Penalties for plagiarism and collusion management essay

Plagiarism: to use or pass off as one’s own, the writings or ideas of another without acknowledging or crediting the source from which the ideas are taken. Collusion: submitting an assignment, project or report completed by another person and passing it off as one’s own (as defined in the NTU Honour Code (http://academicintegrity. ntu. edu. sg). I understand the nature of plagiarism to include the reproduction of someone else’s words, ideas or findings and presenting them as my own without proper acknowledgement. I understand that there are many forms of plagiarism which include direct copying or paraphrasing from someone else’s published work (either electronic or hard copy) without acknowledging the source; using facts, information and ideas derived from a source without acknowledgement; producing assignments (required to be independent) in collaboration with and/or using the work of other people; and assisting another person to commit an act of plagiarism. I understand that the work submitted may be reproduced and/or communicated by the University or a third party authorized by the University for the purpose of detecting plagiarism.

Penalties for Plagiarism and Collusion

The penalties associated with plagiarism reflect the seriousness with which NTU view cheating, and its commitment to academic integrity. This could include the award of a failing grade for the assignment (or the course), or expulsion from the University. This policy applies to all work submitted, including oral presentations and/or written work.

Keep a copy of the Assignment

Be sure to make a copy of your work. If you have submitted your assignment electronically, also make a backup copy.


I declare that this assignment is my own work, unless otherwise referenced, as defined by the NTU policy on plagiarism. I have read the NTU Honour Code and Pledge. Signed ___________________________________________ Date ____________________________ntu-logo

Wee Kim Wee School Of Communication and Information






ASSOCIATE PROFESSOR LEE CHEI SIANDATE OF SUBMISSION: 16 APR 2013Table of ContentsAnalysis of Virgin America’s Social Media Strategy


The population of Social Media users has been increasing significantly in quantity and diversity over the years (Kaplan & Haenlein, 2010). Nielson’s 2012 Report on the ” State of Social Media” revealed that the number of hours spent on social media has increased by about 37% year-on-year from July 2011 to July 2012 (Nielson, 2012). Furthermore, the demographics of social media users are not uniform. They range from teenagers, middle aged Generation X-ers at age 35 to 44 to retiree over 65 years. Businesses have taken interest in this trend (Kaplan & Haenlein, 2010) and have sought to utilise social media to create value for themselves as well as their customers. (Annabi & McGann, 2012). For example, social media has been used to facilitate the dissemination of information to a large numbers of consumers at a cheap rate (Bird, Ling, & Haynes, 2012). As a result, this has also changed the dynamics of interaction between businesses and their stakeholders, customers, competitors and the even the media (DiStaso, McCorkindale, & Wright, 2011). Furthermore, businesses have also used social media to build brand awareness and improve consumers’ perceptions (Ayeh, Leung, Au, & Law, 2012). One business that has effectively leveraged social media technology is Virgin America (VA). As a newcomer to the highly competitive US domestic airline industry it relies heavily on social media to engage in customers and build brand awareness. VA began using social media technologies with the creation of social media accounts in 2008; one year after its launch. Following which, it assembled its social media team in 2009 and has been at the forefront of using social media technologies ever since (McNaughton, 2011). Its successful use of social media is evident in the numerous awards it received including the ” Travel + Leisure’s World’s ” Best Domestic Airline” award for five years running[1]. Despite the accolades and popularity with its customers, its business performance has been so poor that it has made net losses of US$671 million since 2007 (Tuttle, 2012a). Moreover, is has resorted to reducing flight capacity by 3 percent in the first quarter of 2013 and offering employees temporary leave on a voluntary basis to cut costs (Credeur, 2012a). To understand this dilemma, this paper seeks to utilise Porter’s Five Forces model (Porter, 1980) to analyse VA’s poor business performance to date despite its popular social media presence. In doing so we seek to highlight the possible reasons why these strategies have not been successful in helping VA gain a competitive edge over the other airlines.

Literature Review

There are several definitions of social media in literature. In general, it is a group of Internet-based technologies that allow individuals and entities to interact with one another (Berthon, Pitt, Plangger, & Shapiro, 2012; Kaplan & Haenlein, 2010). Kaplan & Haenlein (2010) emphasised social media’s ability to create and share user generated content. They listed social networks, blogs, collaborative projects and virtual worlds among the technologies that fall into this grouping. Berthon, et al. (2012) highlighted its ability to harness the collective wisdom of the masses through social dialogues. They distinguished this from traditional one-to-many broadcasts medium because social media enables many-to-many dialogues. To this end, social media can be used by businesses to facilitate interaction within their organisations as well as interaction with their customers (Yang, Kim, & Dhalwani, 2008). Having understood the wide definition of social media, the subsequent sections seek to consolidate our review on the social media strategies that have been undertaken by businesses to augment our understanding of VA’s own social media strategies. Apart from the strategies, our literature review will also cover the challenges to social media adoption to appreciate the limitations and concerns to social media adoption which we can juxtapose with VA’s case study. Finally, we explain the Porter’s Five Force model which serves as our framework for discussion

Social Media Strategies

Most businesses regard social media as a platform for advertising and information dissemination for their products and services. Using social media technologies, product promotions can be personalised which is challenging for traditional mass advertising (Ayeh et al., 2012; Langheinrich & Karjoth, 2010). Like modern word-of-mouth, product endorsements and information can originate from friends within a potential customer’s circle of friends in their social network (Langheinrich & Karjoth, 2010). Consequently, the credibility of the promotional message is perceived to be higher because they come from someone who is neutral, familiar and who has used the product or service before compared to some marketing message. Social media has also been used to engage customers and build brand loyalty (Unnikrishnan & Wall, 2010). Ayeh, et al. (2012) noted that businesses have found that their customers are more willing to divulge their honest opinions through the informal interactions on social media. This creates a channel of engagement for cheap but timely dialogue (DiStaso et al., 2011) for the nurturing of long–term customer relationships. For example, businesses may provide exclusive offerings to customers or poll them about their preferences on social media in an effort to engage and build brand loyalty. Apart from branding, social media may also be used for reputation management (Ayeh et al., 2012). This is particularly important during a crisis where companies can leverage social media to respond, acknowledge their failings or even offer compensation as part of their service recovery strategy.

Challenges to Social Media Adoption

As corporations embrace the social media as part of their business and technological strategies, there are challenges which restrain their adoption. These include the lack of control, its rapid change and general scepticism on its benefits. The uncontrollable nature of comments on social media presents a significant challenge to its adoption (Ayeh et al., 2012; DiStaso et al., 2011). While positive comments are welcome, businesses are particularly fearful of receiving negative comments. To manage negative reviews, some companies have resorted to posting positive reviews to hide the negative one so as to portray a positive image of themselves on social media (Annabi & McGann, 2012). The manipulation of online reviews raises ethical concerns. Leveraging on social media is challenging because the social media environment is dynamic and fast changing (DiStaso et al., 2011). Employees have struggled to stay current despite its immediate nature. Thus, the difficulty for business in adopting social media is three-fold. Not only must they adapt their business and technological strategies to cope with an ever changing social media landscape, they must also train their staff to adapt to the changes as well. The scepticism on how social media is beneficial stems from the difficulty in identifying how it can improve sales, be measured systematically or how it can be used to analyse customer sentiments (DiStaso et al., 2011). Despite these struggles to strategically leverage social media, companies like JetBlue Airways and VA have continued to invest heavily in social media technologies hoping that the greater customer engagement will eventually translate to sales (Unnikrishnan & Wall, 2010).

Porter’s Five Forces Model

Michael Porter’s five competitive forces model (Porter, 1980) provides a framework to analyse the competitiveness of the US airline environment for which VA is a part of. Porter’s Five Forces (PFF) explains that the competiveness of a business environment is dependent on the threat of new entrants into the industry, the bargaining power of customers and suppliers, the availability of substitute products or services and lastly the amount of competition among industry competitors. PFF informs us that the stronger these five factors are, the stiffer the competition. Consequently, PFF has been applied to the US airline industry to explain the competitive forces and expansion (Ramón-Rodríguez, Moreno-Izquierdo, & Perles-Ribes, 2011). Ramón-Rodríguez, et al. (2011) noted that the barriers for new entrants to the airline industry is largely attributed to the limited airport infrastructure and airport regulations. However, incumbent airlines have also erected barriers in the form of passenger loyalty programs, aggressive pricing and formation of alliances. In terms of customer and supplier bargaining power, they observed that the former has increased while the latter has diminished as a result of Information and Communication Technologies (ICT). More specifically, the Internet has empowered consumers to gather information about competing airlines to make better purchasing choices. However, airlines themselves have also relied on ICT to reduce the need for intermediaries to sell the air tickets. This has given airlines greater control of the selling price and distribution channels in the absence of these past suppliers. The airline industry has reached a level of maturity such that most products and services are substitutes for each other (Aharoni, 2004; Ramón-Rodríguez et al., 2011). This implies that lower prices and service differentiation have become critical in staying competitive. This explains the growth of Low Cost Carriers like Spirit Airlines which have stayed profitable through their competitive pricing (Tuttle, 2012a). Addressing the competitive rivalry among airlines, Ramón-Rodríguez, et al. (2011) points out that the industry is not perfectly competitive since the travel routes taken by airline are typically different. Even if the travel destinations are the same, they opined that there are barriers to entry that limit the number of direct competitors. It would seem that VA faces a reasonably competitive market. As a new comer to the domestic airline industry, it is important for VA to differentiate itself while staying profitable. It is thus reasonable to postulate that VA’s heavy investment into social media technologies is its business strategy in remaining competitive.


To analyse the rationale and effectiveness of VA’s social media strategy in the context of the competitive forces that exist within the airline industry, we had first reviewed literature on the topic of social media strategies itself. In addition, we had also considered the use of PFF to analyse the US domestic airline industry. Having done the above, we then proceeded to review articles on VA’s social media strategies. This is done by searching journals and news articles on the subject in the Internet. While the several articles on VA’s social media strategies was found in online news articles, very few journals articles were written on the topic. In the subsequent sections, we consolidate the information on VA’s social media strategies followed by a PFF analysis on its effectiveness.

Case Study: Virgin America

We can observe VA’s commitment to the use social media just from its website. The company has a social media presence in Twitter, Facebook and YouTube along with its own blog called Flyer Feed[2]. Even its CEO David Cush’s message on the site alludes to the use of social media to learn from customers themselves (Cush, 2013). In his message, Cush cited its business strategy of providing WIFI, Google Maps, good food and drinks at competitive prices is the result of listening to VA’s customers, presumably from its social media touch points. The following sections will thus describe these strategies in detail. While companies may have issues adapting to the dynamism of social media, VA is able to embrace it because all its employees, including its CEO, are active participants on social media (Green, 2013). With social media being an integral part of the VA culture, its personnel are comfortable in using it directly to communicate with their customers, engaging them at a personal level in the process. Instead of just having an online presence on the social network, VA’s social media strategy is to also listen and respond to the online feedback about itself as well as its competitors. Green (2013) notes that VA responds to the feedback and conversations about itself on social media channels. VA’s Social Media Manager illustrated this policy by citing how a VA plane from San Francisco to Boston was named #NerdBird because it was the nickname used by employees and customers to describe VA’s passengers and crew (Fidelman, 2011). Furthermore, VA has used social media to crowd source new product and service offerings on its planes. Such is the level of interaction and engagement with its customers. VA has also used social media to respond to negative customer feedback in real-time (Shaik & Ritter, 2011). Unlike the other companies highlighted in our literature review who respond to negative comments by posting positive comments of their own, VA engages unhappy customer on social channels directly. For example, the technical glitches caused by the industry-wide upgrade of the airline reservation system in Oct 28 2011 resulted in unhappy passengers having to change or cancel their flights. When they vented their frustration on social media, VA kept their negative comments on its Facebook page (Gallo, 2011). It also responded to each complaint on Twitter with an individualised response. Finally, VA’s strategy also entails heavy investment into social media technologies. For VA to stay nimble and responsive to the dynamism of social media, it has invested in technologies like HootSuite which is a social media management dashboard to help employees organise the social communication in together (Green, 2013). It has also plans to upgrade its on board RED IFE system in 2013 to enable its customer service agents to track passengers flight history and last three social media interaction so that personalised messages can be set to the passenger (Kollau, 2012). Thus, social media is also used to improve customer post-sales service rather than just pre-sales advertisements or branding.

Analysis and Discussion

Potential threat of new entrants

The potential threat of new entrants by foreign carriers is kept at bay by means of governmental legislation and regulations. One such means is the ruling that foreign ownership in American carriers is limited to 25% (Horgan, 2011). In addition, foreign carriers are restricted from plying domestic routes within the United States (Chang, Williams, & Hsu, 2009). However in 2000, in a bid to boost competition within its local aviation industry, the U. S. Congress enacted the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR-21) which requires airports to file a Competition Plan with the Federal Aviation Administration (FAA) to allow new carriers to have access to airport facilities (J. Williams & Snider, 2011). New entrants into the industry, such VA does not have economies of scale in terms of routes to attract business travellers from legacy airlines such as America, United etc and low budget airlines such as Southwest, Air Trans etc (Grant, 2010). To compete in the hypercompetitive aviation industry, airlines would offer aggressive pricing, personalised booking system, attractive frequent flier and loyalty programs etc. (Ramón-Rodríguez et al., 2011). To wade through the hypercompetitive market space, VA tries to differentiate its market segment by targeting on the premium frequent flyers who would not mind paying for preferred seats, extra leg room etc (Garrow, Hotle, & Mumbower, 2012). However, even with such creative revenue models, VA still finds it difficult if not impossible to be profitable (Tuttle, 2012a), a scenario which would dampen most prospects who are interested to compete in the US airline industry. An aviation consultant, Hubert Horan quotes {Richardson, 2010 #16}(Richardson, 2010):” King Solomon couldn’t start a U. S. domestic airline these days. No matter how well they’re run, it’s tough for any airline that’s small to survive.”

Bargaining power of buyers

As a young airline, VA has sought the strategic use of social media to differentiate itself from its other competitors by increasing the switching costs in lieu of the increased buying power of air travellers who primarily now purchase air travel tickets online (Müller, 2011). The switching costs for customers are only considered substantial for those whose travel destinations comprise mostly of the routes that VA is plying, since VA’s routes are relatively limited compared to most of the other bigger network carriers, and who absolutely require wireless internet access during the flight. Hence, other than the customers who possess the aforementioned requirements, and who desire the premium, hip in-flight experience that VA is famed for, switching costs for customers are generally low or insignificant. Industry analyst Hunter Keay said in a telephone interview with Bloomberg, ” They had an assumption that consumers would choose product quality over price and convenience and network carriers responded with force.” (Credeur, 2012b). Despite all the accolades that VA received for being an innovative and an airline that people love, VA still posted large net losses (Tuttle, 2012b). Air travellers are still going to VA’s rival Southwest Airline (SA) due SA ability to keep fares low through increased productivity (Webb, 2012). Given the bargaining powers of air travellers, VA has had to be creative in enhancing its information system for its clients. Apart from providing the passengers details about the frequent flyer points, VA would suggest entertainment and food & beverage choices based on what they have watched before or eaten on previous trips, as well as airport maps of where they go to make connecting flights. The system also gives all passengers brief profiles on other passengers as a conversation starter for the seat-to-seat chat function (Kollau, 2012).

Threat of substitute products

The threat of substitutes to air travel is traditionally from alternative transportation modes such as rail, road and sea transportation. While they are not perfect substitutes, the magnitude of the threat is dependent on the customer’s time, money and need for convenience. However, unlike other countries, the American airline industry faces a low threat from high-speed rail where regional travel is concerned. The only service in the highest class of high-speed rail currently available in the US by definition[3]is the Amtrak’s Acela Express (Todorovich & Hagler, 2011). Plans for expansion of a similar class of services in California will not be completed until 2028. While the near-term impact to the domestic airline industry is not severe, stakeholders should still make appropriate preparations to maintain competitiveness as high-speed rail affords many improvements to air travel in terms of cost, time and various conveniences. In addition, technological improvements in telepresence and video conferencing systems have enabled many firms to reduce the need for their employees to be engaged in long-distance travels even for important meetings. Despite the generally weakened spending in 2009 during the economic downturn, it was found that corporate spending on telepresence technologies grew at a quicker rate than air travel (Mooyman & Wetenschappen, 2007). Thus, while telepresence and video conferencing systems are a growing threat in eroding carriers’ potential sales from mostly business travellers.

Bargaining power of suppliers

The bargaining power of suppliers is generally high due to the limited choices that carriers have when selecting suppliers for what forms their largest – passenger planes. Boeing and Airbus are the two dominant passenger jet makers. Moreover, they have an order backlog of more than 8000 passenger planes between them as of 2012 (Parker & Shotter, 2012). The supply of aviation labour, in particular commercial pilots, is also limited due to the declining trend in the appeal of a pilot career, given the less-than-glamorous media coverage of airline distress and lower entry pay in recent years (Lovelace & Higgins, 2010). It has also been forecasted that there is a shortfall of approximately 86, 000 in the supply of pilots between 2010 and 2025. Further, given that many continents do not have sufficient training infrastructure to meet training needs, it is expected that pilots from the US and Europe will be the supplier of pilots for foreign carriers, which further erodes the already limited US domestic supply (Lovelace & Higgins, 2010). Hence the bargaining power of pilots is expected to be moderately high. However, while employees of many major US airlines are unionised under the Transport Workers Union (Transport Workers Union, 2013), the employees of VA have voted against unionisation in 2011 (Carey, 2011). While the result of non-unionisation remains to be seen, this may potentially lower the bargaining power of VA’s employees, since the TWU have touted their ability to help unionised workers who are women or people of colour to earn at least $9, 000 more per year on average than their non-unionised counterparts (Transport Workers Union, 2013). However, VA appears to be leveraging on their already well-established social media strategies in their bid to improve staff involvement in its internal communications platforms, as opposed to the traditional military-style of command in the culture of competing carriers (O’Reilly, 2012). The demand for airspace, landing and takeoff are part of the operating costs that are borne by airlines. Delays due to congestion or coordination would increase airlines’ expenditure which in turn might be passed on to the customers (Levine, 2011). In US, the Federal Aviation Administration (FAA) uses Airspace Flow Programs (AFPs) to schedule for departure delays when airlines’ demand for a region of airspace known as a ” Flow Constrained Area” (FCA) exceeds capacity. These schedules are known as slots given out by the authorities for the airlines to land their carriers (Bloem & Huang, 2011). VA, just with other airline would have to negotiate for airspace and slots with FAA in order that its flights can operate optimally. The US National Airspace System (NAS) is a facility which is provided by the Federal Aviation Administration (FAA). NAS manages almost every facet of the aviation industry which includes control towers, radios, radars and many airports to form the NAS operational network (J. H. Williams & Signore, 2011). As such, airlines compliance to FAA is critical to ensure the approval of its flight schedules.

Industry competitors

Standing in sharp contrast to Virgin America’s struggles is the rise of Spirit Airlines. Along with its fellow fee-crazed cohort across the pond, Ryanair, Spirit has been an airline that travellers love to hate for years. And yet, despite the common complaints about Spirit (customers have to pay even for water and could get hit with $100 fees for carry-on bags), the airline is likely the most profitable of any in the U. S. (Tuttle, 2012a). Southwest Airlines, which is the largest low fare carrier in US is now competing directly with VA by entering the frequent premium travellers and the business travellers market segment (McCartney, 2011). Southwest acquisition of Air Trans would significantly put pressure on major airlines such as Delta Airlines (Esterl, 2010) and may have a ripple effect on VA as it previously been competing in several locations with Air Trans. The number of VA, Southwest Airlines and Delta Airlines followers for in major social media platforms represents these companies online presence. For comparison purpose, Southwest Airlines was chosen as it represents the biggest low cost carrier in US whereas Delta Airlines was chosen as it represents one of the major US airlines which serves both US domestic routes as well as international network (Daraban, 2011). Table 1 below indicates the number of followers for each airline in major social media platforms. The numbers of followers derived were obtained from the actual sites of the social media platforms as of 13th April 2013. Virgin AmericaSouthwest AirlinesDelta AirlinesFacebook353, 3073, 724, 883582, 176Twitter402, 0501, 482, 381441, 037Google Plus1, 011, 443

1, 411, 784Pintrest255111, 851222Instagram21, 64452, 370

LinkedIn8, 72530, 52753, 869Table : Airlines’ presence in major social media platformsAlthough VA has been winning accolades for its use of social media, it is not the only airline which is leveraging on various social media platforms. Apart from LinkedIn and Google Plus which Southwest Airlines does not have an account; it is the leading airline in all other major social media platforms. Delta Airlines does not particularly fare very well in terms of presence on photo sharing social media sites. It does not have an Instagram account (Cheng, 2012) and have a very limited number of followers in Pintrest. Nevertheless, it has a greater number of followers for all other social media sites than VA. In VA’s defence, although it may not have the highest number of followers in social media due to its limited route, its engagement with its customers helped to earn VA the best US airline in 2012 (Lowy, 2013). The award is based on the annual statistical report of major airline performance in the US conducted annually since 1991. Academics which were drawn to evaluate the aviation industry for the 2012 awards includes, Dr. Brent Bowen, a professor at Purdue University and Dr. Dean Headley, a professor at Wichita State University (Ewalt, 2013). It is a reasonable assumption that VA’s excellent customer relationship is enhanced with its online presence in social media (Hvass & Munar, 2012).


VA has been brilliant in using social media as a means to increase its brand awareness, enhance customer relationship and market its products and services (Lee & Warren, 2010). Using sentiment analysis tools such ” Attensity Analyze” on user generated content in social media platforms (Wang, 2012), comparisons were made among several airlines in US and it was found that positive sentiments towards VA is one of the highest in the aviation industry (Feil, 2012). To ensure that its branding remains consistently well perceived, VA partnered with Klout, an online data analytics to ensure that major social media influencers such as celebrities, sports personals would associate closely to its brand (Solis, 2012). However, despite the positive feedbacks and accolades that it receives, VA has still yet to post any sort of profit in any quarter since its inception in 2007. Perhaps the reason for such phenomena is apart from its limited number of routes; VA’s competitors have been mimicking its various strategies but at a larger scale. Other pressure factors which VA is facing are depicted through Porter’s five competitive forces model. An effective and well strategised social media implementation alone will not translate into profitability and VA’s experience is a proof of that. Nevertheless, being a start-up airline company, it will take VA several years to challenge the likes of Delta Airlines, Southwest Airline in terms of scale. Nevertheless, VA should ensure that it maintains its rapport with its customers in the midst of its losses and keep to Sir Richard Branson, VA’s founder’s life motto, ” Screw It, Let’s Do It” (Branson, 2010).