Virgin’s gain damages the Flying Kangaroo
When Virgin Blue finally announced that John Borghetti would take the reins of the airline in May, the only question was why they took so long to arrive at this no-brainer.
Virgin Blue’s search for a new chief executive has, for the past five or so months, been the same story written one hundred different ways. Borghetti, initially seen by pundits as the Cinderella for the discount carrier’s slipper, fell quickly out of contention in late 2009 after the Board seemed to keep the search rolling despite his availability. They kept us all off the scent with remarkable ease.
And why should anyone care? Well the company has never had a change of CEO since co-founder Brett Godfrey took the helm from the get-go in 2000. Despite ten years of very impressive growth, Virgin Blue has up to fairly recently been somewhat of a poor cousin to the far larger Qantas and lacking the ultra-cheap cost structure of Jetstar.
Now for the first time, Virgin Blue will have at its helm a man who spent 36 years at Qantas, running almost all of its key commercial and operational divisions – pilots, cabin crew, marketing, inflight product and lounges through to the major commercial travel accounts across corporate Australia.
For the competition it promises to be a bumpy ride. More for Qantas than Jetstar – Godfrey and indeed 26 per cent shareholder Sir Richard Branson have indicated the next phase for the carrier is to challenge Qantas’ stranglehold on the corporate travel market.
Branson told media this morning, “We were quietly pleased when he didn’t get Dixon’s job at Qantas. The board universally felt that if we could get him on board, we could have the best person out there who is available.” Quite.
So expect to see Virgin Blue courting the corporate traveller by nudging into the domestic Business class space, working on its lounge offering and improving its loyalty program. Inflight web/email connectivity and in-seat inflight entertainment are also both products to watch. And V Australia – the airline’s international arm – is likely to attempt to cement itself on the improving Pacific route by increasing frequencies between Eastern Australia and Los Angeles.
No doubt Qantas Chairman Leigh Clifford and his fellow directors will be hoping Borghetti – who was overlooked for the top job at Qantas last year – does not have too brilliant a run. Particularly given his not-so-subtle snub of both Borghetti and then Qantas CFO (now Leighton CFO) Peter Gregg when they were both looked over, where he suggested that they should “take it like a man.”
In his presser yesterday morning, Borghetti was careful to avoid any bitterness – saying he was concentrating on his new job, not his old one. Regardless, there’s something of a delicious irony in Borghetti stepping in to move Virgin upmarket and increase its slice of the premium travel pie while the discount airline guru Alan Joyce at Qantas strips First class out of most of its planes and replaces Qantas with Jetstar on many routes.
So fast forward five years and I’d expect we may have a very different landscape when it comes to domestic air travel.
And in more bad news for the Qantas Group, CFO Colin Storrie has stepped down to fight illness. Storrie, 41, is a former champion swimmer, a well-regarded family man and has been a key finance executive at the flying ‘roo for more than a decade. The search for a replacement has begun.
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