year. The rapid stabilization of

the company allowed Virgin to offer employees on unpaid leave the opportunity to rejoin the

company as well as new hires to fill the positions (Dow, 2002).

        In 2004 and 2005 the airline was able to add 2,400 new jobs, crediting these increases to

the opening of new routes and increase of frequency on old routes (Virgin announces 300 more

jobs in Sussex, 2004 & Harrison, 2005). Following the current fuel crisis and recession in 2009

the airline was again forced to cut 600 redundancies. The airline offered opportunities for unpaid

leave and also announced a pay freeze. Ridgeway himself emphasized that “no airline is immune

from [this] recession.” The airline also planned to reduce capacity by about ten percent to keep

load factors as high as possible (Osborne, 2009).
                                                                                  Virgin Atlantic 9


                                       Marketing Strategies

        The Virgin Atlantic brand has become sort of a marketing phenomenon, with its

charismatic leader and fame-hound Sir Richard Branson as well as its widely recognized

connection with the ever-popular Virgin Group. Positioned as the spoiler, Virgin has effectively

competed with industry giants in markets that they traditionally dominated and captured a market

for economical, quality air carrier service almost in spite of the larger companies. Branson has

successfully applied both his entrepreneurial attitude and the instant brand recognition that the

Virgin brand holds among Brits to create a successful and salable airline, even in spite of the

industry‟s woes in recent years (Flanagan, 2009).

        Branson is known to be eccentric, having completed such personal exploits as a

ballooning trip across the Atlantic Ocean, and he is not afraid to apply this fearless philosophy to

Virgin Atlantic, of which he personally owns fifty-one percent. His private antics have served to

provide free publicity for the entire Virgin brand, and they have even translated down the

corporate chain his employees as an attitude. For example, Virgin Atlantic‟s managing director,

Steve Ridgeway, was Branson‟s copilot during a record-breaking speedboat crossing of the

Atlantic Ocean. Challenging the airline‟s biggest competitor, British Airways, on virtually all of

its routes as well as repeatedly opposing a merger between BA and American Airlines – even

going so far as to paint “No Way BA/AA” on every one of the fleets‟ thirty four aircraft –

Branson‟s underdog spirit has created an airline willing to capitalize on the weaknesses of its

competitors to create a better and more economic experience for airline passengers (Virgin

Atlantic, n.d.).

        Virgin Atlantic‟s inaugural flight in 1984 between London Gatwick Airport and Newark

Liberty was even positioned as a marketing device, based on the famed Virgin name of Virgin
                                                                                  Virgin Atlantic 10


Records and packing a 747 jumbojet with celebrities in an attempt to draw immediate attention

to the airline and to take it from upstart to true competitor in short time. Breaking the monopoly

that British Airways had held on gates at London Heathrow in 1991, Branson‟s upstart airline

grew rapidly. At this news the then-chief of BA is believed to have launched a campaign of

“dirty tricks” against Virgin, which Branson brilliantly parlayed into free publicity. At the

suggestion that his protests were purely for promotional reasons, Branson promptly sued BA and

was awarded a settlement which he split with his employees, calling it the “BA Bonus”. Bad

relations with BA have continued, with Branson painting the famous slogan on the side of his

aircraft following British Airways‟ first attempt to merge with American Airlines in the early

1990s (Compare Airport Parking, 2008) and leaving it there through several more attempts until

a very recent rebranding of the fleet which included new paint jobs (only completed in 2010)

(Banham, 2010).

       As far as traditional marketing strategies, Virgin‟s advertising activity includes UK

television, press, magazines, outdoor billboards, and taxi sides. All of the advertising features the

distinct “Virgin” logo and colors. Direct mailings to UK customers are also used to some extent.

The airline operates a frequent flyer program, of which its members are privy to some unusual

benefits above and beyond just free travel. Frequent flyers are offered access to a “one-call-does-

it-all” phone support system as well as award winning “Clubhouses”. The marketing department

promotes each of the airline‟s three classes – Upper Class, Premium Economy, and Economy. It

also operates a fully functional reservation website as well as an active Charity division (Virgin

Atlantic, n.d.). Branson himself has made several movie and television appearances in direct

promotion of his airline.
                                                                                   Virgin Atlantic 11


       Virgin has always prided itself on innovation, becoming the first airline to provide

individual televisions for business class passengers in 1989 and extending that to all passengers

in 1991 (Flanagan, 2009). The company‟s primary airline partnership is with Singapore Airlines,

which owns a forty-nine percent stake in Virgin. In addition to the capital that the partnership

supplies for both party airlines, Singapore Airlines has 93 aircraft and reaches 97 worldwide

destinations. The two carriers actually operate in quite different parts of the world, accenting the

complementary nature of the partnership. The companies also share passenger lounges, airport

facilities, and frequent flyer programs. Virgin also has codeshare agreements with several

carriers – Continental, Malaysia Airlines, and British Midland [BMI]. It also has a marketing

agreement with Ansett Australia and cooperates with Air India to provide service to Africa. This

separate but complementary arrangement with each of its codeshare partners provides the airline

with the ability to book its passengers to virtually any destination on the Western or Eastern

worlds (Manning, Salter, & Tuinzing, 2005, pp. 8-9, 32). These partnerships allow Virgin to

export its brand and innovative attitude to areas of the world where its thirty-eight aircraft will

probably never have to venture.

       Recently, Virgin has demonstrated further knack for clever PR and ability to exploit the

weaknesses of British Airways. Attempts by BA in 2006 to collude with Virgin in order to fix

ticket prices were promptly reported to the UK‟s Office of Fair Trading by Virgin employees and

an investigation was opened into BA. While it would have been impossible to plan such an

event, Branson‟s company certainly capitalized. In the week after the story broke, Virgin

announced record-breaking revenues as well as inaugurated an additional flight to New York and

an additional service to Mauritius (King of the carrier castle, 2006). Another marketing

capitalization on the competition came when BA bungled the opening of its new terminal at
                                                                                   Virgin Atlantic 12


Heathrow airport. Virgin claimed that it‟s recently opened Upper Class wing as well as its

intimate approach were the reasons that many passengers found their way onto Virgin jets after

the hype turned out to be bunk (Profile, 2008).

         The industry‟s recent woes have left Virgin un-checked. According to Ridgeway, its

resilient load factors were the result of “some of the lowest fares ever… proving the value of

vigorous completion” (Flanagan, 2009). In addition to offering ultra-competitive pricing, clever

marketing has helped to draw customers and actually increase profits despite the current high

fuel prices. Virgin celebrated its 25th birthday in 2009 with a “Still red hot” promotion and

recently introduced the slogan “Your airline has either got it, or it hasn‟t,” as well as creating a

microsite on the World Wide Web dedicated to the campaign. Last year Virgin consolidated its

global ad account with one company and re-designed its website in efforts to globalize its reach.

Head of global advertising and communications, Breda Bubear has targeted the global “ʻgo-

getters‟ who actively make decisions to „set themselves apart from the crowd‟” (Brownsell,

2010).

         According to the company‟s website, “people… regard Virgin Atlantic as a distinctive,

fun-loving, and highly innovative brand and one that is admired for its friendliness, intelligence,

and integrity” (n.d.). This appears to permeate its every public relations move. The combination

of Branson‟s entrepreneurial spirit and the renegade attitude of the Virgin brand name appear to

be a winning combination, with 98% of the British public recognizing the brand name and it

being named by Interbrand as one of the top 50 global brands (Manning, Salter, & Tuinzing,

2005, pp. 11, 29).

                                      International Operations
                                                                                  Virgin Atlantic 13


       Virgin Atlantic almost exclusively serves international routes through a worldwide web

of its own routes and many advantageous partnerships with international carriers. Virgin and its

partners provide service to the U.K., Europe, the U.S., China, Japan, India, Singapore, Australia,

the Middle East, and South Africa. The airline‟s main base is at London‟s Heathrow airport with

a hub at London‟s Gatwick. Major cities for Virgin‟s passengers to connect to its partner airlines

include Newark, Sydney, Singapore, and Johannesburg. Its worldwide partnerships include eight

codeshares, five frequent flyer programs, and one marketing alliance (Virgin Atlantic, 2010)

       The company‟s primary codeshare partnership is with Singapore Airlines, which owns a

forty-nine percent stake in Virgin. In addition to the capital that the partnership supplies for both

parties, Singapore Airlines has ninety-three aircraft and reaches ninety-seven worldwide

destinations including five Australian destinations. Virgin also has codeshare agreements with

several other carriers – Continental, Air China, British Midland [BMI], All Nippon [ANA], Jet,

South African, and Virgin Blue. Its frequent flyer program partners include Air New Zealand,

Gulf Air, Hawaiian Airlines, Malaysia Airlines, and Scandinavian Airlines [SAS]. V Australia

also has combined in a marketing alliance with Virgin to allow passengers interline access (Air

Transport Intelligence [ATI], 2010).

       Most of Virgin‟s partners provide complementary service rather than supplementary –

that is to say that they do not duplicate current Virgin routes. Continental Airlines‟ codeshares

originate from Newark Liberty International and deliver passengers to seven destinations that are

not otherwise served by Virgin. Virgin does book its Heathrow passengers on Continental flights

to and from Newark, but this is an effective method to increase its transatlantic lift capacity and

schedule options. USAirways operates three feeder routes from Phoenix to Virgin‟s west coast

terminals. BMI provides Virgin‟s passengers domestic options with five U.K. routes, as well as
                                                                                   Virgin Atlantic 14


service to six diverse European destinations such as Brussels and Palma Mallorca. The codeshare

partnership with BMI also offers four Middle Eastern routes for Virgin‟s customers. Both

Singapore Airlines and Virgin Blue‟s flights carry Australia-bound passengers under Virgin‟s

banner as does South African Airways to four South African destinations. Among airlines that

provide supplementary service to Virgin‟s customers, Air China operates a Heathrow to Beijing

route, Jet airways operates a Heathrow to Mumbai, and ANA operates a Heathrow to Tokyo

Narita route (ATI, 2010).

       The complementary arrangement of each of its partnerships provides the airline with the

ability to book their passengers to virtually any destination on the Western or Eastern worlds.

Partnerships such as Virgin‟s allow the airline to provide a lot of service without taking on the

risks of under-capacity, over-competition, or overstretching its resources. By establishing these

partnerships on routes that it cannot provide service to with carriers that treat its customers to the

same high level of service, Virgin has effectively created a virtual airline more than twice the

size of its actual asset structure. These partnerships allow Virgin to export its brand and

innovative attitude to areas of the world where its thirty-eight aircraft will probably never have to

venture.

                                     Post 9/11 Security Concerns

           As a dedicated long-haul carrier, Virgin Atlantic devotes a significant amount of its

energies into ensuring its customers are safe in the post-9/11 world. According to the company‟s

website, “the safety and security of our passengers and crew is Virgin Atlantic‟s top priority”

(2010). Virgin works with multi-national regulators to ensure that its standards meet or exceed

each country‟s statutory requirements, including reinforced flight deck doors on all aircraft with

linked close circuit television [CCTV] equipment. The airline also claims to use a wide range of
                                                                                  Virgin Atlantic 15


security techniques – both overt and covert – to include passenger profiling, in order to ensure

system-wide security. In addition, it conducts internal quality control exercises in order to

prepare its security measures for inspection by regulators. The airline itself is a member of the

U.K. Department for Transport‟s [DfT] Aviation Security Compliance Forum and supports the

efforts of Project Griffin, a locally run effort to raise awareness of counter-terrorism measures

and to better equip individual personnel to deal with security issues (Virgin Atlantic, 2010).

Virgin‟s post-9/11 security measures have not been above controversy, however.

       Supported by both Virgin and British Airways, Britain‟s two major carriers, the armoring

of the cockpit doors was initially opposed by the pilots‟ union. BALPA‟s concerns were rooted

in the fact that the reinforced and deadlocked doors would not be unlock-able by the flight crew

from their normal in-flight posts. It and other organizations claimed that there was a risk of all of

the members on the flight deck being incapacitated at the same time and that a deadlocked door

would prevent the flight attendants from being able to help. Virgin, however, stated that the

chance of all flight crew members being disabled simultaneously was “infinitesimally” small.

Ultimately, Virgin installed the heat proof, shock proof, and deadlocked doors on all of its

aircraft shortly after 9/11, as did British Airways(Peachey, 2001).

       In 2006, Virgin‟s founder Richard Branson issued a call to the British government to pay

for all future security measures implemented at the country‟s airports, though it stopped short of

asking the government to entirely takeover managing security. The British airline industry had

been solely responsible for financing the nation‟s airport security infrastructure as part of a wider

fee imposed by the British Airports Authority [BAA] according to the number of arriving and

departing passengers. Virgin, however justified in believing security funding should be a

government issue, stood alone among British airlines as British Airways‟ spokespeople asserted
                                                                                 Virgin Atlantic 16


that the company had accepted the status quo. The position of the DfT remains that the aviation

industry should pay for aviation security. BAA refuses to divulge how much of the industries

money is spent annually on security, although it probably runs into the hundreds of millions of

pounds (Quinn, 2006).

       Amid U.S. plans of fingerprinting all departing international travelers, Virgin and other

industry experts voiced their opposition to the measure, claiming that the measure would

undoubtedly cause passengers to have to endure longer lines. Prior to the measure, European

Union airlines flying to the U.S. only had to supply passenger name records (Milmo, 2007).

While the government planned to require the fingerprinting, it would be up to the industry to

finance and implement the security procedure which it claimed would cost $2.3 billion over 10

yrs. Contrarily, industry experts‟ estimate of this same implementation came to more than $3.5

billion on the overall economy and almost assured longer waits for already-aggravated

passengers. Virgin‟s executives and the International Air Transport Association [IATA] laid the

responsibility for not only financing but implementation of such a measure firmly on the back of

the U.S. government. U.S. government officials later accused the airline industry of obstructing

security advancements (Hsu & Wilber, 2008) before conducting a short experimental test run at

two major U.S. airports in 2009. The program was subsequently discontinued, although the

Department of Homeland Security [DHS] website still says the program will be required “at a

date to be announced in the future” (2010).

       Ultimately, passengers can take comfort in the fact that Virgin Atlantic must be subject to

the regulations of every country it services. The increased oversight instigated by flying only

international routes means that at least two countries laws must be complied with every time one

of its passenger jets lifts off the runway. As evidenced by the debates that have occurred between
                                                                               Virgin Atlantic 17


Virgin and both the U.S. and U.K. governments, Virgin is an active partner in ensuring the

security of the passenger aviation sector in the post-9/11 world.

                                            Conclusion

       Having been profitable in recent years, despite economic and fuel price crises, Virgin

seems poised to continue to compete with industry giants like British Airways and American

Airlines in its niche market.
                                                                                Virgin Atlantic 18


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                                                                                  Virgin Atlantic 19


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