It’s the last blue day today for the Virgin brand in domestic airlines as the myth making cranks up a notch or two for tomorrow’s launch of Virgin Australia.
Richard Branson will touch down in Sydney in a new or “evolved” looking Airbus A330-200.
Across the carrier’s network the temporary badges saying Virgin Blue that were pinned on the new cabin attendant uniforms it released earlier this year will be replaced with the real name.
Whole warehouses full of new signage will be flung open to replace and expunge Blue from the Virgin vocabulary.
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RIP Virgin Blue, first flight August 31, 2000 and a fleet of two 737s, and “hello” Virgin Australia, with a fleet of about 90 jets, including the new A330s and the Boeing 777s flown by V Australia.
As usual in corporate remakes, history will be rewritten, something that has been well under way for months now with a series of vicious “backgrounded” attacks by finance writers on the record of Branson’s co-founder and architect of Virgin Blue, Brett Godfrey.
These dictation exercises had Virgin Blue plummeting to ruin, contrary to any rational reading of the balance sheet and associated filings.
The truth about Godfrey is that he made more money for Branson out of aviation than anyone else he has ever employed, and broke the iron grip that legacy carriers had on the business of being a major Australian airline. He did this despite the nightmare of running an airline in which Chris Corrigan’s Patrick Corporation and then Toll held were at times variously hostile or indifferent stakeholders.
Godfrey also wrote a substantial part of the grand plan his successor as CEO, John Borghetti, is enacting. In September 2009 Godfrey gave an address to the media in which he saw Virgin Blue consolidating its brands to one or two, and providing premium as well as low-fare products on all flights, a one-brand-for-all answer to the Qantas strategy of having a low-cost franchise under Jetstar and its separate and now struggling full service Qantas brands.
What Branson and Borghetti are making real at tomorrow morning’s hoop-la at Sydney Airport is something Godfrey, and his subsequently purged senior team, worked on for several years.
But Borghetti has also fixed past mistakes by Branson and Godfrey, such as deploying Boeing 777-300ERs across the far southern ocean to South Africa, a cost calamity in which the twin-engine jets were required by safety regulations to fly via indirect routes of up to 16 hours compared to less than 13 hours by the most direct route in a four engine Boeing 747-400.
In flight satellite TV never seemed to work as planned either. Relying on FoxTel for general and finance news brought a whole new world of torment to the crammed interior of 737s, especially flying to and from Perth, from which the A330s will be a merciful release, with more comfortable seats and no mind pollution.
Mistakes aside, the Blue Virgins, or “the originals” as they called themselves did quite a bit of damage to the Qantas in which Borghetti played a very important role as group executive general manager until he was passed over for Alan Joyce as the CEO who replaced Geoff Dixon.
The worst “crime” perpetrated by Godfrey and his “originals” was to persevere with a strategy of positioning Virgin Blue in the middle. The popular myth, promoted by the Qantas in which Borghetti was important, was that but for the collapse of Ansett, Virgin Blue would have failed.
The facts say otherwise. The collapse of Ansett provided a place for Qantas to redeploy the international 767s and 747s that had nowhere to go after the concurrent 9/11 attacks and the deep hole into which long-haul demand fell afterwards, until it was clobbered again while struggling back to its feet by the Iraq invasion and the outbreak of SARS in 2003.
Ansett’s collapse made room for Qantas to survive, much more than it helped Virgin Blue. In the face of Qantas putting almost all of its capacity into domestic activities post 9/11 plus Ansett, Virgin Blue should have been annihilated.
The fact that Godfrey’s Virgin Blue was strong enough to survive that combination of events late in 2001 is another part of a history that is inconvenient or inconsistent with the Virgin Australia phase that kicks off tomorrow.
The test for Borghetti is whether enough he gains enough from the pursuit of high yield corporate travel to cover any disaffection by those in the “middle” who just want a good fare for reliable and frequent services.
There is a myth pushed by Borghetti that says corporate travel is recession or cost proof, even though the rise of Southwest, JetBlue, WestJet, Ryanair and EasyJet compared to their legacy rivals shows this is untrue.
Godfrey won’t be at tomorrow’s obliteration of Virgin Blue. He is overseas. But he does hold about 2.8% of VBA stock, and also holds the view that affordable mass-market air travel has a real future.