AFR BOSS Magazine
When Jayne Hrdlicka told her young sons she had a new job running an airline they got a bit worried. “How can you be the boss of an airline when you can’t fly a plane?” they asked.
Actually, there are quite a lot of other skills Hrdlicka needs for her new role as chief executive of the Qantas budget carrier, Jetstar. The former management consultant and Qantas strategy executive will be using every bit of her experience managing change and customer-led growth as she settles into the role at a hard time.
In the domestic arena, Jetstar is facing a *reinvigorated Virgin Australia, led by former Qantas executive John Borghetti. Along with parent Qantas, Jetstar is fighting to maintain the 65 per cent domestic market share it deems *crucial to maintaining the full-service airline’s premium over rival Virgin Australia.
The domestic business is under huge pressure to deliver as its international business takes a beating. Qantas International last month posted an annual loss of $450 million, pushing the airline to a $245 million loss – its first in 17 years since it was privatised and publicly listed.
Jetstar’s relatively low cost base is a huge advantage as it also pushes into the Asian region. But anyone who has flown the airline knows cheap has not made for an especially cheerful flying experience.
Sitting down with BOSS just a few weeks after taking over from chief executive of four years Bruce Buchanan, Hrdlicka makes it clear that customer and employee relations need more work. “The thing we have invested in and *doubled down on is safety,” she says.
“But the things we have done less well, clearly, is on the customer front and I don’t think we have put our people as forward as we could have . . . It takes time. There’s some quick things we can do. But everybody has a bad Jetstar story and bad ones stick with you and get talked about . . . It’s all the classic stuff we have to do.”
Domestic growth is still a priority, with further increases in capacity planned as appropriate, she says, which will provide a challenge to competitors. “We’re lucky because strategically we can work hand-in-hand with Qantas . . . the more *premium full-service marketplace has a much different cost structure . . . with the Qantas brand we are very focused about where we put it and how we develop it. We are not worried about the low fare model because we have that already.”
Although consumer sentiment in recent months has been wobbly due to the global *outlook, spending on recreational travel has been relatively unscathed.
“In a funny way leisure travel has benefited from that. We continually evaluate where the demand is and where we fly . . . and putting *supply back into the mix.
“The strength of the Australian dollar is *making some markets more attractive. We will continue to open up the low fares market in *Australia – there are growth rates in that part of the market which are very attractive.”
There will be a lot of airline consolidation across Asia, Hrdlicka says, and the longer-term goal is for Jetstar is to be the major low-cost brand in the region. Jetstar is rapidly pushing into Asia. It has offshoots in Vietnam, Singapore, and Japan, and is seeking approval from regulators for a new *venture based in Hong Kong.
“We are just about to finalise a very detailed shareholder agreement with our partner China Eastern . . . once we incorporate the business in Hong Kong we can begin actively to get the business operational this financial year,” Hrdlicka says. “We have huge growth in front of us, and the relationship with China Eastern is very important for Qantas group. Japan should be one of our biggest businesses and could be as big as the Australian business if we succeed.”
On the industrial relations front, she says, *Jetstar faces a different landscape from Qantas.
“It’s a lot simpler because our agreements are five, six or seven years old at the most. If you look at the pilot EBA [enterprise bargaining agreement], Qantas’ is hundreds of pages and Jetstar’s is a handful of pages. I’ve spent my first seven or eight weeks in the business talking to lots of *people and to pilots. Some of the Jetstar pilots were Qantas pilots who have elected to take leave without pay and work for Jetstar. There are *different opportunities in Jetstar because of our growth and culture.”
Jetstar, which was launched in 2004, was of course designed to be entrepreneurial with a *relatively flat structure. It was Alan Joyce’s domain for five years before he became Qantas chief executive in 2008.
A native of the US midwest, Hrdlicka was raised in a successful immigrant family which stressed the importance of hard work. Her father had defected from the Czech Republic and believed strongly in the right to choose and be your best.
After a career in management consulting and business in the US, Hrdlicka moved here in 1994 to run a company (Dynamic Marketing), against the advice of her parents. “You get an itch to reorient your perspective . . . I always said I’d stay [in Australia] five or six years.”
Having already worked with Bain in America, Hrdlicka joined the firm here and spent 11 years as a partner. “Consulting is a great way to have a family and after I went back to Bain, two kids, two dogs and an Australian husband later . . . I thought about going back to the US but couldn’t work out where I would go. Lifestyle and family balance also came into it.”
Joyce was a client when Hrdlicka was a partner at Bain and she says he’s been an important mentor. “I wouldn’t have come to Qantas except for him and the very *capable leaders he has,” she says.
It was in early 2010 that Joyce got in touch with Hrdlicka to discuss a possible role at the airline. “Alan and I had been speaking since *February. It took us three to four months and I agreed I would come to *Qantas . . . it took to the end of June to take that decision. So I had the conversation with the partners at Bain . . . and I resigned and the next day I got a call from [headhunters] Egon Zehnder and they said ‘would you consider a role on the Woolworths board?’. [Woolworths chair] James Strong had no idea I was in discussion with Alan – he was my first client when I came back to Bain and Woolworths was my *second.”
Hrdlicka’s US experience running operations for SkyBox, which produced basketball and football trading cards, and with Bain clients forged a down-to-earth, results-driven style.
“What I think differentiated me was I knew how to solve problems and felt well qualified to manage what came at me,” she says. “I know enough to ask the right *questions and get the right people in the room and the specialists . . . there’s always a way to work through it. I have an inclusive style and I like to understand other people’s views. I’m not big on hierarchy and don’t like lots of *layers. I like to have the analysis.”
The years at Bain gave Hrdlicka the chance to get deeply into what she describes as the “consumer experience’’. “If you really understand what drives *revenue then you understand customers, which investment to make and how to run a really profitable business. If you don’t understand that it’s hard to make the trade-offs.”
Running a budget airline in Australia is a very different thing to running the strategy function for Qantas and being a consultant.
While it’s not exactly a trend yet, *Hrdlicka’s move from consulting through to the CEO office – she admits she didn’t expect to move quite so quickly – is similar to the path by Commonwealth Bank’s CEO Ian Narev, who was a McKinsey consultant before heading up strategy at CBA.
“I don’t see why we wouldn’t see more [such appointments] in the future,” she says. “We’re in times of change and businesses need to seek more diversity and having a different mix of people in your business, and moving them around inside your business, is a really good thing.”
There were benefits from spending two years building the strategy arm for *Qantas. The business had been “over-*consulted and was hungry for a different way”.
“There was a heavy reliance on consultants. It’s pretty hypocritical now to say but a company needs its own capability. You need to challenge convention from within and not to have that fully outside the company.
“It didn’t have a centre of excellence and in the last couple of years we built great capability.”