Ops boss

“The pace and change and what Virgin Australia has accomplished in two years – I certainly can’t think of an airline that has gone through that and gone through it in a fashion where I think the customer has said, ‘yes I like it’, the marketplace I think has responded well to it,” Mr Donohue told Australian Aviation in a recent interview. “And I think the employees of the company should be justifiably proud of what they have accomplished. But I think equally they understand there is still work to be done. ” As chief operating officer Mr Donohue’s areas of responsibility include engineerin flight and cabin crew and ground opera-tions, operations planning, flight standards and safety, catering, international opera-tions, Virgin Australia (New Zealand) – the old Pacific Blue, the new regional ATR operation, and facilities and property. It is a wide area of responsibility that sees him in charge of Virgin Australia’s day-to-day running, and managing all operational and technical programs. But the US native has a CV seemingly custom-designed for his role at Virgin, having had a 25-year career with United Airlines.

“I started as a clerk with United and was fortunate enough to have quite a few op-portunities during the 25 years, mainly on the operational side. So I went up the food chain working in ops, working at the air-ports and then started managing airports, running airports, running regions and was actually asked to do some sales work, which was fun to do and get out of ops. ” A particular highlight was running United’s ill-fated low-cost carrier sub-sidiary, Ted. “I was asked to develop and launch the low-cost carrier within United, so there are similarities with what Qantas did with Jetstar. It was a strange name but the employees did a great job with it and it was doing well and was profitable until the global financial crisis and then all bets were off. At that point United decided to retire all their 737s and therefore needed to take all the A320s that were in Ted and pull them back into the mainline. But that was fascinating, that was probably one of the most enjoyable things I’ve done in my career, launching and developing a low-cost airline. ” In the wake of that decision Mr Dono-hue left United, but later returned to the airline as senior vice president of global operations, where he was responsible for the airline’s pilots and cabin crews and its operations control centre (or OCC). Prior to joining the then Virgin Blue in October 2010, Mr Donohue was briefly the chief executive designate for a private equity group bidding for the privatisation of Chi-cago’s Midway Airport.

“I was fortunate to manage and be in-volved in almost every aspect of the business with the exception of the financial side. So that allowed me to be pretty well rounded. A lot of ops people don’t have sales experience, a lot of ops people don’t that the ability to launch a low-cost carrier and develop one,” Mr Donohue says of his experience.

“So I was very fortunate but that is the past and where we are now is even more enjoyable and it has been a very busy two years as we go through [CEO John Borghetti’s] Game Change program. ” Having Virgin Australia’s staff on board has been the key in allowing the airline to implement that change program, Mr Donohue says.

“When you are going through change management like we are, obviously we have processes in place to manage the change, but if you get the employees along with you it is so much easier and allows you to make the changes and make the decisions at a faster pace. ” Mr Donohue says a number of factors are behind the high levels of Virgin Aus-tralia staff engagement.

“The employees like to see the invest-ment, they like to see the growth in the airline and that we are investing in the fa-cilities,” he said. “So if you are an employee and you look at all this change you feel excited about it. ” Seemingly small but symbolic gestures like new pilot uniforms have an impact too. “A simple thing like investing in profes-sional uniforms has sent a great signal to the employees. It’s a sign of respect. ” That sign of respect ties in nicely with the airline’s growth plans. “What is the most important thing to you as a pilot? Growth, right, because you want to go from the right seat to the left seat. ” Mr Donohue characterises Virgin Aus-tralia’s growth plan as “measured”, while the operational integration of V Australia into Virgin Australia means Virgin Australia pi-lots can now move across four aircraft types – Embraer E-190s, Boeing 737s, Airbus A330s and Boeing 777s.

“It is steps like that, it’s not brain surgery, it is being respectful and understanding what’s important to each of the groups. For ground staff and cabin crew investing in facilities and the product is important, it’s really giving them the tools to be successful.

“It’s doing a good job communicating with them, you do a good job listening, just like we pay a lot of attention to the P and L [profit and loss] you have to pay a lot of attention to what the employees are telling you and mak-ing sure you are supporting them, because . . . we are by far getting the best ratings from customers from any airline in Australia.

“The biggest competitive advantage we have are our employees.”

“In my mind as the COO the biggest competitive advantage we have are our employees. Our employees are on board for what we are doing and they are excited about it,” says Mr Donohue, who cites a recent staff engagement survey that had a 60 per cent response rate, which is “a signal that our people are on board and support where we are going, and it is a signal that we listen to the employees and we are always taking their feedback. ” Being able to build on the youthful and entrepreneurial culture inherited from Virgin Blue has been another advantage, with Mr Donohue noting that it is “absolutely” easier to bring change to a 10-year-old organisa-tion compared to a legacy carrier like United. “Having said that, before we know it Virgin Australia is going to be 25 years old and be-fore we know it 35 years old, but now is the time to build in the culture so that as you do get older and older you have a platform that you learn from and you hopefully avoid some of the issues other legacy airlines deal with. ” He says, “We are nimble. Virgin Blue was nimble and we want to continue to be nimble, we want to continue to be efficient. ”

On the efficiency front, Virgin Aus-tralia has made great strides in improving its on-time performance (OTP), a key

“We have turned our safety management system into much more of a risk-based approach which really gets to the quality of the data we are re-viewing versus the quantity. ”

weapon in its armoury in its attack on Qantas’s high yield business traffic.

“In May we had our best month in 30 months when we came in at 87½ per cent. Obviously we compare ourselves to Qan-tas when it comes to OTP but it is not just comparing the results, it is comparing how we get there. Even with full service catering, priority boarding and priority baggage handling where we have added complexity to the operation we still turn a 737-800 in 35 minutes. ” Notes Mr Donohue, “We have noticed in the last couple of months Qantas especially in Sydney and Melbourne their scheduled turn times especially for a 737-800 are 50 to 60 minutes. ” A number of factors have led to Virgin’s improved on-time performance, from timely boarding processes, to im-proved reliability for its 737 and E-190 fleets, to improvements in scheduling and benefiting from Airservices’ new Collabo-rative Decision Making (CDM) processes for Sydney Airport. The forthcoming extra gates at Sydney Airport will help even further.

“Qantas mainline and Virgin Australia have the same amount of departures out of Sydney but Qantas have 16 gates and I have nine. So when we do get delays, my airplanes will land and I don’t have a gate for them to go to but Qantas does. But come the end of this year I’ll have 14 gates and will have solved that for the most part. ” More broadly Virgin Australia has real-ised further efficiencies in integrating the previously separate V Australia and Pacific Blue divisions, a task which Mr Donohue notes has been his most challenging to date.

“If you look at V Australia and Pacific Blue the people had pride in what they had developed and really the direction before was ‘V you are your own airline, Pacific Blue you are your own airline, stay away from the mother ship’ a little bit. Now we are saying we are one integrated airline, we are all Virgin Australia. So that is a big change . . . and that has probably been the biggest challenge. If you look at the 777 operation we’re there, it’s Virgin Australia, it’s been fully integrated and we’re going down that path right now with Virgin Aus-tralia New Zealand, the former PB. ” One aspect of that which Virgin Austral-ia is working to is group integration of its pilot bodies, which Mr Donohue explains is about “that if I’m a first officer and I’m flying in New Zealand for Virgin Australia New Zealand and there is a captain open-ing here in Australia domestically, can I raise my hand and be considered, no guar-antees but be considered? It is trying to get to that point that if I’m a 737 captain flying domestically and there is a 777 FO opening how do I raise my hand to be considered for that? So it’s that type of issue that we want to come to agreement on because I think everyone benefits from that. ” That integration is part of current pilot pay and conditions negotiations now un-derway with both the Australian domestic and New Zealand-based former Pacific Blue pilot groups.

Integrating new aircraft types into Virgin Australia has been another challenge for which Mr Donohue has responsibility – a move, which, on the surface at least, has seen the airline add complexity when in other areas of operations it has been trying to remove it. Mitigating that complexity, the COO says, is improving the airline’s safety management system.

“That is the foundation of the ops group. We have done a lot of work with our safety management system where we have turned it into much more of a risk-based approach which really gets to the quality of the data we are reviewing versus the quantity. ” To a degree the new Airbus A330-200 fleet’s focus on operating transcontinental services limits the additional complexity that a new type brings. “Any time you introduce a new aircraft it adds complexity but when we are only flying between Perth and Sydney, Perth and Melbourne, it minimises some of the complexity,” says Mr Donohue.

The new ATR 72 turboprop fleet, mean-while, is operated on Virgin Australia’s behalf by Skywest (in a similar arrangement to how Cobham operates Boeing 717s for Qantas).

“It’s Skywest’s AOC, it’s their operation. We are there to support and assist them but they are an experienced regional opera-tor and clearly from my experience from running regionals with United this is the model that makes the most sense. You have an operator that understands their business, operates for you with really strong SLAs (service level agreements), because at the end of the day it’s our customer who thinks they are on Virgin, so we really pay a lot of attention to make sure the whole experi-ence feels like you’re on Virgin. ”

Both new types have been performing well in service, Mr Donohue says, noting that he had been pleased with the reliability of the original two ex Emirates A330s with Virgin Australia, even if on occasion one of them going u/s meant half the fleet was out of service.

“Now that we have five 330s and we will have the sixth one next April we have a lot more flexibility and recovery options. But the reliability of the 330s so far has been quite good. ” The ATR operation has grown quickly too, with at late June six ATR 72-500s flying 200 flights a week, with the aircraft operating to expectation.

“What has been most pleasing about the ATRs is the customer feedback. Once you get on that airplane it’s pretty comfortable. ” Making the existing 737 and E-190 fleets more comfortable has been another program Mr Donohue has overseen, with cabin refurbishments adding business class to both types. All bar one of the airline’s 737-800s have now been fitted with busi-ness class (the only 737-800 not refitted is leaving the fleet in August), while all bar four 737-700s will have left the fleet by September, with those four to have been refitted with business.

“I can’t tell you how important that is because to have a customer fly Sydney- Melbourne and on one segment they expe-rience J class and the second they don’t, so by September every 737 will have J class. ” The program to fit business class to the E-190s, meanwhile, should be completed in the first quarter of 2013 and the 777 interior refresh (with its new seat covers) will be concluded by October this year.

As for the repainting of aircraft in the new livery, “by the end of this year close to two-thirds of the entire fleet, including the ATRs and 777s and 330s, will be in the new livery and by mid-2014 we will be all done. ” All that, before the first of the airline’s 737-8 MAXes begin arriving from 2019, announced after AA’s interview with Mr Donohue. But in the meantime, there is plenty still on the to-do list.

“I don’t want to sound like we are patting ourselves on the back because there is still a lot of work to be done. ”