Branson: letting Borghetti go "was Qantas' biggest mistake ever"

By David Flynn, May 8 2013

Should Virgin Australia CEO John Borghetti ever suffer from late-night pangs of self doubt, he need only pick up the phone and call Sir Richard Branson for a shot of confidence.

"Qantas made its biggest mistake ever by not making John their chief executive" Branson reflected in Perth following Virgin Australia's launch of its new regional arm.

"If they had, I think that Australian aviation would be extremely different today."

A 36-year veteran of Qantas who in 2010 took over the helm at Virgin Australia (then known as Virgin Blue) after being spurned for the Red Roo's top job, Borghetti “came to Virgin with a mission to prove Qantas wrong” Branson explains. “He wouldn't say that himself but I’m sure that is the case.”

Branson speaks warmly of Borghetti, readily praising him as being “great with people, and a great strategic thinker... if we could duplicate John and his senior team at Virgin Australia and place them into any Virgin company anywhere in the world, we would love to do so."

Asia still in Virgin’s sights

“John’s ticked most of the boxes” in building Virgin Australia into an airline that could take the fight to Qantas, Branson told Australian Business Traveller.

“The airline has been upgraded enormously and business travellers have been moving over to Virgin Australia in large numbers.”

“We’d like to see a little bit more international expansion, particularly to the Far East, and I’m sure that will happen over the next few years.”

That move stands separate to Virgin’s current partnership with Singapore Airlines, indicating that Virgin would either fly its own aircraft to other Asian destinations – most likely within China – or form an alliance with another airline in the region.

“To have lost Singapore to Qantas would have been a real blow, so it’s great to have Singapore Airlines as a major partner” Branson said. “They’ve got enormous clout in the region.” 

“But domestically and regionally most of the big boxes have been ticked, and Virgin Australia couldn’t be in a better position for the years going forward.”

Branson’s bet with Borghetti

Next year in particular is a crucial milestone, at least on the personal Branson-Borghetti scale.

It’s when the second of two high-stakes bets between the globetrotting entrepreneur multibillionaire and the Aussie airline wiz will be called.

Borghetti claimed victory in his first wager with Branson, which hinged on the radical transformation of the low-cost carrier Virgin Blue into the highly-competitive Virgin Australia.

That bet was “to change the company within 12 months” Borghetti told Australian Business Traveller, “and I asked him to donate money to a charity.”

While Borghetti didn’t name the noble cause it’s believed to be the annual CEO Sleepout for the Homeless, where Borghetti joined other high-flying CEOs bunked out at Sydney’s Luna Park in June 2011 with a $20,000 sponsor donation from SRB in his pocket to assist the St Vincent de Paul Society provide services for the homeless.

Now the Borghetti-Branson challenge is in Round Two. Branson is reluctant to be drawn on specifics, but admits the wager is  that “John believes that next year’s earnings will be a certain amount, plus a few other bits and pieces."

"We’ll see whether he delivers, but I’m hopeful he wins the bet!" Branson laughs.

Follow Australian Business Traveller on Twitter. we're @AusBT

David
David

David Flynn

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Daniell

Daniell

26 May 2011

Total posts 58

Always have to laugh at Branson when he screams about competition and the unlevel playing field (not necessarily in this article), when most of his train routes in Britain are heavily subsidised and face no competition whatesover. Talk about a hypocrite. LOL 

Well done to Borghetti, however. 

777

777

Virgin Blue - Velocity Rewards

12 May 2011

Total posts 32

To point out the obvious: the privatised train system in the UK is a construct of the UK government not of Branson. It's set up in the same way that Melbourne's public transport is: put out to tender by govt to whoever will pay the most/ be subsidised the least (or whatever other criteria they use).

That process is pretty competitive and Vrigin are one of many companies that tender for routes -- last i heard Virgin had lost a bunch of routes in the last round of tenders.  

Whether it's the best design for the system is a whole other argumnet but it's definitely a competitive process.
 

PLATY

PLATY

19 Jan 2012

Total posts 427

It's hard to see how you can link Branson to anti-competition given the impact of VA.

Personally delighted to enjoy the price war between  VA and Qf!

The Tories in the Uk stuffed up the railways. Not Branson's fault.

AlG

AlG

04 Nov 2010

Total posts 674

Can't agree more with Branson on this. Borghetti has done amazing things at Virgin Australia, he certainly won my domestic business from Qantas and that is true of many others I am sure. If Qantas has chosen him as its CEO instead of Alan Joyce I think things woulkd be vastly different at Qantas (for the better) and Vigin Australia might still be the struggling Virgin Blue.

StuParr

StuParr

Virgin Australia - Velocity Rewards

01 Mar 2012

Total posts 168

Here here. My business as well.

While it is not always perfect I have found the service levels at Virgin Australia to be of the highest quality. We are really lucky in Australia to have to airlines that do offer a high quality of serivce. After travelling around the US a lot more than usual lately we really don't know how good we have it.

With VA's competition it has spurred both airlines to a high standard.

AusFlyer

AusFlyer

10 Mar 2011

Total posts 531

Do you think so? I would agree with that more if Virgin and Qantas were on a level playing field and had the same union issues and historical boundaries.  Didn't Borghetti have a lot more to work with at Virgin to bring them up to be a competitor with Qantas? Given that Virgin offered next to nothing, surely even if Borghetti had been given the job at Qantas he wouldn't have been able to do as much as he did at Virgin. Also let's not forget that he was with Qantas and therefore he is partly responsible for what Qantas is today.

So as much as I admire the fact that he has done quite a remarkable job with Virgin, I'm not sure that he could have had the same impact at Qantas which has so many legacy issues to deal with that even he wouldn't have been able to overcome.

RobJ

RobJ

QantasFF

16 Nov 2012

Total posts 55

I agree on this point, not least becaue of the way Borghetti has been plundering Qantas management ranks as a kind of supermarket for his own executive staff. Qantas management must have been severely downgraded by this, which contributes to their poor strategy and execution.

TheRealBabushka

TheRealBabushka

21 Apr 2012

Total posts 3034

Things are as they should be. A formidable competitor will keep Qantas honest and provide diversity in the market to everyone's advantage. Regulators will now need to do their part to ensure a duopoly does not ensue, and step in when politicians seek to favour one over the other, as in the case with Ansett. We the public must continue testing both airlines so that complacency does not set in and they're always just slightly uncomfortable. 

am

am

15 Apr 2011

Total posts 586

I'm waiting to see some strong financial results come out of all this before I make a judgement. It's all well and good to have spent lots of money on fun things like planes and seats and lounges, but Borghetti is yet to prove that he can take that and translate it into profits.

Branson has something of a habit of getting ahead of himself. 

Really

Really

02 Jan 2013

Total posts 70

Not sure about that.Tell me what real improvements did he make at Qantas while he was there.Wasn't he part of the management that had brought Qantas into a slow steady decline over the years?

AusFlyer

AusFlyer

10 Mar 2011

Total posts 531

That's what I think too... And also let's face it, if it wasn't for Etihad and particulary Singapore Airlines, they wouldn't be in the same position they are in now.

johnnysfo

johnnysfo

15 Aug 2011

Total posts 33

That is what GREAT CEO (John Borghetti) do to help there business and make smarter choices to aline themselves and there business to be in a stronger positions and enable there airlines to grow and be competitive. I don't see Allan joyce doing any charity works for the comminity or any one else but himself. 

SteveCF

SteveCF

Virgin Australia - Velocity Rewards

15 Aug 2012

Total posts 170

I'm really sorry but that is a very misguided post, and didn't make much sense either. Yes Qantas have had a rough patch, but Joyce is getting things going well again, doing the right things to get the airline profitable and is ensuring that Qantas is a good corporate citizen at the same time. They do much more than you think.

am

am

15 Apr 2011

Total posts 586

In the past couple of years Qantas has become a major sponsor for OzHarvest (Google it and you'll realise its quite a major sponsorship), and I've seen Alan Joyce's name all over the place sponsoring the arts (ie Gallery of NSW, MCA in Sydney). I can't believe how easily people are buying into the Joyce = evil, Borghetti = good complex. 

David

David

24 Oct 2010

Total posts 2322

Johnnysfo: I don't believe we should judge any CEO by the yardstick of charitable works, but you've missed Alan Joyce's work with 'the CEO Cook-off' fundraiser, sponsored by Qantas and which this year raised an estimated $1m for chariity. For details: http://www.brw.com.au/p/brw-lounge/foodie_takes_flight_as_alan_joyce_hW96SoheyKZyBgvymiXEGP

ollie117

ollie117

21 Apr 2013

Total posts 34

this is not true

Daniell

Daniell

26 May 2011

Total posts 58

The fact is Branson doesn't face competition on his railways, so can charge what he likes. And he does. So don't talk to me about Branson being for the common people and keeping things fair, out of the goodness of his heart. Spare me the stupidity. 

And perhaps if some of you lived in the UK, you may realise just how poor Virgin Atlantic's product and service levels had become. Even Skytrax dropped their status to a 3 star airline for some time. He's hardly one to point the finger at Qantas. Qantas has introduced a hell of a lot of product innovations and improvements of late.

I wouldn't, Platy, talk of VA as some champion of 'keeping the bastards honest' and being pro competition. I can assure you that if Qantas wasn't around, VA wouldn't be there giving away tickets. But tell me, would you take on QF or VA as a business proposition? We all know the answer because VA isn't subject to legacy union agreements and restrictions, even given your talk of patriotism and Govt favouritism. Borghetti would have found it very different and rather more challenging at QF. He was 2IC for some time at QF too, remember, so perhaps some of you may like to apportion some of the blame to him if you think their product fell behind for many years? He was hardly in a junior postion. 

PLATY

PLATY

19 Jan 2012

Total posts 427

Daniell, I appreciate your point of view. But please don't put words in my mouth and then argue against a restatement - I never claimed Branson's intent was to keep the bastards honest, etc.

Incidentally, I have lived in the UK for 26 years (although did leave ebfore the railways were privatised)  - please don't presume about myself or other readers!

Yes, you are right that, that a "virgin" company will run its business to make profit, just like any other, and used the exmaple of UK rail business. Absolutely!

The point is that Branson has sought markets to enter where competiton was desparately needed (pertinent examples being the Australian airline market and taking on the hegemony of BA and the then major US airlines with Virgin Atlantic despite the failures of Vreddie Laker before him and foul play of BA).

VA has been successful at creating a competitive force in the Australian airline industry and stimualted change QF after the laziness and prcie gouging (In buinsess class) of the monopoly since Ansett's demise.

No, I wouldnt' start up or take on any airline business (apart from the fact its way outside my competencies and experience!) sicne the margins are always going to be small (if you even make a profit). Remember, too, Toll put the brakes on the development of VA as business orientated airline.

Whatever Borghetti's achievement at QF his impact on VA in undeniable.

As a final thought (and only  IMHO) it is farcical for QF exec continuially to blame unions and legacy issues for their issues and then sit there taking obscene salaries and bonuses (Dixon would have pocketed $130 million if the private equity deal had succeeded = 3,000 annual salaries!!!)

Daniell

Daniell

26 May 2011

Total posts 58

Branson is content with being anti competitive when it suits him. If you have issues with me linking Branson to VA, perhaps he should refrain from continually commenting on Qantas. That's my observation of him, and as someone who IS living in the UK, I don't just rely on the love affair you have with VA to cloud my opinions of the man. 

I'm also sorry you took exception to my presumption of you, but I can ONLY judge by your posts, which are continually anti QF and pro ANYTHING VA. You even took a rather nasty line with David, the editor, at what yo saw was pro QF, so you're just as guilty at making assumptions and commenting accordingly. 

Your point about Dixon is poignant. That's right, he stood to make a fortune out of the private equity bid, so why do you seem to then blame Joyce for QF's current position? Whether you agree with him or not, he's attempting to change the QF business and certainly isn't sitting still with product enhancements.

If you can deny that VA's new employment conditions would see Borghetti a lot happier than had he been saddled with QF's, then we're never going to agree.

PLATY

PLATY

19 Jan 2012

Total posts 427

WTF, Daniell?!

You are arguing against positions I didn't articulate!!!

I would like to see more depth than a recapitulation of company press releases. That's it. It applies equally to QF and VA. In lieu of that, I  think the AusBT people are doing a great job.

Yes, I have feedback (good and bad) on VA. I share that with Borghetti's office. Soem of my negative feedback is in one of my posts (price hikes, issues with cut over to new booking system).

I am also Platinum One with QF = lots and lots of flights and experience (good and bad), which I also share in the available P1 channels in QF. I make a point of praising staff on flights.

You logical extrapolations are befuddling!

SteveCF

SteveCF

Virgin Australia - Velocity Rewards

15 Aug 2012

Total posts 170

I'm sorry but I don't understand how we are linking English rail systems to this article? 

You are making big claims but don't seem to address direct rebukes to them which makes me think your more intent on stirring the pot.

Please answer 777's post directly or stop carrying on.

And if thats the best shot you can take at Branson you haven't got much at all!

PLATY, ignore him.

schuey

schuey

09 May 2013

Total posts 8

I don't think you could call Joyce stupid but some of the decisions made, and supported by the board are more than questionable and not very transparent.

The long haul fleet is questionable and has been for years, excluding the 380. The 747 should have been supplemented or replaced by the more efficient 777.

The Jetstar operations don't seem to include their full cost of operation and are cross subsidised by Qan when it comes to maintenance, access to routes etc.

The current plan for Qan seems to almost be a domestic airline, oh and Dubai. Everything else is Jetstar and usually without an alternative full service offering.

Yes there's union challenges but compare the morale, the engagement and the approach to staff between AJoyce and JB. It's not ideal because Qan has bigger issues but one operator comes across as confrontational, antagonistic and inward looking and the other sounds like a leader. Not a true comparison and not everything is rosy at VA but having your staff onside counts for a lot.

PLATY

PLATY

19 Jan 2012

Total posts 427

Breath of fresh air!

I know ONE QF employee (a very senior A380 captain) who respects Joyce. ALL of the others (many) have serious issues with the man's direct rudeness (face to face) and the execs deafness to any feedback.

In my book that's bad leadership.

In contrast the VA staff I speak to have universal respect for Borghetti.

Workplace culture is in Joyce's scope of work and in that regard see I personnaly him as wanting.

I don't regard my comments as anti QF, no doubt others will. 

AlG

AlG

04 Nov 2010

Total posts 674

"I don't think you could call Joyce stupid" - very true, I dont have much time for anybody who calls a CEO like Joyce 'stupid'. Just because you don't agree with their decisions doesn't make them stupid. If the solutions were so easy (like "QF should buy 777s!") then Joyce would have done it already. Alan Joyce may be many things, and he is clearly very different to Borghetti, but he is not 'stupid'.

Daniell

Daniell

26 May 2011

Total posts 58

SCF, it's quite simple, even for you. 

If Branson wishes to admonish an iconic Australian company like Qantas, he'd better make sure his own backyard is pretty perfect. And I can assure you, his railway and Virgin Atlantic are bloody awful. It's an analogy. Do you understand that?

And Platy, you made reference to 'that's what good jounalists do', after talking about David being unimpartial. Even he snapped at you, so try apologising rather than in the next sentence saying 'what a good job Ausbt does', in an attempt to backtrack. 

Oh, SCF, here's another Branson comment. He's a sleaze. You may not realise that I am a woman, who finds his portrayal of air hostesses rather disgusting. Don't comment towards me again, I'll do the same to you, my friend :-)

PLATY

PLATY

19 Jan 2012

Total posts 427

Daniell, is it Ok to ask how much time you spend in Australia and how often you travel on QF and Virgin Australia, given you have openly stated that you live in the UK?

Daniell

Daniell

26 May 2011

Total posts 58

Platy, Platinum with QF, Silver with VA (use them Mel-Ool), Gold with Qatar. I have residences in London, Melbourne and the Gold Coast, so I'm between the three a lot. 

Daniell

Daniell

26 May 2011

Total posts 58

To someone who has three initials in their name, beginning with S, ending with C, I believe YOU made the attacks personal upon saying I should be ignored. Just as the aforementioned did in a previous post by pointing out a spelling mistake, when the said's post was littered with them. Cheap shots alright.

The relevance is the point that Branson can hardly bleat on about competition when he operates in a train environment where there is none, nor take cheap shots at Qantas. It suits his purpose to tender to a transportation mode where he runs his business as he sees fit, as does Joyce. Secondly, his product on both his trains and Virgin Atlantic is poor. Caught a flight out of Gatwick lately, S space C? Or booked a first class fare Lon-Man? Try it. 

I also took the aforementioned's challenge of a second pot shot at Branson by calling him sexist and degrading in his treatment of his female staff. I was merely responding to the said's request. For all of Joyce's apparent staff failings, I don't think parading them as air mattresses is one of them.

SteveCF

SteveCF

Virgin Australia - Velocity Rewards

15 Aug 2012

Total posts 170

Your right, I took a cheap shot after you took one at others, difference is I apologised while you continued to rubbish others.

And the post about ignoring was not personal, It was based on relevance. And when 777 replied you didn't respond? So your argument that was nothing to do about this story looked weak.

Anyway I'm done with this and wondering why I'm going on with this.

ill say this, love your passion!

all the best

PLATY

PLATY

19 Jan 2012

Total posts 427

Daniell,

Now I have personally watched Branson (at the Virgin Australia launch) parade with a bevy of staff - it didn't look like any of them were taking offence - that's the point about "degrading" or "harassing" beahviour it has to be unwelcome by the recipient.

whatever your opinions of Richard Branson, please be aware that the staff I know at QF are treated with utter contempt by Alan Joyce. The man ignores them (check out and on boatrd) and is utterly rude. Personally I find that just as offensive and inappropriate as unwelcome sexist behavour. certainly his behvaiour is foudn to be offensive by actual people I know.

This pattern repeats the behaviour of his predecessor Dixon (sit on the aircraft and ignore the staff).

The chap before that, James Strong, was an absolute gentlemen - indeed I have been on the same aircraft and watched his interactions personally.

Now, not really wanting to prolong a tired thread ("stop the sketch - it's all got rather silly") [ humour] I hope you realise that Branson is now a minor shareholder in Virgin Australia, so this whole discussion is becoming irrelevant and absurd to any real issues any of us are likely to experience as travellers on Virgin Australia or Qantas.

Yep - Branson is a "cheeky" fellow - the planes have also rather cheeky maidens painted on their noses - do you not find that puts you off travelling on them given your self-confessed sensitivities?

Incidentally, just stepped off a QF domestic flight and the staff were magnificent. I told them so.


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