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The Virgin Knight

Sir Richard Branson's new world order: save the planet, save its people and keep an eye on things from above. Way, way above.
Betsy Model
From the Print Edition:
Richard Branson, Sept/Oct 2007

(continued from page 2)

Flying the Unfriendly Skies
When routinely asked by budding entrepreneurs or business students about the fastest, surest way to become a millionaire, Branson likes to quip back, "become a billionaire and then start an airline."

Actually, Branson's only partly joking; after all, his first foray into commercial aviation happened on a whim. Hiring a private jet to get him back to Puerto Rico after his Caribbean jaunt, he took the time to count the number of other pissed-off travelers at the gate. After some quick math, Branson borrowed a blackboard, turned to the other passengers and wrote "Virgin Airways. $39 Single Flights to Puerto Rico" on it, and filled the seats. In the back of Branson's mind, a light had gone on. He could build a better airline.

"Look, the airline business 21 years ago was dreadful, and in some countries," he laughs, "it's still dreadful. You had a piece of chicken dumped in your lap if you were lucky, the seats were uncomfortable, the stewardesses and stewards never smiled…they obviously weren't happy in their jobs and they weren't happy with the tools that they were given. I spent a lot of time on planes because I had a record company, so I rang Boeing and I said, 'My name's Richard Branson and I'd like to buy a secondhand 747.'"

Ultimately, Branson was to negotiate an even better deal with Boeing—a lease with a guaranteed return policy—but first, the person at the other end of the aviation giant's phone line had to figure out who the hell this upstart Brit was, calling out of the blue.

"They said, 'Who are you again? What did you say your company is called?' and I said, 'Virgin. Virgin Records. You know, the people who brought you the Sex Pistols.' To their credit," Branson continues, laughing, "they said, 'Look, we'll give you a go as long as, unlike your name, your airline's going to go the whole way.'"

Virgin Atlantic went airborne—literally—in 1984 and while "going the whole way" was certainly Branson's intention, starting out with a single, used 747 did nothing more than amuse the rival airlines serving London and New York at the time, including PSA and British Airways. Laker Air, the discount airline started by one of Branson's business idols, Sir Freddie Laker, had gone bust not long before and People's Express was soon to follow.

Virgin Atlantic began to gain notice from its rivals, though, when its sold-out flights and snappy, tongue-in-cheek marketing efforts began to eat into their sales. Normally boring, cookie-cutter transatlantic flights were suddenly fun again with the addition of sleeper chairs, fine cuisine and flight attendants hired for their smiles and sass appeal. By the time Virgin Atlantic began gaining creditability, additional planes and additional arrival gates—not to mention the media stories about in-flight neck massages and passengers having pajama parties at the stand-up bar in first class—one rival in particular, British Airways, had had enough.

In what was ultimately to become a case study for MBA students the world over on the subject of corporate dirty tricks, British Airways declared war on Virgin Atlantic. The battle played out in the international media, and, later, the courts: a David versus Goliath story that spawned numerous film documentaries and nonfiction books. Tales of how British Airways hacked into Virgin Atlantic's computer database, stole passenger data and either cancelled its flights or rerouted them to British Airways flights were told from one side, as rumors of Branson missteps and of how Virgin Atlantic, the underdog, was financially insolvent were told from the other.

Richard Branson as underdog? If so, not for long. Remember, it's always the smaller dogs that circle around to bite you in the arse.

As he began to lose customers on flights that had once been sold out, Branson doubled his efforts, dipping into the profits generated by other Virgin Group companies to cover the airline's losses. He also began digging in his heels.

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