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Air wars: Virgin ramps up marketing

In the ongoing air wars, Virgin Australia (ASX: VAH) is ramping up its marketing spend over the next 12 months and promoting an on-board Wi-Fi entertainment system to stream content to customers’ own devices.

Virgin is playing catch-up to arch-rival Qantas Airways (ASX: QAN), which has just finished an overhaul of its marketing, brand and corporate affairs structure. In the customer satisfaction stakes, Virgin and Qantas are both tied at 82.7% for the 12 months to June 2013, but Virgin has taken the lead in the business sector. Roy Morgan data shows Virgin has pulled away from Qantas in satisfaction levels amongst its corporate clients.

The Australian Financial Review (AFR) reports that Mark Hassell, Virgin’s chief customer officer, says the company has invested in a product development program, including an expanded program with the Australian Football League (AFL), new terminals and business lounges and the new wi-fi entertainment system.

“There is a lot going on and because of that, the opportunity is there for us to make sure we kind of get those messages out there,” Mr Hassell told the AFR.

The on-board Wi-Fi system was trialled last year on a single jet, by-passing the traditional screens in the seat headrests for an app-based solution, streaming 300 hours of content onto customers own devices. Mr Hassell says that 90% of its customers have at least one device, so the new system should work for the majority of passengers. Last month the company suggested it was aiming to have the system on all of its planes by the end of November this year.

In other Virgin news, Air New Zealand (ASX: AIZ) is reported to have picked up another 63 million shares on Tuesday night, after winning the right to increase its stake in Virgin to 25.9% last week. Virgin’s major shareholders include Air New Zealand, Etihad, Singapore Airlines and Sir Richard Branson’s Virgin Group.

Foolish takeaway

The ongoing competition between Virgin and Qantas is only going to hot up, as Virgin attempts to take some of Qantas’ 65% domestic market share.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

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