After launching his Virgin brand in the music business in the 1970s, Richard Branson has branched out into many fields: mobile phones, cola, wedding dresses, cosmetics, trains and finance to name a few. Most came following Branson’s venture into his second love, after music, of aviation.
“Aviation has been one of the biggest success stories for Richard,” says Virgin Atlantic Airways chief executive Steve Ridgway. “Virgin Atlantic is overwhelmingly the largest company in the group.”
The Virgin brand has been applied to several carriers already – Atlantic, Blue, Express and Nigeria – and more will follow. Ridgway is part of the team involved in assessing new opportunities and on the best way to replicate the Virgin airline brand around the world. “I have quite strong views about how the brand should be developed in aviation and how the brand should be protected,” he says. The group has a coherent method of developing new carriers, and with its entrepreneurial reputation is constantly approached by people wanting to set up an airline.
“You tend to get bombarded by these things,” says Ridgway. “But we are under no illusions. The industry is tough and it is not characterised by big profits. You have to have a very good model to succeed. And the playing field is so uneven. Large parts of the industry are completely under government control and there is market distortion and subsidies. We’ve got to play in that space.”
Virgin’s approach to expansion is both strategic and opportunistic. “We are analysing different markets all the time,” he says. Some, like China, seem to have huge natural potential. “China is the only place in the world where they have built massive infrastructure all just waiting for traffic,” comments Ridgway. But large market potential does not necessarily mean Virgin will automatically go in. “There are a whole load of new licences being awarded, and we will watch that process. We certainly know all the players.” For now, Virgin will concentrate on building up its Chinese services with Virgin Atlantic, which would include a Beijing flight at some point.
Ridgway also puts India above China in terms of priorities for Virgin when it comes to possible launches. “We are very interested in India, but competition is restricted by the rules on foreign ownership,” he says. Branson’s view is that Virgin would start as a domestic carrier and then branch out overseas in conjunction with Virgin Atlantic. “The market potential is there but it will obviously require a change in the rules,” says Ridgway.
Russia is another country that could offer Virgin and Branson a new market. “If we could find a nice oligarch who fancies he has the bravado and panache of running an airline we’ll come and tell him how to do it,” jokes Ridgway. “Things are moving fast there and you would need local partners. In a sense we could go in as we have done in Nigeria.”
Branson also wants to regain control of Virgin Blue, which he lost to Australian transport conglomerate Patrick Corporation in March after it won a takeover battle. Virgin Group, which still owns 25.6% of Virgin Blue, is now mounting its own bid for the carrier in partnership with Toll Holdings, another transportation group from Australia. “Richard would like to increase his investment and get control back again,” says Ridgway. “He thinks Virgin Blue still has big potential and that we’re the ones who can best exploit it.”
With its eyes on almost every territory possible, there is also a desire to replicate the Virgin brand in the USA. But it has been tough going. “America remains a huge opportunity,” says Ridgway. “The big challenge is to do it in the situation the industry finds itself in. But with Delta and Northwest going into Chapter 11 the opportunity is even greater.”
Source: Airline Business
