Former Virgin Australia CEO John Borghetti has defended his strategy which took the airline from the low-cost Virgin Blue to a full-service and full-throated Qantas competitor, saying his ambitious "game change" plan was the only way to ensure the airline's success.
Speaking with the ABC ahead of a special Four Corners report on Australia’s aviation crisis and the future of flying, Borghetti said "I think it was the only strategy because Virgin had found itself placed in the middle between Jetstar and Qantas and it had outgrown the low-cost space but hadn't quite penetrated the corporate space, so you needed to go one way or the other."
"You couldn't go back to the basic low-cost carrier phase because your cost base was too high, so you only had one way to go and that was to attack Qantas and get the corporate market."
Borghetti's work is now being undone by Virgin's new owner Bain Capital, which will reposition the airline as a mid-market 'value-based' carrier rather than fight Qantas for high-end corporate travellers – and in the process significantly downsize the airline, pare back its business class offering, let go of its Airbus A330 jets and close its elite invitation-only The Club.
"We are not looking to take Qantas head on, especially in their corporate part of the market," Bain Capital's local managing director Mike Murphy has said, noting that Virgin's previous battle for the high-end, suited-and-booted business travel brigade "wasn’t a happy outcome for anybody."
"There will always be different segments that will want the much more high spend Qantas experience," he said, but Bain's Virgin will stake out the broad middle of the market and put an emphasis on value.
Former Virgin Australia executive John Thomas – a long-time friend and colleague of Borghetti, who joined the airline in late 2016 and was seen as Borghetti's successor, but ended up hired and fired in the space of a year – tells the ABC that the 'Qantas-lite' approach was unpopular within the airline.
"When I arrived at the airline, a lot of frontline staff said, 'Look, can we, can we please stop trying to be like Qantas... Qantas is a great airline. You're never going to beat Qantas at Qantas's game."
Virgin Australia chair Elizabeth Bryan, who took up the post in 2015, said the airline was "hell-bent" on getting market share.
"But you've got to be able to afford it. You have to be able to afford going into those things. And in the end, deep pockets win and Qantas is the deep pocket, not Virgin."
Bryan also implies that it was the board's decision to have Borghetti resign in early 2019 and be replaced by current CEO Paul Scurrah, who is tipped to remain in that role under Bain's ownership.
"What the board can do if they don't like the way the CEO is running the company is to change the CEO. And that's eventually what the board that I led did. It was not prematurely, it was not done in an undignified fashion," Bryan told the ABC. "I think he'd done his stuff and the board thought it was time for a change."
Grounded: Australia’s aviation crisis and the future of flying will screen on ABC TV's Four Corners on Monday June 29, 2020 at 8.30pm Eastern, and will also be available on ABC iView.