Virgin America

by Adam Berman and Frank C. Schultz
15 Jul 2016

This case illustrates how Virgin America, founded in 2007, craved a niche of dedicated urbanite-flyers in the highly competitive -- but staid -- airline industry by redefining the passenger flying experience. In 2012, approximately 20 percent of Virgin America's passengers accounted for 80 percent of the airline's revenue. The A case begins with Virgin America's launch in August 2007, when the airline began with transcontinental flights between New York City and Los Angeles and San Francisco, and then goes through August 2012, after the airline had expanded into 19 market destinations across the United States and Mexico but was still unprofitable. In the A case, the dynamics of the airline industry, customer experience and loyalty, and niche marketing are explored. The A case ends with several questions, including those asking students to evaluate Virgin America's business model and to identify the action steps needed to reach profitability. The B case then covers Virgin America during 2013 and the decisions Cush and his management team made to make the airline profitable that year, an important financial milestone prior to any possible IPO. The C case concludes with Virgin America's successful IPO in November 2014. Please note: This case also has (B) and (C) supplements available.

Learning Objectives

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The purpose of the Virgin America case (A, B and C) is to apply the business concepts of value propositions, business models, market niche strategies, market segmentation, service management, entrepreneurship, and competitive advantage to the airline industry. Under the leadership of David Cush, the CEO of the Virgin America, this case illustrates how the upstart airline created a loyal market niche of urbanite flyers within the United States -- making up one percent of the total airlines industry revenue in 2012 -- by expanding to 19 destination markets and becoming profitable within six years of its founding and leading to an IPO in November 2014.

Details

Pub Date: Jul 14, 2016

Discipline: Entrepreneurship

Subjects: Organizational behavior, Startup, Decision making, Management styles, Entrepreneurship, Leadership, Risk management, Organizational culture, Marketing, Market positioning, Start-ups

Product #: B5828-PDF-ENG

Industry: Airlines

Geography: United States, California

Length: 21 page(s)