1. Virgin America: The Low-Cost, Luxury Airline
Marketing Plan
Presented by: Angela Romero-Monsalve
Presented to: Prof. Perttula
MKTG 649-3
SFSU

2. History of Virgin America
Virgin America is a subsidiary of the Virgin Group, which is a venture capital conglomerate,
composed of 400 companies worldwide owned by Sir Richard Branson. The concept behind this
business model is to infuse each subsidiary with the Virgin brand and core values in order to
invest in different business areas. The Virgin brand is intrinsically linked to its owner, Sir
Richard Branson. Branson infused thecore values of being unconventional, hip, and innovativeto
each of the conglomerate’s subsidiaries with a keen emphasis on delivering high-quality products
for a low price.1These core values are present in Virgin America because it provides high-quality
travel at a low cost. Virgin America’s primary operations are located in San Francisco
International Airport and its headquarters are in Burlingame, CA.
Virgin America started its flight operations on August 8, 2007 with an aim to provide low-cost
travel with high-quality service between major cities across the east and west coasts, such as
New York City, San Francisco and Los Angeles. By 2012, Virgin America has expanded its
travel destinations to 13 cities in the U.S., such as Seattle, Portland, Dallas, and Philadelphia.
The reason why Virgin flies to these destinations is because these destinations are major
metropolitan cities where the target audience, the “creative class”,frequentsforbusiness purposes,
as explained in the next section “Target Audience”.
Target Audience
According to David Cush, Virgin America’s Chief Executive Officer, the airline’s offering is
primarily targeted at the “creative class” who are young, urban, tech-savvy professionals using
smartphones to frequent social media sites, such as Twitter, Facebook, and Wordpress. 2This
target market rages from 25 to 40 years old, lives in urban areas, and socializes on the web. The
“creative class” encompasses two generational cohorts—the millennials, who were born between
mid 1970s and mid 1990s 3and the Generation X, who were born between mid 1960s and mid
1Marketing Minds. The Virgin Brand. 2012. Web. 04/09/12.<www.marketingminds.com.au/branding/virgin.html>
2Young, Eric. “Virgin America targets ‘creative class’ with social media”. San Francisco Business Times,October 11, 2009.
Web. 04/09/12 <www.bizjournals.com/sanfrancisco/stories/2009/10/12/focus2.html>
3 French, Dana (2005-11-21). "Generation Y versus Baby Boomers". Furniture Today. Retrieved 2009-11-27. "Born
between 1976 and 1994, more than one-third of Gen Y is still under 18."

3. 1970s. Gen X is the main focus of Virgin America because Gen Xers are in a life stage cycle
where they travel for work and/or have capital to start entrepreneurial ventures, which require
travel. The main reason why its operations are located in San Francisco is to cater to hub of
technological start-ups in Silicon Valley. As a marketing strategy, Mr. Cush aligned the product
offering with the primary target market. Because Silicon Valley people are computer-savvy, and
need to work and multitask during the flight, Virgin America offers in-flight Internet, gaming
platforms, and plugs for electronics. Also, the “creative class”will pay for comfort, luxury and
high quality service, which is why Virgin America offers customized leather chairs, ample
legroom and a friendly staff. 4Lastly, the Quantcast demographic analysis reveals that Virgin’s
target market is: males and females between the ages of 25-44 who are affluent and have at least
a college education, which parallels the “creative class” target market description.5
Product
Virgin America offers low-cost travel with high-quality service, providing premium
entertainment and productivity optionswhile being trendy and hip.To fulfill the low cost brand
promise, virgin follows a low-cost airline business model, having only one type of aircraft, the
Airbus A320. Following Southwest, the market leader on low cost, Virgin America uses a point-
to-point route networks and doesn’t add many connections.
Virgin America offers a touch-screen entertainment and productivity platform because, JetBlue,
the leader in comfort andpremium entertainment offers it. This touch-screen platformuses the
Red™ system, which is the most sophisticated entertainment system in the airline industry,
offering music, movies, and games.For productivity purposes, Virgin created a partnership with
Google to provideGogo® in-flight Internet. Theairplanes also come equipped with Ethernet jacks
and USB plugs in every seat because Virgin wants itspassengers to use their productivity devises
to get work done while traveling. The main cabin is also equipped with white leather seats,
ample chair space, and mood lighting, resembling first class cabins. Lastly, the flight attendants
are meticulously trained to provide a friendly and consistent service.
4 Grossman, David. “Virgin America designs a low-cost airline for business travelers”. USA TODAY, 9/9/2009. Web.
04/09/12. <www.usatoday.com/travel/columnist/grossman/2009-09-09-virgin-america_N.htm>
5Quantcast Corporations, 2012. . Web. 04/09/12. <www.quantcast.com/virginamerica.com>

4. Price
Virgin’spricing is in the lower-end of the spectrum, because its price offering is similar to
Southwest, the leader in low-cost airtravel. Virgin America offers airlines tickets from San
Francisco International Airportto Los Angeles International Airport for $69 dollars. Also,
Southwest offers tickets for the same route at the same price,$69 dollars.
As we learned in class, the airline industry is characterized by high fixed cost and very low
variable cost, which is why airlines aim to maximize revenues by engaging in price
discrimination. Figure 1: Price Discrimination depicts several price pointsthat Virgin America
offers for the same flight from San Francisco International Airport to John F. Kennedy
International Airport. The main categories are: Main Cabin, Main Cabin Refundable, Instant
Upgrade to Main Cabin Select, Main Cabin Select, First Class, and Refundable First Class.
Virgin America offers fundable tickets mainly for business travelers because this kind of ticket
allows for flexibility. This feature appeals to businesses because business meetings are often
rescheduled or because other coworkercould fly instead. On the contrary, leisure travelers rarely
reschedule vacations.
Figure 1: Price Discrimination
Source: VirginAirlines.com
Also, there is three price points: Main Cabin, Main Cabin Select, and First Class, which
correspond to three different locations in the airplane and an increasing amount of amenities. For
example, the Main Cabin offers for-pay entertainment, for-pay food and drinks, and no free
luggage check in. In contrast, First Class has exclusive reclining chairs, and unlimited free
entertainment, food, drinks, and checked bags.

5. Distribution
There are two main distributions channels for Virgin America’s tickets. The main one, which
accounts for 70% of the Airline’s ticket revenue is the company website, Virginamerica.com. 6
The other 30% comes from online travel agencies, such as Travelocity or Expedia. Virgin’s
tickets sales are mostly online because the “creative class” gravitates towards the web to do its
shopping, instead of going to brick-and-mortar travel agencies.Sporadically, Virgin America
distributes its plane tickets through discount websites, such as Grouponor Living Social. Virgin
sells its tickets via discount websites because of its cost structure. Because it has high fixed cost
and low variable cost, it is preferable to get more passengers in the flight at a discounted rate
than losing that revenue.
Figure 2: Domestic Operating Profit
Competition
The airline industry is characterized by having high fixed
costs and fierce price competition. As a result, airlines
created several alliances as means to increase revenue
and efficiency while reducing costs. There are three
major airline alliances:Oneworld with a market share of
22.7%, SkyTeam with 28.3%, and Star Alliance with the
majority of the market share of 37.6%.7
Source: CAPA
This is key for Virgin America because it’s an independent airline,
which means it has no alliances. This factor places Virgin America at a disadvantage when it
comes to reducing cost via increased purchasing power or increasing revenue via costumer
sharing, as the big three alliances do. Virgin America’s disadvantage is shown in it lower profits
compared to airlines that are members of alliances. Virgin America’s operating profit, shown in
blue, is often at the bottom when compared to Spirit Airlines, Alaskan Airlines, Jet Blue
Airways, and AirTran, demonstrated by Figure 2: Domestic Operating Profits.8
6 Grossman, David. “Virgin America designs a low-cost airline for business travelers”. USA TODAY, 9/9/2009. Web.
04/09/12. <www.usatoday.com/travel/columnist/grossman/2009-09-09-virgin
7 CAPA. “Virgin Atlantic to join alliance for firepower to compete with 'mega' mergers”.
Centre For Aviation, 13th September, 2011. Web. 04/09/12.< www.centreforaviation.com/analysis/virgin-atlantic-
considering-its-options--to-join-alliance-o-compete-with-mega-alliances-44259>
8CAPA. “Virgin America’s David Cush says the airline's unique formula will drive success”. Centre For Aviation, 13th
September, 2011. Web. 04/09/12. <www.centreforaviation.com/analysis/virgin-americas-david-cush-says-the-airlines-
unique-formula-will-drive-success-58673>

6. Promotion
Because Virgin America’s target market isthe “creative class”-- young, urban, tech-savvy
professionals using smartphones to frequent social media sites, such as Twitter andFacebook--the
best place to reach them is online. For promotions and advertising, Virgin America is mainly
active in 2 social networking sites: Twitter and Facebook.Twitter is the main promotional vehicle
for Virgin America. It aims to attract new customers in the tech-savvy market with Promoted
Tweets, which are advertisements that appear in the feed of people who aren’t following Virgin.
This is a good strategy because even thought Virgin America has over 300,000 followers, it can
9
increase its revenues via more customers. Moreover, Virgin did a Twitter promotion through
Promoted Tweets called “Fly Forward, Give Back”, which resulted in the fifth most successful
day in ticket sales. 10
Virgin America aims to create brand awareness, engage customers, and increase emotional
bondsby being highly responsive with its followers. After analyzing Virgin America’s Twitter
stream, I concluded that it respond to all the Tweets from followers, which is highly unusual for
a company. Virgin America embraced Twitter as a vehicle for guest services, a social media
strategy never seen before in the airline industry. For example, if a guest misses a flight and
Twits about it, Virgin responds by rebooking another flight for that guest.
Facebook is the perfect vehicle to engage in 2-way conversations with consumers in an attempt
to increase brand loyalty because Virgin hasover 200,000 followers.While followers don’t
translate into engagement, Virgin has over 5,000 people “talking about this”, which represent the
number of people actively engaging with the company.Virgin’s FacebookPage showcases events,
promotions, new routes and links to other less important social media sites, such as Instagram
and Pinterest. Because Virgin America is positioned as a high-tech airline, it wants to attract a
tech-savvy target market, which socializes on the web. As a result of the direct engagement via
social media, Virgin was able to achieve a Net Promoter Scoresimilar to Apple’s, which enjoys
high loyalty among its customers.A Net Promoter Score is a marketing tool used to measure
9 Van Grove, Jennifer. “Tweets at 35,000 Feet: How Virgin America Uses Promoted Tweets”. April 13, 2010. Mashable.com.
Web. 04/09/12. <mashable.com/2010/04/13/virgin-america-promoted-tweets>
10 Bush, Michael. “Virgin America on Why Twitter, Facebook Are More Important Than TV”. Adage.com, February 09,
2011. Web. 04/09/12. <http://adage.com/article/digital/virgin-america-values-twitter-facebook-tv2/148795>

7. customer’s loyalty. In conclusion, Virgin has turned one-time customers to loyal fans through
social media engagement. 11In addition, Virgin America has refrained to use TV ads because it is
a startup airline with a small target market that doesn’t have much reserve capital. On the other
hand, TV ads are designed to reachthe mass markets and are extremely costly. As a result, a TV
campaign would not serve Virgin’s goal, which is whyVirgin has not
used TV ads. Figure 3: Event Promotion
Guerrilla Marketing
Virgin America engages on guerrilla marketing campaigns that
seamlessly blend several marketing channels, such as the “Fly The
Beard” campaign. Virgin America and the San Francisco Giants
partnered to create a plane that has a beard in honor of baseballstar,
Brian Wilson. The campaign was promoted via a You Tube video Source: Virgin’s Facebook
because You Tube is another website that is frequented by the creative class. Another component
of the campaign is event marketing. Virgin set up a footprint that looked like an airplane in front
of AT&T Park. It also had photographers taking pictures of people in a fake beard behind a cut
out that resembles Virgin’s iconic print ads, see . The goal of the campaign is to take a picture of
the bearded plane and Tweet it to@VirginAmerica using the #FlyTheBeard hash tag. Virgin
selects the best pictures every month and the winners get free flights, andVirgin America Club
Level passes.12
There are several reasons why Virgin did this campaign. First, partnering with a high profile
organization like the San Francisco Giants increases brand awareness. Moreover, a Quantcast
demographic analysis reveals that the Giants fans are males between the ages of 20-35 who are
affluent and have at least a college education. 13 The Giant’s target market
demographicsparallelVirgin’s demographics closely, which illustrates that Virgin was aiming to
gain customers from the Giants because these two companies have a similar target market.
Breath of Fresh Airline Multimedia Campaign
11Bush, Michael. “Virgin America on Why Twitter, Facebook Are More Important Than TV”. Adage.com, February 09,
2011. Web. 04/09/12. <http://adage.com/article/digital/virgin-america-values-twitter-facebook-tv2/148795>
12Virgin America. 2012. Web. 04/09/12. http://www.virgin.com/travel/news/fly-the-beard-with-virgin-america
13Quantcast Corporations, 2012. . Web. 04/09/12<http://www.quantcast.com/sanfrancisco.giants.mlb.com>

8. Figure 4: Print Ad Virgin’s main campaign was called a “Breath of Fresh
Airline” and it was introduced in 2011. This multi-media
campaign usesonline banner ads, You Tubevideos,print, and
out-of-home billboardsas its main pillars.14However, the
online banner ads are the most used because online ads are
relatively cheap, the ROI is easy to track, and it gathers
consumer information. I found that Virgin’s online ads are
based on search history because since I’ve been doing this
paper, I’ve been getting several ones.
Source: Virgin’s Website
Figure 5: Out-Of-Home
The goal of the campaign is to showcase differentiating
features and amenities of the airline, such as entertainment,
mood lighting, and Internet with “cheeky statements” from
passengers. The adsshow different passengers framed from an
airplane window, expressing their feelings about Virgin such
as, “landing has never been so bittersweet”. The passengers’
points of view represent the company’s mission to make
flying fun and stylish. Moreover, from language like Source: Virgin’s Website
“bittersweet”, we can infer that Virgin is targeting an educated target market because
“bittersweet” is not a common word. Moreover, Virgin chose to display its ads on the
Internetbecausethat is where the target market spends its time, socializing and working. Lastly,
for the print ads, Virgin chose to deliver them in places transited by commuters, such as train and
bus stations, and busy street intersections because its needs to reach its target market who are
working professionals that commute.
14VirginAmerica. 2012. Web. 04/09/12. < http://www.virginamerica.com/press-release/2011/virgin-america-launches-
breath-of-fresh-airline.html>