what do you think is virgin Americas business level strategy. please explain why you choose this strategy. what are the ways virgin America used to differentiate itself from its competitors? what have been the financial outcomes ( e.g. cost, revenue, profitability) of Americas differentiation efforts over the years.

This article first appeared the in the June 2014 issue of Airways magazine. SQUEEZED BETWEEN THE POWERFUL U.S. domestic network airlines and the aggressive ultra low-cost carriers, an airline that offers an award-winning travel experience to both leisure and business flyers might not have a chance to grow, much less survive. Virgin America begs to differ with a unique marketing advantage. Over the past year alone, thirteen million airplane seats have been removed from the skies by airlines as they reduce capacity. With little ability for growth projected for 2014, only the "ultra-low cost carriers" of Allegiant Airlines, Frontier and Spirit Airlines are poised to expand. Indeed, the average domestic load factor reached 87.1% during the second quarter of 2013. Beyond this dire analysis, an argument can also be made that true marketing differentiation among airlines in the domestic U.S. market is almost non-existent, if not a source of apathy among passengers whose sole focus is the five letter word: P-R-I-C-E. In the "low cost carrier" (LCC) category, Southwest Airlines has a unique marketing advantage, with its contagious corporate culture that encourages all employees to carry out their duties (on the ground and in flight) with humor and panache. After all, this was the first airline where this author experienced a passenger safety briefing sung in the Rap music genre by a flight attendant over the on board public address system. Outside of Southwest, a passenger would be hard pressed to associate anything significant about "flying in the aluminum tube" that would distinguish one airline over another When Airline Branding Mattered In the "legacy carrier" category of U.S. airlines, one would have to go back to defunct Eastern Airline's highly touted television and print campaign called the "Corporate Rate". Created by marketing executive Jim O'Donnell, passengers in 1990 could purchase a First Class seat for the price of an unrestricted Coach Fare. In an aggressive bid to lure business flyers back to Eastern, passengers received an extra wide leather seat (aboard select aircraft), extra legroom, full meal service, and an extra-designated flight attendant. While unthinkable in today's commodity-driven economy, Eastem took the bold step of doubling the size of their First Class cabins. The closest competitors to this program, TWA and American Airlines, merely offered extended legroom in Coach Class, only to abandon the program a short time later to maximize yields. In the late 1990s, British entrepreneur and Virgin Atlantic Airways founder and chief, Sir Richard Branson, felt that there had to be a better way. He also observed the struggle that his archrival British Airways endured, after they were stymied from increasing their 24.6% investment in US Air. Under U.S. law, a foreign investor is restricted to less than 50 % of the capital, and only 25% of the voting rights on the board of directors. Convinced that regulatory authorities in the U.S. would eventually relax these restrictions and allow an increase in foreign investment, British Airways executives soon became fed up and divested themselves of their US Air stock. Branson was convinced that the U.S. commercial aviation industry had succumbed to a lamentable state of affairs. Passengers complained of surly service in the airports and in-flight. What Branson saw that was missing was the lack of any distinguishable service characteristics when deciding upon which carrier to fly. To this end, he reasoned that U.S. domestic passengers deserved better service and more amenities for their money. No More Business As Usual In early 2004, Branson decided to "shake things up" when his Virgin Group announced the intention to start a new United States-based airline named "Virgin USA" (later changed to Virgin America). He envisioned a low-fare airline that differentiated itself from competitors by providing domestic travelers with a higher level of comfort. Branson also envisioned offering coach seats at prices well below the fares of larger rivals. To cite an example, Virgin America's introductory fares between its base at San Francisco to New York were set at $278 round trip, at least $50 lower than the lowest advance fares available from United and American - the route's two dominant carriers. Similarly, Virgin America's first-class service aimed to become a more comfortable experience, taking advantage of a high tech in-flight entertainment system at each seat called "RED" (a nod to the red-painted aircraft tails). Virgin's then-CEO Fred Reid described "RED" as "arguably two or more generations ahead of anything in the U.S. market today", offering 18 channels of TV from the Dish Network, pay-per-view movies and a wide variety of electronic games and music. Further, passengers would be able to text message each other, send drinks to one another, and order meals through the system at an extra cost in coach class. A Change of Mood Beyond technology, Virgin endeavored to introduce "mood lighting" inside its fleet of 53 Airbus A320's to improve the passenger's perception of the cabin environment and the passage of time through multiple time zones. These settings include "dawn", "dusk" and "blue sky". Further, the Virgin sense of "loosening the tie" (in self-deprecating fashion, Branson refers to himself as a "tie- loathing lothario") and having fun has extended to the naming of various aircraft in the fleet. Rock icon Grace Slick was on hand in 2006 to dedicate Virgin America's new corporate headquarters, and an aircraft dubbed "Jefferson Airplane" after the legendary 1960's band. Other aircraft names promoting this sense of fun include "Virgin & Tonic" and "Mach Daddy". This attention to informality and on board amenities differed significantly from competitors, who were scaling back on such services to lower costs and improve yields. Clearly, Virgin America is no "peanuts and soft drink" only airline. At the time of The Virgin Group's announcement of its intentions to the press, the newly organized airline expected to become aloft by the following year. However, in a scenario reminiscent of Southwest Airline's initial startup efforts in 1967, Houston-based Continental Airlines and the Airline Pilots Association (ALPA) met the initiative with strenuous opposition. Both groups alleged that the upstart would not be under U.S. ownership, but rather, operated as a subsidiary of Branson's Virgin Group in England. This argument appeared to hold some sway with regulators at The Department of Transportation (DOT), who denied Virgin America's initial application for an operating certificate on December 27, 2006. Indeed, The Virgin Group had provided an initial loan to Virgin America. However, formally, the airline is an independent licensee of the Virgin brand rather than a subsidiary of Virgin Group Undaunted by the DOT's ruling, Branson ordered 33 new Airbus A320's and selected veteran airline executive Fred Reid as CEO of the fledgling carrier. Virgin America's First CEO A native of San Francisco and a graduate of the University of California at Berkeley, Fred Reid was raised in Africa and has lived in Asia and the Middle East. Beginning in the mid-1970s, Reid held marketing and management positions with Pan American World Airways and American Airlines. He went on to become President and Chief Operating Officer of Lufthansa. After privatizing the latter and restoring it to profitability, Reid became president of Delta Air Lines, where he led the creation of the airline's low-fare branded airline 'Song', the Delta Connection regional subsidiary, and oversaw the acquisition of Atlantic Southeast Airlines and Comair (Airways, February 2014). Under his tenure, the SkyTeam global airline alliance was also created. Regarded as a savvy negotiator, Reid's first 18 months at the helm of Virgin America in 2004 was spent.lining up $162 million in financing from Black Canyon Capital and Cyrus Capital Partners. By November 22, 2005 the airline was capitalized and earned the support of city and state representatives from California and New York