Exclusive Interview: John Borghetti, CEO, Virgin Australia

By Tony Hall, Chairman and Editorial Director APAC, Travel Daily Media Group

After six years at the helm of Virgin Australia, John Borghetti is as charming, polished and passionate about the airline as ever. He has led the company through many substantial challenges, yet VA continues to deliver high levels of customer satisfaction and new product innovations. Travel Daily Media was fortunate to personally meet with Mr Borghetti and Virgin Australia’s Group Executive, Public Affairs – Danielle Keighery – in Sydney this week.

On the subject of new developments, Mr Borghetti was excited about the new Melbourne-Los Angeles service launched this week and a new Melbourne-Hong Kong service commencing in July this year. “We will firmly focus on a maintaining our high standard domestic routes while adding to our popular corporate-friendly US and Asia destinations.” Mr Borghetti said

“The new Hong Kong route and partnership with recent shareholder HNA’s Hong Kong Airlines will open up interline access to 13 Chinese provinces with a population of 700 million people. The HK route and partnership is important for VA as high growth Chinese tourism will feed into VA’s domestic capacity. The Chinese market is now the number one inbound tourist market for Australia in terms of numbers and spend per person.” He said.

“VA does not aspire to grow into a multi-leg long-haul airline,” Mr Borghetti explained. “Instead we will concentrate on providing a quality domestic product and profitable point-to-point international destinations tailored for the corporate and higher end leisure market. Subsidiary Tigerair will transition its fleet from A320s to longer range 737s to service the expanding low-cost domestic and international leisure destinations,” he said. “Tiger can compete much better with low-cost carriers on international leisure sectors within the range of 737s. The benefits of a simplified 737 fleet make sense on many fronts.”

When asked about the potential benefits of joining an international alliance to give VA customers better access to overseas carriers, Mr Borghetti explained that such alliances are subject to intense regulation, are very costly and a predominantly domestic carrier will not get the same input or attention as a much larger global, long haul airline. “We have been in the fortunate position to choose our own bilateral relationships which are all leaders in their regions – Singapore Airlines (Asia), Air New Zealand (NZ/Tasman) Etihad (Middle East/Europe), Delta and HNA (China).” He said.

“Alliances are now less relevant than 10-15 years ago. Many members don’t even talk to each other, let alone work together,” he revealed. “We are able to provide our customers all the benefits of more selective and flexible, quality, global bilateral relationships without the high costs and anti-trust scrutiny associated with more formal alliances.”

VA just announced two additional innovations to the market – new economy product called Economy X and a customer testing period of inflight Wi-Fi. Economy X guests will enjoy an extra 7.6cm of leg room, as well as priority boarding and dedicated overhead locker space. The cost of Economy X begins at AU$29 (approx. US$22) and is free for Platinum frequent flyers. In addition to new seating, a tested and proven Wi-Fi solution provided by Gogo and Optus will commence with a free three-month trial immediately so that customer feedback is collected prior to the full roll-out. Customers can stream content from Netflix, Stan and Pandora.

Since Mr Borghetti joined VA in 2011, the number of frequent flyers with the airline’s Velocity Frequent Flyer program has grown rapidly from two million to seven million, in only six years.

After a period of financial and operational consolidation, Mr Borghetti is clear that the VA Group is now poised to grow carefully while at the same time maximizing customer benefits.