For a guy who first made a name for himself by releasing music by punk act The Sex Pistols when labels refused to touch the act, Richard Branson has done very well. He's more than an entrepreneur, but a visionary with an obsessive eye for detail. Those attributes came in handy when he launched Virgin Airlines in 1984, hoping to put a more contemporary stamp on air travel at a time when plane commuting was uncomfortable at best.
Virgin was a success from the start when the company that put a huge focus on customer service and flier comfort was a hit with European travelers. In particular, Virgin Atlantic won several global hospitality awards and continues to lead the pack in innovations like high-tech lounges and even LGBTQ staff to promote inclusivity.
Branson started a similar venture in Australia to serve the Southeast Asia market and tried his hands at taking on the U.S. market.
In retrospect, Branson might admit that Virgin America was a tough segment to crack, especially with the economy getting more unpredictable. Things got so tough, Virgin shareholders decided to ink a deal with Alaska Airlines, a move Branson felt would spell the end of Virgin America for good. That declaration would turn out to be alarmingly quite prophetic.
Virgin Airlines Started As A Bold Richard Branson Vision
Tired of airlines packing passengers into fleets like sardines in tins and feeling customers felt the same way, Branson wanted to extend the Virgin Airlines brand into the U.S. with a promise to make flying more enjoyable for Americans. A stickler for details, Branson added features that fliers might ordinarily find on luxury carriers, but he pledged that flights would still be affordable to the average passenger. In short, he wanted to offer folks in coach some services you'd otherwise expect sitting in first class.
Some of those features included purple mood lighting and leather seats to relax folks occupying the cabin and offering several high-tech amenities like complimentary side orders and the opportunity to order food or select entertainment options via touchscreen.
Branson Protested The Sale To Alaska Airlines
When Virgin America began operations in 2007, it was touch and go from the start as high operating costs forced the company to cut services to a few North American cities. But the financial market collapse of 2008 hit Virgin America hard, although it was luckier than other airlines that have since folded. The company tried to realize efficiencies by upgrading its automated booking system, but it frequently crashed, disrupting even more customer service.
Trying to raise more cash, Virgin America went public on the stock market, which created a lot of interest from other American airlines wanting to take Branson's company over. Alaska Airlines presented the most enticing offer, which Branson tried to block. But by now, he was a minority shareholder in Virgin America running against other stakeholders to accept an offer of $2.6 billion from Alaska.
The Virgin American Name Is Quickly Gutted
Alaska Airlines, an airline that didn't have as great a customer service record as Virgin, promised to treat the acquisition as a merger, but a year later they changed their mind. Insisting that the company would realize greater returns if the fleet ran under the same Alaska brand, the new owners quickly started scrubbing the Virgin America brand on everything from stationery to the surfaces of the planes themselves.
Even the interiors of Virgin planes were retrofitted to fit the color scheme of Alaska and crews once relegated to planes owned by two companies were integrated to create a more cohesive workforce. While Branson bemoaned the disappearance of his beloved company, Alaska responded with reports that by the fourth quarter of 2017, previously flatlining revenues were up by five percent.
As For The Rest Of The Virgin Fleets...
The sale of Virgin America was only the beginning of Branson's decreasing influence on the very airline he founded. After seeing his American wing disappear into the fold of Alaska against his wishes, the entrepreneur decided he'd had enough.
A year after the sale, he sold off shares of Virgin Atlantic until he wound up owning only 20 percent of the company he founded in 1984. The rest of it is unevenly split between Delta (49 percent) and Air France/KLM (31 percent). His ownership of Virgin Australia is even lower at 10 percent. Etihad Airways PJSC and Singapore Airlines comprise part of an ownership group that has the rest of the shares.
More recently, with Covid-19 restricting international air travel and threatening to change the industry forever, several news outlets have reported that the surviving Virgin businesses are on the brink of collapse, Some dispatches have cited as Branson asking for government support to keep them aloft for the duration of quarantine measures during the pandemic.