Virgin Australia CEO John Borghetti won't need to go far for high-powered advice with the CEOs of Air New Zealand, Etihad Airways and Singapore Airlines all joining the board of Virgin Australia to reflect their cornerstone stakes in the Qantas challenger.
Together the three airlines hold almost 70% of Virgin Australia stock, with Air New Zealand leading at 25.99%, followed by Singapore Airlines at 22.4% and Etihad's 21.4% stake.
A further 10% of shares are held by Sir Richard Branson's Virgin Group, which already has a seat on the Virgin Australia board.
The unusual board arrangement will see Air New Zealand chief executive Chris Luxon, Etihad Airways president James Hogan and Singapore Airlines CEO Goh Choon Phong – which are competitors in a variety of markets – sitting together around Virgin Australia's boardroom table, with the first such meeting due in Sydney later this month.
However, they're far from strangers – for example, Air New Zealand and Singapore Airlines are already working together to begin sharing flights as part of a new alliance between the two flag-carriers.
But Etihad and Singapore Airlines are direct competitors for the lucrative travel market between Australia and Europe, and are also pushing into the Indian market with their respective backing of Jet Airways and a proposed Tata-Singapore Airlines join venture airline due to launch in September this year.
Boardroom or battle-ground?
There's sufficient room for competing goals and secular side-interests to have Virgin Australia draw up a set of 'protocols' to manage conflicts of interest and ensure that none of the airlines gain too much insight into each other's plans.
“We’ve had good relationships with each of the airlines and these directors in particular over a reasonable period of time" said Virgin Australia chairman Neil Chatfield, "and we know they’re bring a lot of industry insight and understanding of some of the issues every company in the industry faces."
Even so, there remains "massive potential for conflicts of interest – and real conflict – around the new Virgin board table" suggests Business Spectator associate editor Stephen Bartholomeusz.
"Chatfield and Borghetti’s diplomatic skills are about to be tested" Bartholomeusz predicts.
"They will need to use all of them to avoid introducing potentially destructive tensions into the boardroom and making it unworkable."
"For the moment, given the size of the three big airline shareholders’ stakes, there’s something of a stand-off that preserves some stability. It also helps that all the players would see Virgin as weakening Qantas, its ability to compete with them internationally and the effectiveness of its alliance with Emirates."
Bartholomeusz believes "there is the potential for an uneasy truce to be observed, as long as two of the big shareholders don’t join forces or the interests and convictions of the shareholders and Virgin’s management don’t diverge."
"If they do, it could get interesting, and messy."
Virgin's board-level recognition of its foreign ownership comes as Qantas also edges a step closer to increasing overseas investment – which could stretch as high as 49% of the Flying Kangaroo belonging to an overseas airline – following a softening of Labor's opposition to modifying the Qantas Sale Act.
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