Porter’s Five Forces Analysis of Virgin Atlantic

Since Virgin Atlantic’s strategy is always changing in reaction to the ever-changing external environment, it’s sufficient to point out that each of these five forces has a unique impact on Virgin Atlantic. Virgin Atlantic’s low-cost business strategy has been followed by many of Virgin Atlantic’s competitors in recent years. Customers in the aviation industry receive amazing service. People who use transportation services enjoy a high level of convenience and effectiveness. Food, entertainment, and a welcoming staff complete this establishment’s offerings. Other than transportation, this industry excels in terms of time savings. Analysis of the aviation industry can reveal why some companies outperform the rest. Operating costs, passenger volume, expensive fuel and maintenance costs, and severe pricing rivalry are only some of the external factors that impact this business in the United States. Using Porter’s method, this analysis focused on Virgin Atlantic.

Barriers of  Entry and Exit

• Starting a business in the aviation industry requires a considerable investment of capital, which suggests that there are major barriers to entering and leaving the market.
• Regulators usually demand that airlines fulfil their contractual obligations to their stakeholders if they decide to leave the aviation industry, which makes it much more difficult. 
• The airline industry is also extensively regulated and subject to numerous standards, so authorities must be satisfied with the airline’s airworthiness and financial stability in addition to the safety of its aircraft. 
• In this regard, Virgin Atlantic has to contend with considerable entry hurdles. Remember that carriers will be allowed to participate in price wars and a “race to the bottom” when you enter the market.

Rivalry in the industry

• Every year, more and more airlines enter the market in search of greater financial rewards. Airlines have not been stopped from entering the sector despite the fact that most airlines are unable to regularly make profits. 
• It is safe to say that the level of industry competitiveness is strong, which has an adverse effect on Virgin Atlantic. Fare wars and ruthless competition are becoming increasingly common in the global aviation business, which is driven by the increasing number of airlines competing for the dwindling passenger pie. 
• The cliché of “bigger is better” and a lack of profitability are also driving airlines into mega-mergers as competition between them intensifies. For the airline business as a whole, rivalry is more likely to be confined to the buyer’s side than of the seller’s side. Fliers can now have a very luxurious experience. 
• It’s because of this that a low price is charged with all services included, especially in a case like United’s, where severe competition in the airline business is visible.
• For Virgin Atlantic’s benefit, a large number of competitors have entered the market. Despite the fact that the airline business does not generate consistent profits, new competitors have jumped into the market. 
• As a result, there is a lot of competition. As a result of the competition, many businesses have adopted the maxim “bigger is better,” and as a result, mergers and acquisitions abound.

Supply Chain Influence

• Aviation fuel, ground support, and handling services, as well as planes like those of Virgin Atlantic’s come from Boeing and Airbus. 
• Vendors also include makers of spare components. Few airlines and many suppliers compete for airline business, therefore it stands to reason that suppliers have limited leverage and airlines have sway. 
• Because jet fuel is a costly and valuable commodity, airlines like Virgin Atlantic enjoy a competitive edge in the supply chain. As a result, these companies view Virgin Atlantic as a valuable customer.

Buying Power

• In a market where passengers have so many options, there is fierce competition for their dollars, and there is constant concern that low-cost carriers will eat into the market share of established rivals, the purchasing power of customers is the most significant influence on Virgin Atlantic’s business. 
• Even while many other airlines have successfully copied Virgin Atlantic’s economic strategy in recent years, the low-cost carrier’s market share is being eroded by the competition.

Substitutes Threaten

• As air travel is the most frequent means of transportation in the Western world, Virgin Atlantic has few rivals. In light of the current economic climate, many business travellers who previously relied on flying to conduct business are now considering alternatives such as teleconferencing and virtual meetings. 
• In addition to these changes, budget cruises and slow tourism are reducing the necessity for air travel in favour of more affordable options like budget cruises. 
• There haven’t been any potential Virgin Atlantic competitors because air travel is the dominant mode of mobility in the Western world up until now.
• Companies are turning to technology like virtual meetings and telephone conferences to cut down on travel costs and boost productivity in the face of the ongoing recession. 
• Travelling for pleasure has become more popular among the general public, who are opting for lower-cost alternatives and lessening their use of commercial airlines in doing so.

Conclusion

On Virgin Atlantic, this paradigm has a substantial impact on Porter’s five forces concept. Because Virgin Atlantic’s operations are immediately impacted by the external environment, the company’s need to innovate and be lean and mean in order to survive in the face of increased competition. If Virgin Atlantic wants to be in business, it must keep up with the times and adapt to the changing industry.