Expanding Market Reach
One of the strongest ways to create a top brand is by strengthening ties such that two airways come together either with one buying stakes from the other or the two becoming one. This often creates two stronger brands having a broader coverage for their services.
This is the case with Singapore Airlines and Virgin Australia after the former got a 10% stake of the other in an acquisition agreement. This agreement will strengthen the services of the two airways. This acquired stake will be by Virgin Australia placing new shares.
Singapore Airlines will purchase 245.57 million shares at a rate of 42.88 Australian cents. This agreement is one that is targeted at strengthening business development and pushing the frontiers for the two companies. This will also lead to the diversification of the earnings made by the companies.
The importance of business development cannot be overstated in the aviation sector, as there is a crucial need to continue spreading the reach of the airways’ services. Many airlines have shut down because they were unable to meet the demands of the business. As such, it is crucial to have a solid business development scheme through which the airline will continue to maintain its services and reputation.
The acquisition agreement is seen more like a partnership and alliance. The aim is to create a wider spectrum for the two parties and the parties are in full support of it. The two parties have released statements to this effect showing that they are in support of the subsequent transformation to take place following the agreement.
Virgin Australia is not stopping with just that single transaction. The airline is taking things even farther. The company has announced that it will be having two more acquisition transactions in other airlines. Clearly, the aim of acquisition is to gain more market prominence and also become a force to reckon with. By having the main shares in the other companies, the airline gets to have a clear point of vantage.
Also, the airline business requires that you have a solid reputation in the market as well as a wide reach. The biggest airways are those with the reach to serve millions of people. This way, the airline will be on people’s mind when they have to travel. So, while Virgin Australia and Singapore Airline are sealing an acquisition agreement, Virgin Australia is also sealing more agreements with other airlines in the business to expand its business scope.
For instance, Borghetti stated clearly that acquiring Skywest and Tiger Australia allowed the airline to have a broader reach in the market. It created a stronger presence for the airline and cemented its place as a top airline to work with.