The Virgin Galactic Accident Won't Be A Disaster For Virgin-Branded Airlines

The fatal test-flight crash of a Virgin Galactic passenger spaceship over the Mojave Desert in California on Friday has raised questions about whether the Virgin-branded airlines -- Virgin Atlantic, Virgin America and Virgin Australia -- will suffer from a lack of public confidence due to the crash. But don’t expect the airlines to suffer a major hit from the commercial space travel’s disaster, analysts say.

The perceptions of an airline are crucial to its business -- see Malaysia Airlines, for example, which has suffered huge financial losses in the wake of two separate aircraft disasters earlier this year. If an airline is perceived as unsafe, customers stay away.

“The Virgin Galactic crash is certainly not a positive for the Virgin brand,” said Tim Calkins, a professor of marketing at the Kellogg School of Management. “The challenge for Virgin is that the brand is in so many categories, there’s always the risk that a negative event will spill into other areas.”

In the days since the crash, Virgin Group founder Richard Branson has been vocal about responding to the commercial space travel disaster. He has been praised for responding quickly to the crash, traveling to the scene and setting a tone that indicates he’s serious about finding the cause of the crash.

“The fact that he responded so well will help the Virgin brand weather this setback,” Calkins said.

Virgin America, which is on its way to an initial public offering, plans to offer more than 13 million shares between $21 and $24 each, the company stated in its SEC filings. In the paperwork, it also noted that “negative publicity related to the Virgin brand name could materially adversely affect our business.”

But most industry analysts agree that it’s unlikely Virgin America, along with counterparts Virgin Atlantic and Virgin Australia, will suffer. Data from online travel agency Orbitz shows that there is no significant difference in bookings of Virgin flights since Friday's crash.

“I don’t sense any market confusion between the scheduled airline and sub-orbital or space tourism brands,” said aviation industry analyst Robert Mann.

Shashank Nigam, CEO of aviation marketing firm SimpliFlying, agrees. “While the Virgin Galactic incident is a setback to the space exploration program, we don’t believe it will have a direct impact on the airline side of the business,” Nigam said. “Each of the Virgin airlines have strong brands in their own home markets that should be resilient enough to absorb the impact of this incident.”

That’s because most consumer put space travel in a very different mental category from routine airline trips, Calkins said. “I don’t think there is a huge risk that people will have doubts about the safety of Virgin America or Virgin Atlantic because they had a crash in the Virgin space program,” he said.

But, added Calkins, things could change. “If it turns out the crash was due to some egregious maintenance problem, it could become an issue,” Calkins said. “For now, people are able to disconnect these two things. That’s why I think Virgin will end up being fine.”