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Flying high starts with high risk

How Richard Branson broke into the airline business

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in Leaders & Managers,Leadership Skills

As Richard Branson found, frustrating experiences can provide the basis for innovation. Once you identify a problem, muster the courage to implement a bold solution.

Through his mid-30s, Branson operated a diverse business empire with roots in the music industry. He built a mail-order company to sell albums and then launched his own record label before branching out to video games and film distribution.

In 1984, he realized that the airline industry could use some innovation. The only discount carrier flying from London to New York was People Express. But despite his repeated attempts, Branson couldn’t reach their reservation line.

“I reasoned that either it was very poorly managed, in which case they would be an easy target for new competition, or that they were in so much demand,” says Branson, now 64.

Intrigued, Branson leased a Boeing 747 for one year. He figured he could dip his toes into international travel and test his hunch that he could run a better low-cost airline.

Like many innovators, Branson mitigated his risk. He knew the odds of failure were high, so he told his management team that he’d be willing to lose as much as $3 million trying to launch Virgin Atlantic Airways.

Instead of copying People Express by marketing his new airline as a mere provider of cheap seats, Branson sought to differentiate Virgin as a brash new player. He designed passenger cabins with in-seat massages, double beds and customized televisions.

Over the next decade, Branson discovered that operating an airline requires steep capital outlays. Even though his new airline broke even within its first year, an economic downturn forced him to make the most painful move of his storied career to keep Virgin aloft: He sold EMI, his wildly successful record label, for $1 billion.

Today, the four Virgin airline brands are thriving and profitable. And Branson’s net worth is $5 billion.

— Adapted from “Richard Branson Soars To Top With Super Service,” Scott Smith,

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