Article in todays nespaper. is quite interesting and straight forward.

https://www.theage.com.au/business/comp ... 4zkxv.html

How would Borghetti’s tenure as Virgin Australia boss be seen in years to come?
Was he too ambitious? or laid a platform for future growth?

Leading from that, what do VA need to in their next incarnation with a new CEO?
The article suggest with HNA and Nanshan group with 40% stake, a greater emphasis on China perhaps?

Appreciate much comment.

It will be mixed reviews with a lot of criticism. VA had a lot of potential but had greatly underperformed during JB's tenure with a number of poor decisions or executions that have been botched.
To be fair to JB to some extent, he did inherit a mixed fleet that was acquired under his predecessor Brett Godfrey (e.g Embraers for regional services and the 777s for their then V-Australia long-haul division). Apart from that, JB did axe the low-yielding destinations the 777s were placed on on during BG's tenure (Fiji, Phuket).
The shareholder structure at the time (e.g NZ, SQ, EY, Virgin Group, etc) didn't help as all four shareholders had their own competing interests that JB had to attend to.

However last few years under JB's watch has also been stagnant, botched roll-outs e.g halting new lounges, poor fleet decisions e.g the Airbuses and ATRs, and at the same had personality clashes with former partner CEOs (e.g Luxon leading to NZ's exit from VA and subsequent alliance with their bigger competitor QF).

sq256 wrote:

It will be mixed reviews with a lot of criticism. VA had a lot of potential but had greatly underperformed during JB's tenure with a number of poor decisions or executions that have been botched.

I'll start with one statement - hundreds of millions of shareholder funds lost and for what - a second rate airline?

mariner

called 'Teflon John' for a reason.
Fast forward 18 months and a new CEO is appointed, What is the first order of business?

bakestar wrote:

called 'Teflon John' for a reason.
Fast forward 18 months and a new CEO is appointed, What is the first order of business?

Bearing in mind that 18 months is an age in aviation, and the market will continue to morph during that time, I think the key issue will still be over the airline's balance sheet. Yes, it has been able to raise more equity, but that tap is now turned off, and it still has a lot of debt at high rates (7-8%). And with the Maxes coming at the end of 2019, there is a new cycle of capital expenditure kicking off. Assuming that profits and free cash flow continue to rise, that should be manageable, but it doesn't take much to change that situation.

There's little chance of Virgin collapsing, but it's also unlikely to grow beyond the pincer that Qantas has it in.

With the announcement, I doubt he will last that long. Transition has started and in my humble opinion as soon as a suitor is found, he will quietly slip out early, finally!

I think we focus a lot on the challenges VA have had with a lot of the cutomer experience touch points(checkin, lounge etc), and operational elements (fleet types and size). But I feel VA has done little in the marketing space. They started Viegin Australia with a retro glam feel, cheeky yet classy. Different from stale, stodgy QANTAS. But that soon vanished in an attempt to be slick which I don’t feel captured much of the public’s attention, and QF eventually turned out to be the more stylish prestigious brand.

VA has enormous marketing and brand potential - but never fully seemed to be able to build this cohesivly.

cougar15 wrote:

With the announcement, I doubt he will last that long. Transition has started and in my humble opinion as soon as a suitor is found, he will quietly slip out early, finally!

Please, let it not be James Hogan for next CEO.

juliuswong wrote:

cougar15 wrote:

With the announcement, I doubt he will last that long. Transition has started and in my humble opinion as soon as a suitor is found, he will quietly slip out early, finally!

Please, let it not be James Hogan for next CEO.

You gave me a laugh for the day thanks )) Last I heard he had moved to an investment or venture capital firm of some sort, but things became quiet since then. I personally think smi0006 above has a point! Maybe a Virgin 3.01 can finally get things sorted and make something of it, Australia badly needs a second carrier that is equal to our loved red roo (if only for the consumers sake...) . From the little I do know about them, their strategic direction in recent years reminds me a little of something that used to be called Air Berlin.......

You can't blame JB for all of VA's woes!

I'd suggest and hopefully someone writes a book on this, that the marriage between SRB and JB and the creation of the VA love child was always a poor base for a successful business.

If we consider they both had an axe to grind with AJ and by default QANTAS their motivation often compromised common sense and good reason.

The reality is, SRB has never had a problem spending other people's money and JB has always had an eye for the finner things in life.

Did JB have vision? Yes, I think he did! Did he have a good partner in SRB? Probably not!

In remembering JB's legacy I think it is fair to acknowledge he has taken a small and somewhat rundown airline to become Australia's second carrier. He has created a business that any employee should be proud to work for. In the tough times when he has faced immense critism, he has remained steadfast and a strong leader.

Did he, and by consequence the VA board and management team make mistakes? I'd suggesting yes, but with the caviet the marriage of JB and SRB was one more of convenience than one based upon common goals.

From this perspective, JB was never the issue, just a part of a complex problem.

I think JB deserves acknowledgement for the work he has put in over his eight years as CEO.

The best thing he has done was the merging of the mess of brands into one new slick one, with a regional operation and low cost brand. Once that was done, he should have moved on and brought someone new in to manage and grow his created structure, as VA have just stagnated the last 4-5 years whilst QF have continued to innovate.

When did Virgin and JB for that matter become too dependent on foreign ownership? They appear to have dug themselves such a whole, that I don't believe VA could stand on its own feet at the moment. And was that a hindrance to VBs Virgin vision and ambition? I reckon give him an Etihad or Qatar and he could do quite well.

travelhound wrote:

You can't blame JB for all of VA's woes!\

Who else will you blame?

JB said "yes" and "no" - just as AJ did at Qantas, and whose shoes would you rather be in now?

Borghetti was a disaster at Virgin. He took a small, cheerful, generally profitable airline and tried to turn into a poor man's Qantas - and the media (and a.net) swallowed it.

They're singing a very different song now.

mariner

mariner wrote:

travelhound wrote:

You can't blame JB for all of VA's woes!\

Who else will you blame?

JB said "yes" and "no" - just as AJ did at Qantas, and whose shoes would you rather be in now?

Borghetti was a disaster at Virgin. He took a small, cheerful, generally profitable airline and tried to turn into a poor man's Qantas - and the media (and a.net) swallowed it.

They're singing a very different song now.

mariner

And to the point of replicating the QF/JQ structure with TT only to bugger up the DPS flying.

Or perhaps we shouldn’t be so hard with JB the old DJ prior to VA had morphed away from its LCC routes and was caught in the QF/JQ pincer. They should have innovated their way out like B6- but instead went to head to head with QF, and weren’t agile or nimble enough- and didn’t have a strong enough brand.

cougar15 wrote:

juliuswong wrote:

cougar15 wrote:

With the announcement, I doubt he will last that long. Transition has started and in my humble opinion as soon as a suitor is found, he will quietly slip out early, finally!

Please, let it not be James Hogan for next CEO.

You gave me a laugh for the day thanks )) Last I heard he had moved to an investment or venture capital firm of some sort, but things became quiet since then. I personally think smi0006 above has a point! Maybe a Virgin 3.01 can finally get things sorted and make something of it, Australia badly needs a second carrier that is equal to our loved red roo (if only for the consumers sake...) . From the little I do know about them, their strategic direction in recent years reminds me a little of something that used to be called Air Berlin.......

James Hogan founded and currently is the chairman of Knighthood Capital, based in Switzerland https://www.knighthoodcapital.com/team/ Not sure what they do, their website lacks information. IMO, I think JB overstayed his welcome. True that he has some missteps, he did great things as well. However, time has arrived for him to move on.

Btw, the Board has confirmed JB is leaving when his contract is up in 1st Jan 2020 https://news.airwise.com/story/virgin-a ... -step-down

I always thought the change of name from V Australia to Virgin Australia is a mistake. And I always thought SRB could care less about the airline as he survives on licence fees of the Virgin brand rather than airline income.

The only way for VA to go forward is to reborn as an airline that does not pay millions of fees to Virgin and SRB. It needs a new name and new image that is suitable to mass Australian market. Yes Virgin is a iconic brand, yet it might be the same reason why some travellers would never fly with them.

juliuswong wrote:

IMO, I think JB overstayed his welcome. True that he has some missteps, he did great things as well. However, time has arrived for him to move on.

What "great things" did he do?

I can't think of one, but I can think of a lot of bad decisions.

mariner

I think we have to remember until the time of the QANTAS grounding VA had QF on the ropes. They (VA) were taking big bites out of QF's market share, they had the public relations advantage and the momentum to become a very serious contender.

The grounding of the QF fleet and the public debate that surrounded it was the inflection point that broke the camel's (VA) back. They had simply gone for broke and as consequence miserably failed. They didn't have a Plan B. A major failure in management stratwgy.

For me the heroics of SRB was where the core issues of the VA business model failed. In the past all he had to do is get himself in front of a camera, bag QF and money came his way.

To offer another perspective, maybe Australia just grew up a little bit. With the grounding of the QF fleet and the prospect an Australian icon facing insolation, maybe we just started to see through the shallowness of the SRB persona and what he ultimately represented. VA as a consequence became a tainted brand, a public relations anomaly with no means of reinventing itself to give itself relevance in the market place.

From this perspective the VA strategy was always flawed. You would have to think a sound business and marketing head would have seen the pitfalls.

Not sure how many of you fly Virgin Australia with some of the comments. I fly 30-40 return trips a year. Their domestic product is the best and so are the staff. They lose on INTL. No growth no plans and not even their HKG flights will stop the flow of loses on INTL routes. They suffer as does all the clients in Australia from a lack of competion in Australia. We have 3 choices on most routes, Qantas and Virgin or INTL airlines. Virgin stick with domestic and trans Tasman only. Losing ANZ will be a big loss. Still the best domestic airline though on mainstream. Tiger needs to at least be up with Jetstar.
JB did his job and raised them on Domestic but the results showed INTL always did and will hurt them.

A lot of what people predicted with VA and JB has come to pass.

They moved up in the market and let themselves get sandwiched between QF and JQ. Not able to command a premium over QF and undercut by JQ. TT was an after thought (!!) and struggles to compete against JQ.

Rushing into a330 with EK planes and over promising and under delivering. Annoyed customers and eroded brand.

Going from 737 to A330 doubling capacity. Blood bath for yields. Ah I remember the sub $200 flights from Perth to Sydney to fill all those seats. And remember they doubled their capacity to Perth first.

Going regional with the turboprop. Didn’t last long.

Multiple shareholders being difficult to manage. Who’d have thought?


The crazy thing is that in the Australian domestic market with essentially two players it’s shocking that they can’t make any money. They didn’t need to be Qantas Mark 2. They just needed to be different from Qantas to attract a loyal following (or the disenfranchised Qantas customers).

Whichever way you look at JBs tenure, it’s been a disaster for VA. They have blown so much money and got very little for it. I wouldn’t be surprised if they could have made more money leaving it in a term deposit

Very sad.

smileymilo wrote:

Not sure how many of you fly Virgin Australia with some of the comments. I fly 30-40 return trips a year. Their domestic product is the best and so are the staff. They lose on INTL. No growth no plans and not even their HKG flights will stop the flow of loses on INTL routes. They suffer as does all the clients in Australia from a lack of competion in Australia. We have 3 choices on most routes, Qantas and Virgin or INTL airlines. Virgin stick with domestic and trans Tasman only. Losing ANZ will be a big loss. Still the best domestic airline though on mainstream. Tiger needs to at least be up with Jetstar.
JB did his job and raised them on Domestic but the results showed INTL always did and will hurt them.

I’d be in the region of 10 flights per year on VA, and have to diagree with you about their domestic service.

Virgin’s domestic product is a pathetic excuse for a full-service experience, and comes nowhere close to what Qantas offer. Every time I fly them I find the service to be cheap, as in they decided to only do a half-hearted job in order to save a few cents. It’s things like the sandwiches the size of my index finger and a ‘happy hour’ that only lasts from 5-7 pm. I get a feeling that something is missing on every single flight I take, and it is always something really minor but adds to the overall image.

With regards to the crew I used to agree. Virgin Blue had hands down the friendliest crews in the sky, probably anywhere in the world. Now the VA crews seem just as jaded and cynical as any other airline, and over the last few years I would actually give Qantas the edge here.

travelhound wrote:

You can't blame JB for all of VA's woes!

I'd suggest and hopefully someone writes a book on this, that the marriage between SRB and JB and the creation of the VA love child was always a poor base for a successful business.

If we consider they both had an axe to grind with AJ and by default QANTAS their motivation often compromised common sense and good reason.

The reality is, SRB has never had a problem spending other people's money and JB has always had an eye for the finner things in life.

Did JB have vision? Yes, I think he did! Did he have a good partner in SRB? Probably not!

In remembering JB's legacy I think it is fair to acknowledge he has taken a small and somewhat rundown airline to become Australia's second carrier. He has created a business that any employee should be proud to work for. In the tough times when he has faced immense critism, he has remained steadfast and a strong leader.

Did he, and by consequence the VA board and management team make mistakes? I'd suggesting yes, but with the caviet the marriage of JB and SRB was one more of convenience than one based upon common goals.

From this perspective, JB was never the issue, just a part of a complex problem.

I think JB deserves acknowledgement for the work he has put in over his eight years as CEO.

OK, bit late in getting back on this one (due to the many varied posts since this one), but I will respectfully disagree! What is his (JB) legacy? What have they archived?
if I was a little airline anywhere globally with shareholders and partners such as EY (OK, happy to put a question mark on that one for now), SQ and even NZ, should I have not made more of it? You keep mentioning SRB, young King Richard. I love the guy and love to hate him.

Do you really think VA´s issues are SRB related, who´s influence I am sure has been rather minimal for about 10 years at least (you will be aware of ownership structures from about 2006 forward.....)?

I am sorry, I don´t and.... although at a different scale, I am seeing a ´who am I , what is my mid - not short - term stategy and will I stick to it....?´ kind of scenario (edit) as per AB!

VA should be prospering, the enviroment, market and financial backing is (was) there, but they are jumping from one puddle to the next!
I wish them absolute success, as mentioned above, the AU market needs them, but I am having trouble identifying & seeing the pot of gold at the end of the rainbow VA is aiming for , that really is there to grasp........

Overdue change is not a bad thing, sometimes change is an overdue positive.....

The Virgin Blue/ Australia businesses have awards s relies upon the Virgin Brand and SRB as a figurehead in their marketing strategy. If you go back to the prospectors document for their original listing on the ASX they clearly state the value of the Virgin brand and SRB for achieving growth. Interestingly the document had a caviet about branding and that changes in market perseptionscould reduce its value.

If we consider governance of a company no one person should have the control people are suggesting JB had. The reality is JB under the direction of the board and has to act in accordance to its decisions.

The problems for VA has always been its licensing agreement with Virgin, straw men board members and the ability of SRB to influence company direction even though he and his group were relatively small shareholders.

With the introduction of a new suite of airline investors, all with competing interests the job of CEO must have been a complete nightmare. Who could give a company so deeply rooted in the past with a confused means of identity any sort of direction to drive strategy.

RyanairGuru wrote:

smileymilo wrote:

Not sure how many of you fly Virgin Australia with some of the comments. I fly 30-40 return trips a year. Their domestic product is the best and so are the staff. They lose on INTL. No growth no plans and not even their HKG flights will stop the flow of loses on INTL routes. They suffer as does all the clients in Australia from a lack of competion in Australia. We have 3 choices on most routes, Qantas and Virgin or INTL airlines. Virgin stick with domestic and trans Tasman only. Losing ANZ will be a big loss. Still the best domestic airline though on mainstream. Tiger needs to at least be up with Jetstar.
JB did his job and raised them on Domestic but the results showed INTL always did and will hurt them.

I’d be in the region of 10 flights per year on VA, and have to diagree with you about their domestic service.

Virgin’s domestic product is a pathetic excuse for a full-service experience, and comes nowhere close to what Qantas offer. Every time I fly them I find the service to be cheap, as in they decided to only do a half-hearted job in order to save a few cents. It’s things like the sandwiches the size of my index finger and a ‘happy hour’ that only lasts from 5-7 pm. I get a feeling that something is missing on every single flight I take, and it is always something really minor but adds to the overall image.

With regards to the crew I used to agree. Virgin Blue had hands down the friendliest crews in the sky, probably anywhere in the world. Now the VA crews seem just as jaded and cynical as any other airline, and over the last few years I would actually give Qantas the edge here.

Nailed it. Cheap and “something missing” is what I’ve always experienced. West Coast flights were shocking in comparison to QF... and for a similar price. It’s not a surprise that I hardly talk to anyone in Perth who flies them to the east coast.

travelhound wrote:

The Virgin Blue/ Australia businesses have awards s relies upon the Virgin Brand and SRB as a figurehead in their marketing strategy.

You're determined to let JB off the hook, aren't you? LOL.

When the job became vacant JB was asked for this vision of Virgin - with which at least one member of the board agreed - SRB. But it was JB's decision to take the airline up-market and JB's decision to challenge Qantas for market share - just for starters. Some say that it was to show his arch-rival up because he didn't get the top job at Qantas - his arch-rival did. I think that was a big part of it.

In the rebellion speak-headed by CEO Luxon of Air NZ, all two other share holders had to do was side with Luxon. They didn't - all off them sided with JB, effectively saying that profitability was meaningless at Virgin Australia as long as they continued ro get the Virgin customers on their metal.

mariner

RyanairGuru wrote:

smileymilo wrote:

Not sure how many of you fly Virgin Australia with some of the comments. I fly 30-40 return trips a year. Their domestic product is the best and so are the staff. They lose on INTL. No growth no plans and not even their HKG flights will stop the flow of loses on INTL routes. They suffer as does all the clients in Australia from a lack of competion in Australia. We have 3 choices on most routes, Qantas and Virgin or INTL airlines. Virgin stick with domestic and trans Tasman only. Losing ANZ will be a big loss. Still the best domestic airline though on mainstream. Tiger needs to at least be up with Jetstar.
JB did his job and raised them on Domestic but the results showed INTL always did and will hurt them.

I’d be in the region of 10 flights per year on VA, and have to diagree with you about their domestic service.

Virgin’s domestic product is a pathetic excuse for a full-service experience, and comes nowhere close to what Qantas offer. Every time I fly them I find the service to be cheap, as in they decided to only do a half-hearted job in order to save a few cents. It’s things like the sandwiches the size of my index finger and a ‘happy hour’ that only lasts from 5-7 pm. I get a feeling that something is missing on every single flight I take, and it is always something really minor but adds to the overall image.

With regards to the crew I used to agree. Virgin Blue had hands down the friendliest crews in the sky, probably anywhere in the world. Now the VA crews seem just as jaded and cynical as any other airline, and over the last few years I would actually give Qantas the edge here.

This! As my username suggests, I fly ADL-DRW VERY regularly and Virgins ‘full-service’ offering on this route is woeful compared with QF. The ‘complimentary food and beverage’ service of a bite-size muesli bar and a plastic cup of water is frankly embarrassing compared with the full hot meal service on QF. The difference has been exacerbated since the VA flight was downgraded to an F100 via ASP.

The whole experience with VA just seems cheap - the app, the bag drop process, everything.

Does the brand "Virgin" really hold that much weight anymore? Roll back 20-25 years ago and yep, it was kind of different, kind of edgy, kind of fresh but I think we have moved on. Gen X and possibly some Gen Y HAD an affiliation with the brand but its kind of like watching your half cut uncle in a safari suit dancing at your daughters 18th birthday. It used to be fun but it no longer feels quite right.

I for one don't fly VA because of the 'brand' as we knew it 25 years ago - it could be called anything in my view. If the licensing costs of the brand are as exorbitant as some have noted on here (and this is by no means the singular issue) could it re-brand successfully? Are there any successful precedents of airlines totally re-branding? I accept a name change alone does not fix everything.

Velocity7 wrote:

Does the brand "Virgin" really hold that much weight anymore? Roll back 20-25 years ago and yep, it was kind of different, kind of edgy, kind of fresh but I think we have moved on. Gen X and possibly some Gen Y HAD an affiliation with the brand but its kind of like watching your half cut uncle in a safari suit dancing at your daughters 18th birthday. It used to be fun but it no longer feels quite right.g.

I have read somewhere (I think in The Guardian) that Virgin branding has little resonance and appeal amongst millenials, and is certainly not the ‘edgy, new, cool’ brand it was back in the day to GenXers like myself, so perhaps you’re on to something. If I can find the article, i shall link it.

Velocity7 wrote:

could it re-brand successfully? Are there any successful precedents of airlines totally re-branding? I accept a name change alone does not fix everything.

Air Pacific > Fiji
Impulse > Jetstar
Pacific Airlines > Jetstar
Meridana > Air Italy (in progress, admittedly)
ValueJet > AirTran
BOAC > British Airways
BEA > British Airways

.... there are probably more.

You could also argue the US mega-mergers, but then again that was taking on an established brand:
Northwest > Delta
Continental > United
US Airways > American Airlines

I suppose TN rebranding into QF falls into the same ‘merger into a known brand’ category.

I have always wondered why DJ didn’t exploit the enormous goodwill towards the Ansett brand and assume it after AN collapsed in 2001. Imagine the fees it would have saved.

Velocity7 wrote:

Does the brand "Virgin" really hold that much weight anymore? Roll back 20-25 years ago and yep, it was kind of different, kind of edgy, kind of fresh but I think we have moved on. Gen X and possibly some Gen Y HAD an affiliation with the brand but its kind of like watching your half cut uncle in a safari suit dancing at your daughters 18th birthday. It used to be fun but it no longer feels quite right.

I for one don't fly VA because of the 'brand' as we knew it 25 years ago - it could be called anything in my view. If the licensing costs of the brand are as exorbitant as some have noted on here (and this is by no means the singular issue) could it re-brand successfully? Are there any successful precedents of airlines totally re-branding? I accept a name change alone does not fix everything.

No. I never understood why they were still paying royalty to SRB when they have Australia in its name which is more important. The Virgin brand is dying. All other Virgin airlines are now gone. In Australia, Virgin Mobile is closing. No one would go to Virgin Money if it wasn't for some Velocity points. I would expect them to close as well when whatever contract they have left ends.

If someone like SQ were to take over the airline, I wonder if they still would want to pay this unnecessary royalty fee.

mariner wrote:

juliuswong wrote:

IMO, I think JB overstayed his welcome. True that he has some missteps, he did great things as well. However, time has arrived for him to move on.

What "great things" did he do?

I can't think of one, but I can think of a lot of bad decisions.

mariner

I'm going to let you prosecute this case because I agree with everything you have said and would merely add the only time Virgin under JB has achieved a profit is when QF grounded its fleet. There was a reason he was passed over for CEO of Qantas and his tenure at Virgin is indicative of a good decision made by the Qantas Board.

For my part, the next CEO of Virgin needs to find what Virgin actually stands for as a carrier and in the marketplace and deliver on that. Simply being a half arsed attempt at being Qantas light isn't enough.

vhtje wrote:

Velocity7 wrote:

Does the brand "Virgin" really hold that much weight anymore? Roll back 20-25 years ago and yep, it was kind of different, kind of edgy, kind of fresh but I think we have moved on. Gen X and possibly some Gen Y HAD an affiliation with the brand but its kind of like watching your half cut uncle in a safari suit dancing at your daughters 18th birthday. It used to be fun but it no longer feels quite right.g.

I have read somewhere (I think in The Guardian) that Virgin branding has little resonance and appeal amongst millenials, and is certainly not the ‘edgy, new, cool’ brand it was back in the day to GenXers like myself, so perhaps you’re on to something. If I can find the article, i shall link it.

Velocity7 wrote:

could it re-brand successfully? Are there any successful precedents of airlines totally re-branding? I accept a name change alone does not fix everything.

Air Pacific > Fiji
Impulse > Jetstar
Pacific Airlines > Jetstar
Meridana > Air Italy (in progress, admittedly)
ValueJet > AirTran
BOAC > British Airways
BEA > British Airways

.... there are probably more.

You could also argue the US mega-mergers, but then again that was taking on an established brand:
Northwest > Delta
Continental > United
US Airways > American Airlines

I suppose TN rebranding into QF falls into the same ‘merger into a known brand’ category.

I have always wondered why DJ didn’t exploit the enormous goodwill towards the Ansett brand and assume it after AN collapsed in 2001. Imagine the fees it would have saved.

Not sure why they were not more obvious to me vhtje, doh! I guess it would come down to the cost and benefit of re-branding vs. the current licensing costs. It would be an interesting concept to understand.

The AN thing is very close to my heart and my family in many ways. Had the timing been different maybe, but DJ were already on the scene before AN collapsed and riding on that 'fresh' brand

The virgin brand is tired and like others have said it’s no longer hip and cool like it was 20 years ago. There comes a point where red lipstick and sexual innuendo tire.

Fundamentally they don’t know what they want to be. Actually i think they know they want to be qantas mark 2 but they don’t have the money to do and aren’t making the yield to cover the additional costs. If you can’t command better fares than qantas or similar then you’re left with being cheaper.

So really all they’re left with is being a better Jetstar, but they’ve got qantas like costs now. Not a good place.

xiaotung wrote:

Velocity7 wrote:

Does the brand "Virgin" really hold that much weight anymore? Roll back 20-25 years ago and yep, it was kind of different, kind of edgy, kind of fresh but I think we have moved on. Gen X and possibly some Gen Y HAD an affiliation with the brand but its kind of like watching your half cut uncle in a safari suit dancing at your daughters 18th birthday. It used to be fun but it no longer feels quite right.

I for one don't fly VA because of the 'brand' as we knew it 25 years ago - it could be called anything in my view. If the licensing costs of the brand are as exorbitant as some have noted on here (and this is by no means the singular issue) could it re-brand successfully? Are there any successful precedents of airlines totally re-branding? I accept a name change alone does not fix everything.

No. I never understood why they were still paying royalty to SRB when they have Australia in its name which is more important. The Virgin brand is dying. All other Virgin airlines are now gone. In Australia, Virgin Mobile is closing. No one would go to Virgin Money if it wasn't for some Velocity points. I would expect them to close as well when whatever contract they have left ends.

If someone like SQ were to take over the airline, I wonder if they still would want to pay this unnecessary royalty fee.

\\

Very true. Virgin Express (Belgian) (now merged into Brussels Airlines); Virgin Atlantic (now still a "virgin" carrier, but controlled by Delta); Virgin America (now merged into Alaska). I've heard royalties to SRB are as much as 7%, which is a tremendous amount when you consider margins in the industry.

I'm not Australian, but I do remember Ansett well - and enjoyed my flights with them - they had a different "personality" than Qantas (or even TAA), but reviving dead airlines hasn't worked too well elsewhere (i.e., Braniff, Eastern, Pan Am in the U.S.). But what would the bottom line of VA look like without the royalties to Virgin?

The Virgin brand works in the UK but it has zero value for Virgin Australia because the marketplace for airlines in Australia is not crowded. Virgin Australia may as well be called "Not Qantas".

The strategy they have pursued of building an alternative network is too risky and they were never going to unseat Qantas as the no1 airline in Australia. The main investors/ex investors just wanted some feed on the end of their inbound flights and to make a bit of profit in the process, this is probably the reason for shareholder disquiet.

The should have focused making the most of the traffic coming in from their investor airlines and providing competition on popular routes.

I VA will struggle and will be in danger of going out of business if they restructure their network to be more profitable, particularly now they have lost feed from NZ.

3AWM wrote:

The Virgin brand works in the UK but it has zero value for Virgin Australia because the marketplace for airlines in Australia is not crowded. Virgin Australia may as well be called "Not Qantas".

The strategy they have pursued of building an alternative network is too risky and they were never going to unseat Qantas as the no1 airline in Australia. The main investors/ex investors just wanted some feed on the end of their inbound flights and to make a bit of profit in the process, this is probably the reason for shareholder disquiet.

The should have focused making the most of the traffic coming in from their investor airlines and providing competition on popular routes.

I VA will struggle and will be in danger of going out of business if they restructure their network to be more profitable, particularly now they have lost feed from NZ.

Fully agree. I'm old enough to have remembered Ansett well, and liked them (they had a "personality" much different from Qantas, IMHO), but there isn't much benefit to rebranding with the name of a defunct carrier - just look to the U.S. with Braniff, Eastern, Pan Am, etc. But how much money would they save without royalties on the name to SRB? 7% is a lot in a low margin business like airlines, and that's what I've heard was the rate in the U.S. with Virgin America. And the other two Virgin carriers (Virgin Express - now merged with Brussels Airlines, and Virgin Atlantic, now effectively controlled by Delta) haven't exactly done too well over the years).

bakestar wrote:

The article suggest with HNA and Nanshan group with 40% stake, a greater emphasis on China perhaps?

Appreciate much comment.

I thing the HNA shareholding is also problematic as SQ surely would like to be carrying at least some of this China traffic.

If VA needed more money to continue flying where would they go, Etihad (scaling back and pulling out of other investments?), HNA (experiencing cashflow problems), SQ (likely not much appetite to put more money in?).

3AWM wrote:

bakestar wrote:

The article suggest with HNA and Nanshan group with 40% stake, a greater emphasis on China perhaps?

Appreciate much comment.

I thing the HNA shareholding is also problematic as SQ surely would like to be carrying at least some of this China traffic.

If VA needed more money to continue flying where would they go, Etihad (scaling back and pulling out of other investments?), HNA (experiencing cashflow problems), SQ (likely not much appetite to put more money in?).

Exactly. VA will need more money at some stage in the next couple of years. JB knows if he didn't resign, their board would sack him in the next year or two anyway. Why not resign now to save face? I have never hear of any CEO giving more than 18 month notice. Like James Hogan, it would not be easy for him to find another job.

Mariner said:

You're determined to let JB off the hook, aren't you? LOL

Sydscott said:

I'm going to let you prosecute this case because I agree with everything you have said...

Well, I have a formidable opposition in having a screen writer and a lawyer join forces to argue against me!

......but, I will try!

If we go back to the days before JB became CEO, the old VB business had similar financial issues. A low share price and a very marginal business model that wasn't able to generate cash.

If we can remember back than the VB lounges often had worn out seats, the signs were a little old and tatty and more generally the VB product was very mush low cost.

For JB a turn around plan for the old VB business would always have to revolve around the airline commanding more revenues for its products.

The VA rebranding was part of that turn around.

The main issue I have with the JB critism is that it is often based around the premis that the old VB was good and the new VA is bad. I'd suggest the old VB was bad on many fronts and the new VA is a whole lot better, but it's financials and corporate governance is bad.

If my argument is correct than we have to ask ourselves how JB adversely impacted on the performance of the business.

If we consider the VA board is probably dysfunctional, the Virgin brand has mixed perceptions in the market place and the marketing strategy is based around trying to appease opposing shareholder interests, rather than business fundamentals, it wouldn't matter who the CEO is, the business is compromised to the extent that it would be incredibly difficult to manage, let alone implement strategy, etc.

Fundamentally, managing shareholders is a board issue, not a CEO issue, the Vurgin brand was probably losing relevance 2-3 years prior to JB starting with VA and a dysfunctional board that can not give clear directions to the management team will always create problems for a business.

JB tried to turn a holden into a BMW, largely with out the support and oversight of a functioning board. As a consequence we have the situation we have today.

You can't blame the CEO for all of that! JB is only one person of many.

travelhound wrote:

Well, I have a formidable opposition in having a screen writer and a lawyer join forces to argue against me!

......but, I will try!

If we go back to the days before JB became CEO, the old VB business had similar financial issues. A low share price and a very marginal business model that wasn't able to generate cash.

If we can remember back than the VB lounges often had worn out seats, the signs were a little old and tatty and more generally the VB product was very mush low cost.

For JB a turn around plan for the old VB business would always have to revolve around the airline commanding more revenues for its products.

I used to fly Virgin Blue a lot back in the day before JB, I don't recognise the airline that you propose. I stopped flying Virgin Blue about two years after JB took over. I gave that airline a decent shot but it was becoming too snobby for me I wasn't surprised it was all down hill - financially.

Which it was. You can defend JB all you want but I am extremely glad the Qantas board got sensible and, of the two of them, chose AJ.

mariner

mariner wrote:

travelhound wrote:

Well, I have a formidable opposition in having a screen writer and a lawyer join forces to argue against me!

......but, I will try!

If we go back to the days before JB became CEO, the old VB business had similar financial issues. A low share price and a very marginal business model that wasn't able to generate cash.

If we can remember back than the VB lounges often had worn out seats, the signs were a little old and tatty and more generally the VB product was very mush low cost.

For JB a turn around plan for the old VB business would always have to revolve around the airline commanding more revenues for its products.

I used to fly Virgin Blue a lot back in the day before JB, I don't recognise the airline that you propose. I stopped flying Virgin Blue about two years after JB took over. I gave that airline a decent shot but it was becoming too snobby for me I wasn't surprised it was all down hill - financially.

Which it was. You can defend JB all you want but I am extremely glad the Qantas board got sensible and, of the two of them, chose AJ.

mariner

I'm going to start an airline I think. It won't be snobby. There will be surly, cranky staff and cramped, uncomfortable seating on the plane. And if there are any delays, the customers will be left to fend for themselves. Is there a niche for that? Seems like it.

By the way- I fly Qantas instead.

Greetings Folks, well there are still JB knockers enjoying their 2 minutes on the net.
Travellhound I agree with your assessment.
P.S Did not Alaska renegotiate the "royalty" fee with SRB when taking out V America?
Cheers.

There's a strong consensus hear.... VA is out of its depth. I think we all know NZ doing a deal with QF was the final straw. Fair points about the shareholders. Does anybody think the SIA brand could fly better domestically? Of course you'd have a very hard time getting the Chinese shareholders to agree. very hard. They really only have 2 international long haul routes served properly, SYD-LAX and HKG. The lounges aren't at QF standards. NZ was a very big loss. In fact a joint venture with them across the pacific would have made a lot of sense. That ship obviously sailed. You know there's a saying in business... underpromise and over deliver. With VA I just always got the feeling they did the opposite... they overpromised and under delivered. You get on BA on a South African domestic flight and you see a real challenger. You get on VA.... where do I start? The worst part of the entire thing is they haven't forced QF to keep their standards up. But the regular traveller knows despite QF's shortcomings.... they'll look after you if there's an issue. Ditto for NZ. I really don't know what the future is for them. But something needs to change, and change fast.

3AWM wrote:

bakestar wrote:

The article suggest with HNA and Nanshan group with 40% stake, a greater emphasis on China perhaps?

Appreciate much comment.

I thing the HNA shareholding is also problematic as SQ surely would like to be carrying at least some of this China traffic.

If VA needed more money to continue flying where would they go, Etihad (scaling back and pulling out of other investments?), HNA (experiencing cashflow problems), SQ (likely not much appetite to put more money in?).

The only other airline not with a stake that has flagged a 'passing' interest is DL. They haven't ruled out anything / being coy in 2016 (around the time NZ exited).

https://www.smh.com.au/business/compani ... o3zq0.html

If it does eventuate to DL buying one of the debt ridden EY and/or HNA stakes, there is the very very very slim chance they could launch a takeover bid from there some months after acquiring a stake from one of the two debt ridden groups.

Delta Air Lines UK (VS), meet Delta Air Lines Australia (VA).

superjeff wrote:

I'm not Australian, but I do remember Ansett well - and enjoyed my flights with them - they had a different "personality" than Qantas (or even TAA), but reviving dead airlines hasn't worked too well elsewhere (i.e., Braniff, Eastern, Pan Am in the U.S.). But what would the bottom line of VA look like without the royalties to Virgin?

Oh - when I made the Ansett post earlier in the thread, I was specifically referring to the events of 17 years ago, not now.

It could have worked - the then-fledgling DJ assuming the name and style of AN, but not the legacy of the debt, inefficient fleet, high costs, bloated workforce, etc. There was a huge vacuum in the Australian domestic market after the AN collapse, and adopting the AN brand might have been one way DJ and its backers could have taken advantage of that vacuum.

But that boat has sailed, a long, long time ago. I am not suggesting VA rebrand into AN now, doing so would be a retrograde step as the AN branding has long since lost its resonance and goodwill. As you rightly point out, efforts to reuse long-dead airline branding have not been successful.

vhtje wrote:

But that boat has sailed, a long, long time ago. I am not suggesting VA rebrand into AN now, doing so would be a retrograde step as the AN branding has long since lost its resonance and goodwill. As you rightly point out, efforts to reuse long-dead airline branding have not been successful.

That was the trouble. Until Air New New Zealand came along, Ansett was what a famous member (briefly) of a.net called "the royal barge of airlines." It was run (pre-Air NZ) without reference to costs, as long as it was the best airline is that part of the world. Peter Abeles didn't know how to run an airline and Rupert Murdoch didn't care.

Rupert Murdoch was only interested in money and he made a lot of it when he sold, sensing (rightly) some suckers in the form of Air NZ in town. When Air NZ saw the balance sheet they just about fell over, and everyone knows what happened then .

Fast forward ten or so years. JB had been knocked back for the top job at Qantas, in favour of his arch rival AJ, and was suddenly aware that this cheap and cheerful airline called Virgin Blue was looking for a CEO.

Here was JB's chance - he would show the Qantas BOD what fools they had been! JB set about recreating Ansett in glory years. One of his first action to change the name from the cheeky Virgin Blue (an in-joke for Australians) to the stellar airline he really wanted - Virgin Australia.

But it had never been shown that Australia could support two first class airlines at the same time without government underpinning it. It still hasn't.

mariner

The mistakes VA have made have been well documented, especially on these forums.

A couple of things I think they have done well, have been, as mentioned earlier, the brand unification. It was a complete shambles before, now there is a single brand - it’s just working out what it stands for.
Another one that hasn’t been touched on, is moving from the previous web based reservations system to the GDS. Previously they were acting in isolation, in order to become a “grown up” airline, they needed to move to the GDS in order for easier interlining to other carriers, and for other carriers to sell on to them. They’ve achieved that part but failed to really capture any scale of significant partners for it.

From those two aspects, the vision and infrastructure are in place, it’s just a matter of realising it.

My pet hate with VA is one that any regular traveller on them can probably tell you is if there is a significant disruption to ops, they can tend to fall down faster than a soccer player thinking they’re about to be tackled.

By the time a new CEO comes in, it could be fortuitous timing for them, by that stage VA may not have as many carriers on its share register, less masters to serve, more focus on its direction, more of a chance to stamp her or his vision.

Obzerva wrote:

The mistakes VA have made have been well documented, especially on these forums.

A couple of things I think they have done well, have been, as mentioned earlier, the brand unification. It was a complete shambles before, now there is a single brand - it’s just working out what it stands for.
Another one that hasn’t been touched on, is moving from the previous web based reservations system to the GDS. Previously they were acting in isolation, in order to become a “grown up” airline, they needed to move to the GDS in order for easier interlining to other carriers, and for other carriers to sell on to them. They’ve achieved that part but failed to really capture any scale of significant partners for it.

From those two aspects, the vision and infrastructure are in place, it’s just a matter of realising it.

My pet hate with VA is one that any regular traveller on them can probably tell you is if there is a significant disruption to ops, they can tend to fall down faster than a soccer player thinking they’re about to be tackled.

By the time a new CEO comes in, it could be fortuitous timing for them, by that stage VA may not have as many carriers on its share register, less masters to serve, more focus on its direction, more of a chance to stamp her or his vision.

I think the brand unification highlights to me where they went wrong - literally the tail. Red lettering on white,as opposed to the reverse for VS,VX. Want to challenge QF, but not be too close. I realise why they did it, but it just always seemed to me to be a diluted VS. Bring in the cherry, glitz VS style branding.

Same with their shocking attempt at a safety video for Bathurst - swing and miss. Was just awkward.

For me VS has a stylish, edgy brand still. Classy, sophisticated, with a bondesque style. To be frank, I can’t articulate what the VA brand means or represents to me.

If by miracle I was to become VA CEO, couple of steps I’d make;
- Rebrand, maybe even keep the virgin name, or how about Velocity? And maybe move to a blue or green brand away away from QF/JQ.
-if staying with red But bring back the red fiery ness - not diluted VS. Look for ways to renfocs this onboard - like VX; mood lighting, jazz music at checkin,small cheap ways to reinforce the brand. Small wins in the lounge, adjust the lighting, more interesting food choices.

- Adopt NZ suits to suit unbundled style product for domestic and 738 ops to Asia . Then you know what you’re getting every time, adopt B6 style mint for tran con, Tasman and Asia. Maybe even removing J from the golden triangle, and short haul domestic but offer a ‘works deluxe’ option with lounge access.
- get rid of the bloody awful automated PAs they do onboard! Bring the personality back.
- ramp up the joint marketing with DL,SQ,HX,EY general public and trade need to understand their partnerships better
- rebrand TT, and deploy it on the Tasman, PI, PNG, and try Asia again.
- adopt the Perth checkin product across their network

The rebrand would be expensive, otherwise a lot are reasonably cheap wins.

smi0006 wrote:

Obzerva wrote:

The mistakes VA have made have been well documented, especially on these forums.

A couple of things I think they have done well, have been, as mentioned earlier, the brand unification. It was a complete shambles before, now there is a single brand - it’s just working out what it stands for.
Another one that hasn’t been touched on, is moving from the previous web based reservations system to the GDS. Previously they were acting in isolation, in order to become a “grown up” airline, they needed to move to the GDS in order for easier interlining to other carriers, and for other carriers to sell on to them. They’ve achieved that part but failed to really capture any scale of significant partners for it.

From those two aspects, the vision and infrastructure are in place, it’s just a matter of realising it.

My pet hate with VA is one that any regular traveller on them can probably tell you is if there is a significant disruption to ops, they can tend to fall down faster than a soccer player thinking they’re about to be tackled.

By the time a new CEO comes in, it could be fortuitous timing for them, by that stage VA may not have as many carriers on its share register, less masters to serve, more focus on its direction, more of a chance to stamp her or his vision.

I think the brand unification highlights to me where they went wrong - literally the tail. Red lettering on white,as opposed to the reverse for VS,VX. Want to challenge QF, but not be too close. I realise why they did it, but it just always seemed to me to be a diluted VS. Bring in the cherry, glitz VS style branding.

Same with their shocking attempt at a safety video for Bathurst - swing and miss. Was just awkward.

For me VS has a stylish, edgy brand still. Classy, sophisticated, with a bondesque style. To be frank, I can’t articulate what the VA brand means or represents to me.

If by miracle I was to become VA CEO, couple of steps I’d make;
- Rebrand, maybe even keep the virgin name, or how about Velocity? And maybe move to a blue or green brand away away from QF/JQ.
-if staying with red But bring back the red fiery ness - not diluted VS. Look for ways to renfocs this onboard - like VX; mood lighting, jazz music at checkin,small cheap ways to reinforce the brand. Small wins in the lounge, adjust the lighting, more interesting food choices.

- Adopt NZ suits to suit unbundled style product for domestic and 738 ops to Asia . Then you know what you’re getting every time, adopt B6 style mint for tran con, Tasman and Asia. Maybe even removing J from the golden triangle, and short haul domestic but offer a ‘works deluxe’ option with lounge access.
- get rid of the bloody awful automated PAs they do onboard! Bring the personality back.
- ramp up the joint marketing with DL,SQ,HX,EY general public and trade need to understand their partnerships better
- rebrand TT, and deploy it on the Tasman, PI, PNG, and try Asia again.
- adopt the Perth checkin product across their network

The rebrand would be expensive, otherwise a lot are reasonably cheap wins.

Congrats, a number of good suggestions in there.

On your highlighting partnerships, maybe a single 737 painted kind of like the old star alliance livery, which named the members on the side of the plane with the VA tail. Although do it better than the star alliance one was, because that was hideous, but at least have a design that highlights partners. The AB/EY combined livery jet looked good, something like that.

smi0006 wrote:

For me VS has a stylish, edgy brand still. Classy, sophisticated, with a bondesque style. To be frank, I can’t articulate what the VA brand means or represents to me.

If by miracle I was to become VA CEO, couple of steps I’d make;
- Rebrand, maybe even keep the virgin name, or how about Velocity? And maybe move to a blue or green brand away away from QF/JQ.
-if staying with red But bring back the red fiery ness - not diluted VS. Look for ways to renfocs this onboard - like VX; mood lighting, jazz music at checkin,small cheap ways to reinforce the brand. Small wins in the lounge, adjust the lighting, more interesting food choices.

- Adopt NZ suits to suit unbundled style product for domestic and 738 ops to Asia . Then you know what you’re getting every time, adopt B6 style mint for tran con, Tasman and Asia. Maybe even removing J from the golden triangle, and short haul domestic but offer a ‘works deluxe’ option with lounge access.
- get rid of the bloody awful automated PAs they do onboard! Bring the personality back.
- ramp up the joint marketing with DL,SQ,HX,EY general public and trade need to understand their partnerships better
- rebrand TT, and deploy it on the Tasman, PI, PNG, and try Asia again.
- adopt the Perth checkin product across their network

The rebrand would be expensive, otherwise a lot are reasonably cheap wins.

I think 8 years later even after how many people on here have said "Seat2Suit' is an bad idea, in fact its proved to be an a pretty good solution and ended up making NZ money short-haul market that has become crowed.

The question revolves around risk and return. It can take years to establish a brand in the market place. The Virgin Australia brand has strong consumer awareness, but is a little confused in segments in the market. For Mum's and Dad's who might fly a couple of times per year with the kids or for those who use the airline to fly home on the weekends, it does everything it is suppose to.

For those who fly the airline regurly or connect on other partner airlines the experience somewhat diminishes. Transfer of baggage, meals, customer support all cost money. If we consider 15-20% of VA's customers are not receiving the service they exoect,the ROI equation revolves around increasing costs unnecessarily for the 85% to better serve the 15%. I suspect those types of numbers don't stack up.

For JB, the VA business model was always based around having 30% of its revenues derived from the corporate customer. I suspect that number was always unrealistic and as such they currently find themselves stuck in a cost structure that isn't generating the revenues expected and adds unnecessary costs for the Mum's, dad's and children who simply use the airline for point to point travel.

Mariner has always suggested the JetBlue model as an alternative for VA. A little funky, no nonsense and a couple of well targeted products.

I am not too sure a JB, SRB or the partner airlines could ever agree on such a model though.