C/B/282. How successful was Virgin, through its low-cost subsidiary, Virgin Blue, and British Airways, through its low-cost airline, Go, in overcoming the disruptive strategic innovation that was the low-cost, no frills airline?

In recent years, competition in the already turbulent airline industry has intensified as a result of the entrance of low-cost, no frills airlines into markets across the global. Here, the low-cost, no frills airline business model is seen as a strategic innovation that will undermine the business model of traditional airlines. Two such airlines that have responded to this threat by setting up subsidiary airlines include British Airways, through Go, which operated in the European market, and Virgin, through Virgin Blue, which competes in the Australasian market. Whilst Virgin Blue has experienced considerable success, British Airways did not and was forced to sell the airline after just five years of operation. This paper, using a model of disruptive strategic innovations, examines the reasons why Virgin Blue has been successful whilst Go failed. It will be of particular use to those studying disruptive strategic innovations, as well as those who have an interest in the airline industry.