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Branson Says Competing Airlines Should Start From Scratch

Virgin Atlantic President Tells Ad Age He Hopes Rivals Don't Learn From His Success

By Published on . 6

FT. LAUDERDALE, Fla. (AdAge.com) -- When Richard Branson does anything, he usually does it in a big way, and that often means lots of people and press and a highly festive atmosphere. So when Virgin America, which was named one of America's Hottest Brands by Ad Age, inaugurated two new routes from Ft. Lauderdale to San Francisco and Los Angeles, it was done with all the pomp and circumstance that usually accompanies the launch of an entire airline, let alone a new route.

Richard Branson at Virgin America's Ft. Lauderdale launch.
Richard Branson at Virgin America's Ft. Lauderdale launch.
Yes, Mr. Branson clearly knows how to draw a crowd. Against the backdrop of two of his airline's jets, he celebrated the inaugural flight as it landed in Ft. Lauderdale Wednesday afternoon. He was joined on one of the runways at the Ft. Lauderdale-Hollywood International Airport by Virgin America executives, including CEO David Cush, local government officials, loads of press and several hundred partiers, many wearing oversized sunglasses and acting as if they were too cool to be bothered by the heat. All the free music and booze certainly helped, and the party continued into the night at a red-carpet event at the W hotel in Ft. Lauderdale, where the music kept playing, the booze kept flowing and everyone kept partying.

Mr. Branson, founder and president of Virgin Atlantic, sat down with Ad Age on-board one of his planes during the festivities to talk about the future of the airline industry, what he hopes legacy carriers can learn from Virgin America (nothing), TV as an ad medium, what marketers need to do to get through the economic downturn and, of course, commercial space travel.

Ad Age: How do you think the airline has done in its first few years of operation in the U.S.?

Mr. Branson: Despite being born in the worst recession since 1929, it's done remarkably well. Word-of-mouth has gotten out about Virgin America, and once people have flown it, they won't fly any other airline. And even though we have advertised, we haven't had to advertise an enormous amount because word-of-mouth has been our best advocate.

Ad Age: What are you guys doing well and what could you be doing better?

Mr. Branson: The product is absolutely and utterly right, and I wish every one of our airlines all over the world had exactly the same product. Our crews are bang-on right and delivering the product tremendously well. Having brand-new planes and the youngest fleet flying in America is a big help. We have the best entertainment system, and offering free Wi-Fi through our current partnership with Google is great.

We're lacking planes and routes, and we just need to get more of both. The most common question I've been asked today by people here in Ft. Lauderdale is "When are we going to New York, Chicago and all the other cities?" The important thing is to try and build the network.

Ad Age: What are your plans for increasing routes throughout 2010?

Mr. Branson: We should be looking at roughly five new routes next year.

Ad Age: Virgin America doesn't use much TV or print at all, so what are your thoughts on the future of the more traditional advertising mediums?

Mr. Branson: Conventional television obviously is dying as an advertising medium and will continue a slow death, whereas obviously the web and other forms of new media will continue to grow.

Ad Age: What can some of the legacy carriers learn from Virgin America in terms of the airline's approach to marketing and customer service?

Mr. Branson: I don't really want them to learn anything. I'd be delighted if they carried on exactly as they are. They basically should get out a clean white sheet of paper and start again. Most of them are beyond repair. They got far too big and have management groups that don't care about customer service. The experience the traveling public gets on those other carriers is pretty dire.

Ad Age: Are any of them doing anything right?

Mr. Branson: If I was them, I'd start a new airline. I just don't see how they can rescue their current airlines.

Ad Age: What will the airline industry look like going forward? Do you foresee more major consolidations like Delta and Northwest?

Mr. Branson: As long as governments don't make the mistake of stepping in and propping them up, we will see another spectacular failure with one of the major airlines. I won't forecast which one, but it will be good news for the industry because it will free up slots and enable people like JetBlue, Virgin America and Southwest to expand, which is in the interest of the traveling public because our policies are better and we offer better fares.

Ad Age: What are some of the challenges marketers are still contending with during this economic downturn?

Mr. Branson: When Virgin Atlantic started 25 years ago, we had one plane and we were competing with 13 American carriers and a lot of them have gone bust and yet they were all massively bigger than us. The challenge is that they are not getting their products right. The car manufacturers that have their products right are doing fine. The ones that don't are effectively bust or should have been had the government not bailed them out. The same rule applies to all industries: If you've got your product and offering right, you'll survive this. If you don't, you'll die.

Ad Age: You've said banking, with Virgin Bank, would be your next venture. Why the financial-services industry?

Mr. Branson: We're looking at Virgin Bank in Europe and possibly North America. Again, banks like many other industries have been discredited, and this is a good time for Virgin to move in to the industry.

Ad Age: Do you see a future or market of any kind for the traditional music store?

Mr. Branson: Sadly, I don't think so. One just has to accept in life that technology moves on and evolution takes place. What was the hip thing one day has become a thing of the past another day and music stores are one of those things.

Ad Age: When will we have commercial space travel?

Mr. Branson: Virgin Galactic will unveil our spaceship on Dec. 7. Then we go into extensive test programs, and hopefully, in 12 to 18 months' time, it will happen.

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