Virgin Blue CEO Brett Godfrey said some provocative things about the Qantas dual brand strategy yesterday, but was it more than it appeared to be?
The occasion was a forward looking address to the National Aviation Press Club by Godfrey, the co-founder of the airline, who will retire late next year, not just as the head of a carrier that overcame the barriers to new entrant airlines in Australia, but ironically for a man running an ‘upstart’ operation, as the longest serving chief executive officer of a major national carrier this century.
Godfrey revealed there was an “airline of the future” unit at work in Virgin Blue, and that the day was coming when all of its brands, Blue, Pacific Blue and V Australia, would be united under one brand.
Not only would one “V” brand confront the dual brands of full service Qantas and no service Jetstar, but it would have a fully internet connected fleet, and every plane would offer the soon to be revealed and revised premium and discount products to every point it serves.
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There would be no cheap brand versus “quality” brand like Qantas/Jetstar, just one brand, with low operational costs, doing all things for all people.
This is a major challenge to the Qantas dual brand strategy, and on the surface, exploits the intense dissatisfaction of Qantas customers crammed into Jetstar cabins as well as the internal tensions between the former, which Qantas staff claim is being gutted, to prop up the alleged “sweat shop” working conditions of the latter.
But why did Godfrey let this “secret” out? The media habitually transmits whatever signals airlines send to each without pausing to ask “why?” they were sent.
One theory that merits consideration is that the “V” team wants the “Q” team to panic into putting a premium economy offering in the Jetstar domestic fleet, because the former believe this will destroy whatever relevance the Qantas full service product has in domestic services now and in near future, to Virgin’s advantage, starting with the isolation of a once powerful brand to a core network of international routes.
Unfortunately, the Qantas response to Godfrey’s comments yesterday is not expected until its CEO, Alan Joyce, addresses the aviation media in November. Sooner would have been better.
By then Qantas low cost brand Jetstar will have flown headlong into month two of the incompletely announced expansion plans by rival Singapore Airlines controlled low cost clone, Tiger Airways, which Godfrey sees as trench warfare for disloyal price driven customers in which both combatants bleed cash to see who dies first.
This gets even more painful for Qantas if the widely held view that Virgin Blue domestic is profitable and Qantas main line domestic is unprofitable is correct.
Meanwhile Godfrey is refusing to release a video of his management team wearing grass skirts and singing the Qantas anthem “I still call Australia home.”
Revealing more of the Virgin Blue culture or irreverence, and “gatecrashing Qantas pricing monopolies” Godfrey said the taunts Joyce’s predecessor Geoff Dixon used to make about his airline were reproduced as motivational posters and badges and circulated among section or team leaders “with great and beneficial effect.”
“Our management team has been the one constant in the many twists and turns we have experienced under different ownership combinations,” Godfrey said.
“During that time … our board has changed so frequently we’ve had to issue name tags sometimes.
“We’ve been launched, listed, taken over, bought, sold again, pillaged, inherited, given away and now bought again last month. We had $300 million ripped out of the company…
“But we own 30 % of the market … and it is not unrealistic to say we will get half of it in time. In July our yields were down by only 1.8% but in Qantas they had plunged 12.3%.”
Where Qantas was shedding thousands of staff Virgin Blue had said it would have to lose 400 jobs, but only retrenched 12.
Godfrey said against such uncertainty in its ownership, and in the airline business at large, the airline had kept to its chosen path in the middle market which was where the biggest margins could be made.
But as everyone in the room, and the industry knows, he leaves next year, after a decade at Virgin Blue, and the management team will change no doubt as radically as its “airline of the future” unit sees its operations changing.
What will Qantas CEO Alan Joyce say when he takes the floor?
It could be two months before we find out.