New VA CEO ideas.

[Rotate2]

Starting a thread of constructive ideas on the future of VA.
Essentially, what would you do if you were made CEO of VA to bring it to profitability?

If a quote from a recent newspaper article is correct then substantial change has to occur...

”Virgin has run at a statutory financial loss every year for the past six years, running up total losses of $1.6 billion over that period, and peaking at last year's loss of $653 million”.

I take the view that the logistical structure within aviation is the most important, it is an upside down version of the traditional corporate structure.
At the top are “frontline troops” e.g. tech crew, cabin crew, engineers, ground staff etc. The staff who actually get passengers from A to B. They are the most important staff and as such should be supported and rewarded well for their skills. They also are the best people to tap for advice on further efficiencies within the airline and customer experience.
At the base of this model is the CEO and management heads, they are the “support team” for the frontline troops. They provide whatever’s required for the troops to make the airline run.
So to answer my own question, basically if you’re not doing a job that helps get the aircraft airborne then you’re gone.
Close down the Sydney offices, Tigerairs Melbourne head office etc. Run the airline only from the Brisbane “village” with minimal staff, but not under-staffed.
Purchase the best software available (or design your own) with a simple user portal that all staff can access through company provided iPads. A workforce that is connected and informed. Flight and cabin crew rosters should be simplified keeping the same crew and aircraft throughout their duty where possible. A big reduction in overnight expenses and increase in staff morale.
Employ the best fuel hedgers money can buy, pilfer Qantas’ excellent team if possible.
Outsourcing is problematic in aviation. “In-source” all frontline staff; more expensive but ultimately provides stability, experience and loyalty (teamwork). This includes creating Virgins own catering and tarmac operations company. The staff are employed by VA but available to tender work to other airlines as well.
Approach VA shareholders and look for the best synergies e.g. lobby the Chinese for much greater mainland access and run the A330 to these multiple destinations. Offer our politicians “sweeteners” to help here similar to Qantas.
Tigerair should be a low cost domestic and international airline. Purchase REX Airlines (owned by Singapore/Temasek). REX feeds Tigerair and they feed Scoot or fly directly to Singapore. Purchasing REX would also alleviate some of the recent Qantas/ Alliance purchase pressure.
These are just some ideas, there’s so much potential within the VA Group to not only become profitable but a real force within the Pacific. It doesn’t have to be at the behest of Qantas either. Imagine if both airlines (and AIr New Zealand) worked in a loose alliance, a legal cabal. At the very least to cover our Australian “turf”.
Apologies for the long post, glad to hear constructive thoughts on how to turn VA around. A lot of people’s futures depend on it.

[blow.n.gasket]

What are you saying Rotate ?
Do you mean an integrated homogeneous business model , like what Qantas had before Geoff , Alan and the MBA Wunderkin business consultants spun their siloisation magic ?
As a wag at work keeps saying , “ When you’re run by clowns , you inevitably end up becoming a circus ! “ .

[The Bullwinkle]

Great first post Paul. :ok:

[30/30 Green Light]

That's scurrilous!! ;)

[wheels_down]

Customer and Team first culture. No airline has nailed this yet.

IT overhaul. Look at Woolworths, quite impressive what they they done within their business. Delta has done a lot in this space also.

Tiger needs to be fixed once and for all. Too many people have been playing with it over the past decade. Potential is there. Scrap the fantasy of operating 20 year old machines. Scoot is phasing out it’s 10 year old fleet to the neo, what a great chance to get hold of them.

The Alliance dream can’t go on forever. Need some medium term planning when it eventually caves in.

[ebt]

I'm wasting my time here, but hey, I have a little on my hands.

Close down the Sydney offices, Tigerairs Melbourne head office etc. Run the airline only from the Brisbane “village” with minimal staff, but not under-staffed.

Or, perhaps, just consolidate it all in Sydney? Interestingly, with Scurrah based in Brisbane I expect he will be seen at the Village more often, and more executive functions may drift north. Shutting down Tigerair's Melbourne HQ would mean integrating it into VA, which would be a waste and see Tiger lose (the very little) advantage it still has in the market. Keeping Tiger at arms' legth operationally but close strategically is the best way to have it, or it will just end up being subsumed by the parent carrier


Outsourcing is problematic in aviation. “In-source” all frontline staff; more expensive but ultimately provides stability, experience and loyalty (teamwork). This includes creating Virgins own catering and tarmac operations company. The staff are employed by VA but available to tender work to other airlines as well.

Imma stop you there - outsourcing is not a problem in aviation at all. Every carrier does it to some extent, and in most cases the customer can't tell the difference. VA's outsourcing at some ports has actually worked well in its favour. But tarmac and catering would have huge overhead costs to bring them in-house, when Gategroup has a lot more customers to spread those fixed costs over, so will always be cheaper than in-sourcing - even if VA Catering and Ground did third-party work.


Approach VA shareholders and look for the best synergies e.g. lobby the Chinese for much greater mainland access and run the A330 to these multiple destinations. Offer our politicians “sweeteners” to help here similar to Qantas.

'Sweeteners' are already offered by way of The Club. Also, you presume that the HNA Group can overturn bans that the CAAC has that stop the biggest airports from adding new routes. HNA's troubles at the moment are much bigger than trying to get a piddly little partner slots at Shanghai Pudong or Beijing Capital.


Tigerair should be a low cost domestic and international airline. Purchase REX Airlines (owned by Singapore/Temasek). REX feeds Tigerair and they feed Scoot or fly directly to Singapore. Purchasing REX would also alleviate some of the recent Qantas/ Alliance purchase pressure.

Rex isn't owned by Temasek at all - its largest shareholder is executive chairman Lim Kim Hai, who is Singaporean, so I can see the potential for confusion. But given VA's ability to stuff up the integration of VARA and Tigerair, let's just say that they should keep the chequebook closed for a while.

For all intents and purposes, VA is kinda right where it needs to be now and not a lot needs to change in the short-term, at least from the high-level perspective. The domestic mainline market is making money, international is starting to lose less money, and for once the whole enterprise is cashflow positive. New cabin innovations can come in with the Maxes arriving later this year, but there is no need to go all-out spending on bells and whistles.

But they need to sort out Tigerair because it is a mess financially, especially with the half-in, half-out fleet plan.

[73qanda]

What would happen if you gave each Captain $2000 worth of shares on their DOJ anniversary each year, each Engineer $1500 worth, each F/O $1000 worth and each Purser $500 worth? How would that affect the company long term?
Edited to add; VA shares.....not Qantas shares.

[Freehills]

Bung sweeteners to the regulators to allow a merger

Merge with QF. Cut flights, raise prices. Profit!

[TBM-Legend]

I'm amazed the VA Board didn't look to PPRUNE for a new CEO....the expertise trotted out here means an online interview and Pruners can vote on the outcome...

[industry insider]

I think that Rotate 2 makes some valid suggestions. The reverse pyramid is not so silly.

[Jethro27]

A single integrated group operations centre would enable total visibility of all the group resources to manage the day of operations.
Capable and supported technology is an important enabler in managing the operation. Work smarter not harder. But airlines don't build their own aeroplanes, nor should they build their own in-house IT solutions.
Simple crew rosters and keeping crew paired together is a fantastic idea. But requires minimal complexity work rules that are aligned across tech and cabin crew EBA's (12 EBA's across the group).
A consolidated efficient young fleet across the group. Reliable aircraft with high service rates = happy crew, happy passengers and stable network. Have sufficient spares and support equipment for the fleet.
In-house simulators. Have control of the scheduling and a revenue stream when not required for in-house training. Instead of paying the competitor to use theirs at undesirable times.
Stop kicking own goals. Do the due diligence, assess the risk and reward and have a back up plan if it goes wrong.
An end to the negativity and pessimism. Those in Leadership roles (including crew) set the standard. The standard you set for yourself is the standard you should expect from others.
Recruit to a high but achievable standard of values, attitude, qualifications and experience. Retain and reward those demonstrating same. Boot those no matter how high or low (including crew) who are not adding value and are generally a drain on everyone's time and energy. Give the job to someone who actually wants it.
Give the new CEO reasonable time and a fair go. Don't expect change overnight or have a meltdown if it doesn't.

[AerialPerspective]

Why would you do that... have to get away from this belief that because Pilots are highly trained they are geniuses who can turn the company around... there are FAR MORE people working for an airline, ground for example, if they don't cooperate crew may as well stay home... and in my experience, in many cases, VA's engineering division are part of the problem - criticise everyone else while rebutting any criticism when stuffing up themselves.

[RodH]

Get rid of that outdated B737 and get some much better A320's.
Very much better to pax in and far more efficient in baggage stowage etc.
Poor old B737 . it was good in it's days but it is old airframe technology that cant be updated much more.

[777Nine]

My thoughts:

- Focus on doing what the airline is good at and just do that. Don't try to be Qantas and don't try to chase Qantas because you will burn a lot of cash. Figure out what Virgin Australia is, and nail that. It started as Virgin Blue then morphed into this 'are we like Qantas, but we're not quite so let's burn a lot of cash trying to figure that out'.
- If a route ain't making money but you're doing it just to compete, cut it. You win some, you lose some. But it's a heck of a lot worse when you are losing cash.
- Keep your employees happy and motivated. Remember, they are the front line and they cop all the day to day abuse of having to deal with the public which is not easy.
- Further to above, keep the crew happy. No crew = no flight. Customers also react positively to good crew.
- Don't hire any consultants that have no idea about the aviation business and get them to give you 'advice'. That's also wasting money.
- Re-think the international routes. If they're not worth it, cut them and focus on being an awesome domestic airline. Use partner airlines to feed in domestic traffic (perhaps get more partner airlines?).
- Keep the fleet as efficient as possible.

This is just my opinion and I am not a CEO, and I certainly appreciate that running a large organisation is not so easy, especially with all the stakeholders involved. Everyone from the comfort of their own home can critique, but this is just my opinion as I love analysing businesses.

[porch monkey]

Brilliant!!!! 80% of you with your great ideas are just spending more money. Exactly what you all criticised the soon to be gone CEO for. MAKING money is exacly what you complain the company doesn’t do. How you were all overlooked for the CEO job I cannot fathom.....

[non_state_actor]

Well why not go back to paper logs, paper charts, paper manuals, no IPADs, BYO Headset, Run scheduling on Excel, Windows '98, No ACARS etc etc.

Think of all the savings right there.

[porch monkey]

Doesn't save anything. Would cost money to go retro now. My point is making the most of what the company does have now, not just buying **** and spending money willy nilly. Oh and the BYO headset thing? Already plenty doing that, especially after the telex debacle. We still use paper logs.

[rockarpee]

Reading the QF Pravda News it’s Paul Scurrah.

[Berealgetreal]

True but the horse has bolted on that one.

Must admit the NEO’s look to be a good product. 321 NEO is incredible from what I’ve read. Max 10 has dissapointing range in comparison.

[TBM-Legend]

Reminiscing:



Tuesday 2 March 2010: The Board of Virgin Blue Holdings Limited (VBA) today announced that it had appointed John Borghetti as the company’s new Chief Executive Officer and Managing Director, effective May 8, 2010.



Chairman Neil Chatfield said: “We are delighted to have John join us. He is a highly regarded executive with deep aviation experience and insights; proven strategic capabilities and; strong marketing credentials. Nobody knows the market better and he is passionate about the aviation business.



Current Virgin Blue CEO and co-founder of the company, Brett Godfrey announced in July 2009 his intention to step down from the leadership role this year.



“With the company poised to move to its next level, John is the right person to now lead Virgin Blue through that new phase of evolution,” Mr Chatfield said.



Mr Borghetti said he feels privileged to have been selected as the new leader of Virgin Blue.

“It’s a great business with a great team and great culture – you can feel the energy in the people and the brand. The company is in good shape and is exceptionally well placed to build on its strengths and embrace revenue growth opportunities ahead. I look forward to working with the team to create an even more competitive environment for air travellers – domestic and international,” he said.





Mr Chatfield said Mr Godfrey has done an excellent job over the last 10 years.



“Today, Virgin Blue has a credible market position with a solid balance sheet and has the scale and momentum for further growth, despite the enormous challenges faced by the industry in recent years. Brett has been an inspirational leader to the Virgin Blue team and we sincerely thank him for his extraordinary dedication and talent. We also appreciate that he has agreed to be available to work with John to ensure a smooth transition.”

[AerialPerspective]

Starting a thread of constructive ideas on the future of VA.
Essentially, what would you do if you were made CEO of VA to bring it to profitability?

If a quote from a recent newspaper article is correct then substantial change has to occur...

”Virgin has run at a statutory financial loss every year for the past six years, running up total losses of $1.6 billion over that period, and peaking at last year's loss of $653 million”.

I take the view that the logistical structure within aviation is the most important, it is an upside down version of the traditional corporate structure.
At the top are “frontline troops” e.g. tech crew, cabin crew, engineers, ground staff etc. The staff who actually get passengers from A to B. They are the most important staff and as such should be supported and rewarded well for their skills. They also are the best people to tap for advice on further efficiencies within the airline and customer experience.
At the base of this model is the CEO and management heads, they are the “support team” for the frontline troops. They provide whatever’s required for the troops to make the airline run.
So to answer my own question, basically if you’re not doing a job that helps get the aircraft airborne then you’re gone.
Close down the Sydney offices, Tigerairs Melbourne head office etc. Run the airline only from the Brisbane “village” with minimal staff, but not under-staffed.
Purchase the best software available (or design your own) with a simple user portal that all staff can access through company provided iPads. A workforce that is connected and informed. Flight and cabin crew rosters should be simplified keeping the same crew and aircraft throughout their duty where possible. A big reduction in overnight expenses and increase in staff morale.
Employ the best fuel hedgers money can buy, pilfer Qantas’ excellent team if possible.
Outsourcing is problematic in aviation. “In-source” all frontline staff; more expensive but ultimately provides stability, experience and loyalty (teamwork). This includes creating Virgins own catering and tarmac operations company. The staff are employed by VA but available to tender work to other airlines as well.
Approach VA shareholders and look for the best synergies e.g. lobby the Chinese for much greater mainland access and run the A330 to these multiple destinations. Offer our politicians “sweeteners” to help here similar to Qantas.
Tigerair should be a low cost domestic and international airline. Purchase REX Airlines (owned by Singapore/Temasek). REX feeds Tigerair and they feed Scoot or fly directly to Singapore. Purchasing REX would also alleviate some of the recent Qantas/ Alliance purchase pressure.
These are just some ideas, there’s so much potential within the VA Group to not only become profitable but a real force within the Pacific. It doesn’t have to be at the behest of Qantas either. Imagine if both airlines (and AIr New Zealand) worked in a loose alliance, a legal cabal. At the very least to cover our Australian “turf”.
Apologies for the long post, glad to hear constructive thoughts on how to turn VA around. A lot of people’s futures depend on it.







Purchase Rex??? Why, so VA can put half it's fleet of 340s up against the fence while still paying the leases, move the others to some other market and then pay Alliance to do the flying...

[SRM]

Get rid of that outdated B737 and get some much better A320's.
Very much better to pax in and far more efficient in baggage stowage etc.
Poor old B737 . it was good in it's days but it is old airframe technology that cant be updated much more.
Well I guess VA looked at all options before choosing the best aircraft for their airline and operation.
Sounds like you were never consulted.

[The Bullwinkle]

Hmmm, Aerial Perspective sounds like someone who a) is desperate to get onto the VA management greasy pole or b) who was there, was knocked off the greasy pole and is desperate to get back on again.

Really???
Just sounds to me like he’s drawing a parallel with their past performance.