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Virgin Australia chief executive Paul Scurrah has vowed the airline won’t chase capacity and market share when it begins to rebuild its domestic network.
In an exclusive interview on the Australian Aviation Podcast, which you can listen to above, Scurrah said he won’t pursue a “win at all costs” strategy and the business will prioritise looking after existing customers.
“Sometimes in companies, the word profit gets demonised,” said Scurrah. “But it’s incredibly important that people at all levels of the organisation understand why that’s important – because it’s creating the future. And we need to bring that back up and elevate the importance of that.”
Scurrah was speaking as the business works to rebuild its network as domestic border restrictions ease.
Bain beat out Cyrus Capital Partners in May to become the administrator’s preferred bidder for the airline but the decision was only rubber-stamped at a final creditors’ meeting on 4 September.
As part of a restructure to prepare the company for a post-COVID-19 world, Virgin announced in August it would cut 3,000 jobs and axe the Tigerair brand. However, it also said it wouldn’t go down the route of being a stripped-down, low-cost carrier and would continue to fly international routes and offer domestic lounges and business-class flying.
Scurrah indicated the new strategy would involve prioritising existing customers and focusing to maximising profit from a streamlined network.
“Going back to some of the mistakes you alluded to before, we won’t have a win at all cost approach to some of the big corporates,” said Scurrah. “Some of them, it would just cost way too much to win them, than the benefit that would come with it.
“We’re sticking to our swim line around what we want. And it’s really hard to define which corporate customers we’ll go after, because there’s big ones that will be value focused and looking for more and more value. That’s the spot of the market, we will fill: a high-quality product with better value than our competition.
“There has been a fault of this industry, and not just in recent times, of overweighting market share as a measure. It is a measure, but it’s not the measure. And if you overweight that, you win market share at the expense of profitability, which ultimately is the thing that has been the least performing part of our business over the last 10 years.”
On the podcast, recorded late last week, Scurrah also hailed Bain as “a really good owner” and said the relationship between the investors and the existing management team is like “a good marriage”.
The chief executive’s staunch defence of Bain came shortly after eight unions, including the TWU and AFAP, signed a joint statement in which they launched a wide-ranging attack on the airline’s new owners. It came as the two sides are attempting to negotiate new enterprise agreements underpinning terms and conditions, which have expired.
“The fact that Bain has come in is something that’s incredibly welcome to us, because the alternative was far worse,” Scurrah said. “They’ve got a really good track record in terms of funding the businesses adequately, and making sure there is a really strong focus on process improvement and technology, and customer-facing investment.”
Ian
says:Pity John Borghetti didn’t have that attitude instead of trying to beat QF at all costs, build stupid VIP clubs for his mates. Virgin wouldn’t be in the position it is today.
andrew ferguson
says:Interesting to note that Virgin is moving some of its aircraft to Brisbane Wellcamp Airport. The new arrivals include the one Boeing 777-300 series aircraft that was not owned bt Virgin. They have owned four owned 777-300 aircraft. Its the leased one that its now sitting at Wellcamp. Also there is one of their 5 Airbus A330’s there.
Duncan
says:Let’s see if he’s saying the same in a year’s time.
Once Bain has total control, there could be a seismic shift.