Incumbent Virgin Australia CEO, Paul Scurrah, is leaving the airline. Rumors were swirling today that his departure from the airline was imminent. That is now confirmed.
Mr Scurrah survived the collapse, restructure, and sale of Virgin Australia to a North American private equity outfit. But the previously cheery relationship between the old management team and Virgin Australia’s new owner is fast breaking down.
Cracks appearing in the relationship between management & owners
Mr Scurrah started at Virgin Australia in March 2019. He came in with a formidable reputation and a background in the airline, stevedoring, and rail industries. However, by the time of Paul Scurrah’s appointment in 2019, the financial problems at Virgin Australia had well and truly set in.
When Virgin Australia was placed in voluntary administration in April this year, Mr Scurrah could have been one of the early casualties. Instead, he established good working ties with the administrators and sailed through the receivership. When Virgin Australia was sold and rebooted, Paul Scurrah still had his job.
But multiple mainstream media outlets in Australia on Thursday were reporting the end was nigh for Mr Scurrah. Allegedly, serious differences had emerged between Mr Scurrah’s vision for Virgin Australian and the new owner’s vision for the airline. By lunchtime on Thursday (Sydney time), the reports were confirmed.
Incoming CEO out of favor with unions
The original plan for the rebooted Virgin Australia was to pitch Virgin Australia as a mid-market airline, slightly cheaper than Qantas, but jazzier than a low-cost carrier. But now, the new owners, Bain Capital, appear to be leaning heavily towards the downmarket, low-cost carrier model.
Also causing friction is the role of former Jetstar boss Jayne Hrdlicka at Virgin Australia. Ms Hrdlicka has a reputation as an tough operator and is actively disliked by local unions. But Bain Capital seems to quite like her. Ms Hrdlicka is to replace Paul Scurrah in the number one job at Virgin Australia.
That has caused some unions to suspend workplace agreement negotiations with Virgin Australia. The unions argue they supported the sale of Virgin Australia, but that support was conditional, and Bain Capital is now breaking its earlier promises.
Meanwhile, the cost-cutting is making its presence felt in the cabin. Competitor Qantas is still operating a scaled-back timetable within Australia, but once onboard, it’s mostly business as usual. Not so at Virgin Australia. Amongst other things, the airline seems to have run out of wine.
Cost-cutting in the cabin is beginning to raise the ire of Virgin Australia loyalists
Virgin Australia has kept flying locally throughout its collapse and restructuring process, albeit on a reduced timetable. The airline also closed its lounges and cut back catering to a bottle of water, using the since debunked excuses of health/hygiene/government regulations.
Lately, stories have been reported of passengers in business class and getting a packet of supermarket grade noodles as a meal. You wouldn’t mind so much except business class tickets on the flagged flights were costing more than $2000.
Then an internal memo got leaked and widely circulated over the past weekend, including on Executive Traveller’s Twitter feed, indicating existing catering supplies were close to exhaustion and that they were already out of wine and Diet Coke. Beleaguered flight attendants were instructed to be tight-fisted out what was left.
In itself, this is just a trivial and entertaining diversion. But it’s also indicative of Virgin Australia’s future direction. The wine never was anything special, but if the new owners can’t be bothered buying in some more to keep premium fare-paying passengers happy, what does that tell you?
Despite assurances to the contrary during the sale process, the days of good living on a Virgin Australia flights could be over. No doubt, it’s a considered and calculated move by the new owners. They are taking a punt their regular flyers won’t jump ship to Qantas. That’s quite the gamble. As for Mr Scurrah, like the onboard drinks, his time has run out at Virgin Australia.
