reveries - john riordan - virgin atlantic airways

NOVEMBER 2002

"In rugby, you beat the crap out of your opponent and have a beer with them afterwards," says John Riordan, Chief Marketing Officer of Virgin Atlantic Airways. "It's the same in the airline business. We're fearsome foes during the day, and we're fierce friends at night."

A native of Cork, Ireland, and former professional Rugby player, John Riordan joined Virgin Atlantic Airways as Vice President, Marketing and Telephone Sales, North America in 1999.

"I was a frustrated finance major and while the numbers are all well and good, I always wanted to see what was behind making the numbers," he says, explaining why the business of marketing looked interesting to him, even at a tender age.

"I never had an absolute yen to work in the airline business as a kid," he continues, "but I do recall on numerous occasions in my teens, sitting on a plane and thinking, 'I paid a hundred bucks for this, and there are 120 people on board the aircraft and multiplying it out, adding in something for fuel and the crew and whatever and thinking, they can't be making money!"

Then, he says, he realized, after talking to other people, that there were others on the plane who paid a much different price. "So probably at the age of about 15 or 16, I thought, 'this is a very interesting business.'"

His path to Virgin Atlantic began with answering a blind newspaper ad about ten years ago. It happened to be an ad for US Air. They were looking for four people to set up a division within the marketing group -- ostensibly for two internal, one other airline person, and a wild card. Well, John managed to snag the wild card spot. He just got in on the ground floor in the marketing department, and was exposed to a ton of different things.

During his first two weeks at US Airways, Continental launched a product called Continental Lite, which was the precursor to Delta Express and Shuttle by United. It was the first response by a major carrier to the perceived threat of Southwest coming out to the East Coast. John became heavily involved in that for a couple of years, really enjoyed working on the marketing side and progressed on to running the frequent flyer program there.

And then there was that detour. Autobytel. You know, a dot-com. "It was a couple of minutes actually," he explains. "I was there for eight weeks. I moved, I blinked, I bought a house, I blinked, and I moved back again. It was great."

At that point, one of the VPs at US Airways that John worked closely with had some close ties at Virgin and he recommended John for a position. "It was the end of my seventh week there when I got the phone call that Virgin was interested. And I just dropped everything and came back because it's probably one of the best gigs in the airline business."

What's it like to work for Richard Branson?

It's incredibly interesting. Actually, it's more appropriate to say that I'm working within a cluster that he's created. But there are certain buzzwords that w

e all live by, certain brand values that we live by, and they permeate through everything that we do and they start right at the top. We have five core brand values and we do everything by those -- fun, caring, honesty, value, and innovation. They weren't just plucked out of the air; every single one of those values has meaning.

Is the airline business as much fun today as it was before September 11th, 2001?

The airline business is always a lot of fun and extraordinarily interesting. I think the dynamics have definitely changed since 9/11 and it really challenges a lot of our business models. But no, I don't think the interesting nature of the challenge has changed any bit. This is just yet another cycle in the airline business.

From a marketing perspective, there's an enormous thrust on driving down cost. Again, this is endemic in the airline business; in recessionary times, one of the first focuses is on cost. For ourselves, at Virgin, that always becomes a really interesting scenario because we're such a sales-and-marketing driven corporation. We hold marketing to be one of our core skills, so we do our best to try to protect our marketing dollars in a downturn.

How do you keep it fun at Virgin?

It's the people, to be honest with you. We have an excellent group of people working in our marketing organization throughout the world. If you get the right people motivated in the right way, and you have a brand that people believe in, then you don't have an issue. The people who work on this brand, all around the world, wake up every morning enthused with the prospect of working for the brand.

Does that make flying Virgin different than flying any other airline?

Well, it makes working here different than working anywhere else! Actually, one of our company foundations is that if we have a place where people enjoy working, that will be passed on to the customers who will see that and will enjoy flying with us and who will fly more often, which will give us more profit.

So as opposed to saying, "let's first and foremost try to deliver shareholder value," we try to deliver employee value, which will deliver passenger value, which will deliver shareholder value. We're simply inverting the typical business model.

What is the best marketing idea you've had for Virgin?

I don't know if you're familiar with Handspring PDAs? About two and half years ago we heard that Handspring was about to launch, and that it was a competitor for Palm. They were trying to do things in a fun and unique fashion, a la Virgin.

So, we approached them just as they came to market and before they had released any of their advertising and said, "give us X amount of units. We'll buy those units from you, if you allow us to market your product with our name on it. We gave away Handspring PDAs for passengers who flew in upper class, which is our business class product. We led with the headline saying, "Virgin Atlantic offers you an assistant you can fool around with in London."

So we went out there with a product that was consistent with what we were and what we are. We provided added value to the customer and we also did it at a time of the year when we needed the impetus in our business class cabin.

Other than butterflies, what kinds of new media work best for Virgin?


Click HERE for Butterfly Story

That was a scandalous story! I don't know how you picked that up! It was mean-spirited! We had such a laugh. There's a guy my age who works at our ad agency who is a rogue -- he's got a great, great sense of humor. Every now and then he just comes up with this hysterically funny idea. He called me cracking up laughing saying, "We've got to do something with this, I just picked it up wherever last week." It was hatched in about forty-five minutes. We just looked at it and laughed and said, "we can not pass this up without sending it out!"

What are the new media? In the course of the last year, probably the most important campaign that we did was a very carefully coordinated integrated campaign in the New York area, primarily the New York area, which we called The Loving London Tour.

We took what sounds like an extraordinarily bland concept of a poster of a plane, on a stylized Union Jack with the words "Loving London" and "Virgin Atlantic" on it. It sounds incredibly boring but it was done in a retro sixties British rock style poster. We came up with this and the concept actually worked both on TV and in print. Because it had that sort of rock poster genre, we had quite a considerable amount of wild postings in Manhattan. There was a ton of construction going on downtown and we did quite a lot of blanketing down there as well.

How about the Internet -- how do you use it for Virgin?

It's an excellent distribution vehicle. It is not likely to replace the importance of the travel agency community, which still delivers an enormous chunk of our revenue.

As it develops, the travel agency channel is probably like the cinemas were when videos came out; they need to reinvent themselves, and they are. Those that are successful are going to do extremely well. If you remember, twenty years ago, everybody was saying that cinemas would die -- that there won't be any more cinemas. We've now gone through the videotape revolution, we're in the DVD revolution and I'm sure they'll be something else following up shortly, yet the cinemas are still robust.

Cinemas may be slightly fewer, but they're going into the entertainment side of it and they're going to the added services. The Internet is having the same dynamic on the travel agency world and we recognize that there are people who want to buy our product direct with us, through the Internet. But the majority of people want to buy our product through the travel agency community, and we will continue to serve both.

How will the airline business change over the next five years?

We're so hidebound by regulatory issues that the most cataclysmic changes in the airline business are probably going to be precipitated by regulatory changes. If domestic air service is liberalized and if the domestic ownership rules are relaxed and foreign carriers are allowed to fly between points in the U.S., that will change the dynamics of the domestic airline model.

Similarly, if there's the correct liberalization between the European Union and the U.S., in terms of flying rights, that will open up

the European market. You could potentially see carriers like Virgin Atlantic flying between Paris and New York and Air France flying between London and Boston. So those kinds of changes are the largest changes likely on the horizon. Those changes would probably move at glacial speed, but they would have the largest impact.

From a product standpoint, we have invested quite heavily in some larger aircraft and we will be one of the launch customers for the brand new Airbus 380, along with Emirates and Singapore, in 2006. The Airbus 380 is the double-decker aircraft. We already have a project team who are about a year into working on every aspect of it. I'm not going to tip our hand now, but we will be doing plenty of innovative things onboard the aircraft.

How will Virgin Atlantic change?

Right now, Virgin Atlantic Airways is the biggest entity within the Virgin Atlantic Group in the U.S., but if the current projections come true, Virgin Mobile will pass us by very comfortably, very shortly. And Virgin Megastores is expanding. So while we're now the flagship of the enterprise here in the U.S., we may well have two other companies within the Virgin Group fighting with us for the number one spot.