25 YEAR OLD VIRGIN

As Virgin Atlantic, founded by Sir Richard Branson celebrates its 25th Anniversary in the worst downturn for half a century. It would like a merger with its short-haul rival BMI, recently bought by German airline Lufthansa. At the same time it is slashing its prices in a sales drive to encourage travellers amidst lower demand. Steve Ridgway who has quietly headed Virgin Atlantic for the last 10 years met his friend and mentor Branson on the Virgin Challenger, atlantic by boat record in the 1980’s. Ridgway, a former teacher turned boat builder was the project manager. Branson sponsored the race to get some much needed publicity for his new airline, launched with just one leased plane.

Twenty five years later, Virgin Atlantic now has a fleet of 38, flying 30 regular long haul routes to America, Africa, India and the Caribbean. Despite Ridgways non aviation background his adept organisaton and marketing have allowed the airline to punch above its weight with a service that is aimed at a younger business audience than its rival BA.

Ridgway has a tough job on his hands in the near future steering Virgin Atlantic through these torrid times in the worldwide economic market. It is a privately owned, medium sized long haul airline and its main competitor is the National carrier.

It was in profit last year on about £2.9 billion of sales, but could slump into the red in 2009. It has already postponed orders for new planes and last week launched a 40% -off sale on Upper class tickets. Without losing valuable slots at Heathrow or cutting the daily service to destinations it is hard to see where Virgin Atlantic can cut costs. In an interview with the Sunday Times Ridgway stated ‘We’ve done a lot already, cutting capacity and frequency, and we are a pretty efficient organisation, with none of the legacy costs of the old flag carriers. Our routes are profitable, we’ve got cash in the bank, no debts, our aircraft are leased – it’s a great place to be.’

He went onto say ‘I think we will stay profitable unless we see a much sharper downturn. We held our traffic until November, now its falling behind, but it’s not huge and we’re watching it carefully.’

As much of the airline industry looks to consolidate it will be interesting to see whether Virgin Atlantic will weather the storm, with other factors such as oil prices, falling sterling and the third runway at Heathrow all impacting the future. Ridgway remains confident saying ‘We’ll recover. If we have to slow down, we will, but we will grow again. Sure as eggs is eggs.’

I’m sure they will as their marketing has an ability to continually capture their target audience.

VAUXHALL STOPS FREE BSM CARS

Vauxhall is currently is discussions with British School of Motoring (BSM) in order to renegotiate of its supply agreement to the UK’s largest driving school to pay for cars it currently gets free of charge.

The talks threaten to thwart the planned sale of BSM by its parent company Aviva. Although Aviva has never confirmed BSM is for sale it has solicited a number of bids for the business which have now stalled while the car supply agreement is renegotiated.

For several years Vauxhall has supplied BSM with a 3500 fleet of the Corsa and Astra models for learners to practise in order to market them to young drivers. The driving school didn’t pay for the cars and after six months they would be sold onto the second hand market. Vauxhalls owners, the struggling US car giant General Motors decided several months ago that this arrangement was no longer viable and are now trying to get BSM to pay for the fleet costing several million pounds.

BSM have tried to find an alternative supplier, but other motor manufacturers are unwilling to take on the contract.

It will be interesting to see how this affects the dominance of BSM in the future and questionable as to whether this form of marketing was ever as successful as Vauxhall hoped with a view to encouraging young customers to the brand.
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