Q & A session with John Borghetti VA CEO on 21 Oct 2103

[mono88]

Part 1

For interest ,here are some points made by JB from the 1 hour Q&A UNSW session in response to questions by Mark Scott ABC CEO at Four Seasons Hotel, Sydney on 21 Oct 2013 evening:
1. Major changes in aviation in last 50 years include digitalisation, use of the web etc and physical changes like increased capacity/size and reduced costs from the 70% lower fuel usage in a 330/787 compared to a 707.
2. Virgin Blue (VB) “forced” QF to introduce J* even though QF did not want to.
3. VA people recruitment is focused on people with a service provider approach not an airline background compared to QF i.e. VA has a broader range of people,
4. Until 3 years ago 90% of VA revenue was from the leisure market, mainly to/from and within QLD. With the QLD floods revenue dropped dramatically and VA needed a hedged revenue portfolio. So VA moved into Corporate higher end market & introduced business class
5. When VA introduced business class, business class fares dropped 27% from years of little business fare discounting
6. To attract Corporates and high end travellers VA had to compete not just on price but had to be a viable alternative to QF that could be trusted to deliver
7. With the resources market tied up in contracts by QF (JB did many of them), VA needed to start international flights, have alliances with partners, have lounges, FF programs etc.
8. With Australia’s small population (23m), VA started international flights to LA and Abu Dhabi with more to be announced soon and developed alliances with 4 international partners,

 

[mono88]

Part 2:

9. VA kept the Virgin name when it started as it would have cost “$100m’ to establish a fresh brand
10.VA did not enter into an alliance e.g. Star, but JB preferred an agreement with selected partners such as the 4 partners currently. These partners have a cultural and philosophical alignment with VA. In an alliance you have no choice as to who some of your partners in the alliance will be, and they may not be suitable for VA.
11. In the current Aust market, JB is not targeting market share. ASK as a measure of capacity is too simplistic.
12. VA has increased capacity by 8% mainly on transcontinental routes Perth vv East Coast. QF has increased capacity by 10% but it is mainly in the Syd/Mel/Bris corridor with J* increasing capacity by 14% in that corridor Yields in the Syd/Mel/Bris corridor are down due to QF not VA. So ASK measurement by itself can distort differences within the. Aust market.
13. Revenue mix share and yield growth together with great customer service are more important to VA.
14. There has only been 1 time that using the Virgin name under licence has been an issue for VA. When JB selected the new livery he presented it to a meeting in Houston, where Richard Branson and the other Virgin airlines around the world were meeting. The other airlines were saying you can’t have white plane tails should be red etc. But Richard B just said “Screw it just do it”
15. Best way to get information is to talk to flight and cabin crew on every flight he takes where possible. No good him sitting in seat 44A as he would never get normal service. JB takes about 8 flights a week.
16. Most important thing for the future in Aust. is “Infrastructure, infrastructure, infrastructure”. Do we want to be like LA airport terminal or Beijing terminal which is modern and big enough to handle future growth?
17. On the 2[SUP]nd[/SUP] Sydney airport it is important to make a decision and get on with it. Capacity at Sydney could be increased from 80 flights to maybe 110 an hour so there is some time before a 2[SUP]nd[/SUP] airport is needed. The proposal to combine terminals at Sydney does not work as VA believes that the extra time and cost to travel from the current international terminal is too much of a disadvantage compared to QF. So currently working on VA to remain in current terminal and have some international flights from that terminal. (Nicolas Moore CEO of Macquarie Group was present at the Q & A session)
18. JB started in QF mailroom in 1973 hoping to get a cheap staff ticket to Rio because he always wanted to go there. To this day he has never been to Rio.Gets about 400-500 emails a day, ends up using spending time on early Sunday morning between 3 or 4 am to go through them all. That is best time to send an email.
I have not met JB before but he is a short person for which current airline seat pitch is most suitable.

 

[Andyc]

I was in the audience for this one yesterday. I thought JB was very well spoken as really struck me as a great CEO to work for.

 

[Intra]

Thanks for the quick summary, interesting read. Still keen to see where the partners/international routes go... Regardless of how many partners they have, it would be nice to fly VA elsewhere!

 

[sogg]

I thought JB was very well spoken as really struck me as a great CEO to work for.

My Mate that recently moved from 777 SO to E190 FO, during the E190 Training JB actually came in and had a chat to the 15 or so of them there, explained his vision for VA etc, apparently its a common occurrence.

 

[lovestotravel]

Nothing really interesting at all there to be honest!

 

[mono88]

I was in the audience for this one yesterday. I thought JB was very well spoken as really struck me as a great CEO to work for.

He is very well spoken and well prepared. The airline industry would be very tough to work in.
There were over 500 people in the audience, luckily I had a cold beer in my hand.
Interesting that JB brought 3 flight attendants to help herd the crowd with UNSW/hotel staff. They looked great.

Wonder if this is a sign of the ratio of attendants to passengers (3:500) airlines are aiming for!!

 

[mono88]

Nothing really interesting at all there to be honest!

That's a fascinating post. Glad you are honest.

 

[docjames]

Nothing really interesting at all there to be honest!

I'm not clear if you're serious or you're being intentionally inflammatory?

I'm not sure how you can be interested in travel and not be interested in comments from the CEO of one of the two major Australian airline groups.

Thanks to the OP for posting - I found it interesting (some info new, some info not so new).