Underwater Plane

The Virgin Conglomerate is now the proud owner of an underwater airplane. The airplane is for guest at Neckar Island, an Island owned by Richard Branson in the British Virgin Islands. Necker Island is rented out for $300,000 a week and if guests are interested they can also rent the underwater “Necker Nymph” for $25,000. The Nymph was designed by Hawkes Ocean Technologies and can go over 100 feet underwater. The Nymph gives a 360 degree view of underwater life. Guests who partake in the underwater experience must be accompanied by a certified pilot or follow SCUBA procedures. Another perk to the Nymph is its low environmental impact. It is quiet, very buoyant, and displays small amounts of light so that it does not disturb the underwater life.

Hawkes Ocean Technologies is currently the only company producing underwater airplanes, giving them complete control over the market. The threat of other firms entering this market is currently low because of the many barriers to entry. Firms interested in developing an underwater airplane would have to have large amounts of capital and be able to invest a lot of time in the development of the underwater airplane. The science and technology involved in making an underwater airplane would be very extensive.

On the consumer side of things, very few consumers are able to afford this Nymph’s $1.5 million price tag making the demand for this item very low. Because Hawkes Ocean Technologies currently has control of the market, there are also no substitutes for consumers to choose from. However in the long run, if Hawkes Ocean Technologies shows a profit, firms will begin to enter this market. If other firms enter this market, it will help drive down prices, create substitutes, and increase the supply available to consumers.

Virgin on the other hand may have trouble making profits in their market of renting the Nymph to vacationers on the island. It seems at first that Virgin would not have trouble making money considering they are charging $25,000 to rent the Nymph but after considering the variable costs it is questionable. Their variable costs would include the pilot’s wages, repairs, insurance, and expenses involved with each use like gasoline. These high variable costs paired with low demand from consumers may make it hard for Virgin to even break even. This underwater airplane does however serve as a good way to spark consumer’s interests in Neckar Island and give the island more publicity.

http://money.cnn.com/2010/02/01/technology/richard_branson_underwater_plane/index.htm