Our big challenge was turning Virgin Blue from a local player into a global force through international partnerships. We expanded existing codeshare agreements—where two or more airlines share the same flight—and built new ones with powerful partners including Etihad Airways, Delta, Air New Zealand, Singapore Airlines and Hawaiian Airlines, as well as Virgin Atlantic and Virgin America. Virgin Blue customers could now fly to 450 destinations around the globe. In effect, we created the world’s first virtual international airline, a model every other airline has been trying to replicate since, which has transformed air travel. Some people suggested it was like turning from easyJet into BA. I didn’t want us to turn into either, though—I wanted Virgin airlines to be unique.
I invited all three of our airline CEOs over to Houston, where I was speaking at a National Business Travel Association event. John flew from Sydney to present plans for a fresh logo, livery, cabin interior, rewards program and, most importantly, a new name: Virgin Australia. The airline was unrecognizable from the one we launched just a few years earlier—all except for our superb staff and commitment to service. In six months, profits went up 118 percent and corporate and government revenues—our key target—grew 81 percent. We gained half a million frequent flyer program members and 1,700 new members were signing up every day.
With the newly rebranded Virgin Australia competing hard as a contemporary business and leisure carrier, I told the team my clear aim: to become the country’s number one airline. When our new full service offering began making inroads on Qantas’s dominance, they very publicly drew a line in the sand and stated in the press they would not go below 65 percent of the market. We already knew from our own numbers that we were pushing them below that figure. It was sheer arrogance on their part. Now they knew we were deadly serious about growing into the premium market, Qantas were determined to stop us, whatever the cost. Battle lines were drawn and they pursued a loss-making strategy of doubling the capacity we introduced onto routes.
Then, on Australian Derby Day in October 2011, Qantas CEO Alan Joyce called an impromptu press conference. He announced they were immediately canceling all domestic and international flights: “I repeat: we are grounding the Qantas fleet now!” he told the assembled press.
The cancellations were over a union dispute about job losses and pay, and left more than 100,000 passengers in the lurch. It left Virgin Australia with a decision to make: we could pump up our prices and make a killing while Qantas was out of the picture—or we could help the public. I was incredulous that Qantas would be so ready to let their passengers down, and offer us a huge opportunity in the process. Reasoning it was better to do the right thing than make a quick buck, we sprang into action to help stranded passengers. We brought in extra capacity from our airline partners, asked staff on leave to return to work and got as many people as possible to where they needed to go. We even offered free flights for passengers who had emergencies. As a result, many previously loyal Qantas travelers got to see what Virgin could do up close and switched allegiances.
As Qantas continued to engage in some pretty aggressive tactics, we had an ace up our sleeve. We had long been planning a A$250 million capital drive that would see our partners Singapore Airlines (yes, our former competitors had come on board as investors by this point), Air New Zealand and Etihad increase their stakes in Virgin Australia, providing us with a cash injection to keep improving our service. Alan Joyce’s reaction to this perfectly reasonable step was to file a complaint with the Australian federal and New South Wales governments. He claimed this “foreign investment” was “predatory” and would “distort” the Australian aviation market. What this really meant was Qantas didn’t want the competition, couldn’t accept that times had changed and wanted the government to support the old monopoly. Sensibly, the Takeovers Panel dismissed their complaint and we went ahead with the deal.
With its credit rating downgraded to junk and share prices dropping to a record low, Qantas campaigned hard for the Australian government to take the extraordinary measure of providing them with a debt guarantee or a A$3 billion unsecured loan. I presumed Joe Hockey, the Federal Treasurer, would dismiss their pleas, but to my great surprise he seemed receptive. Bizarrely, he described Virgin Australia as a “2000-pound gorilla,” beating up poor little Qantas. But it wasn’t as if Qantas was ever in serious financial trouble—they just didn’t like their monopoly being shaken up. It was clear Qantas had dug its own grave through bad management. If a company is performing poorly, it is only right that another better-run business comes along to take its place. If the government was going to bail out Qantas, would they make the same guarantee available for all airlines?
With its historic position as Australia’s national carrier, its market dominance and far larger fleet, did the Flying Kangaroo really need an extra leg up? I took out a full-page advertisement in News Corp Australia newspapers and argued our case: “Businesspeople worldwide should think twice about investing in Australia for fear of such intervention in their sectors. Qantas has gone to its shareholders on numerous occasions over the last few years to wage its capacity war against us. Now that shareholders have turned that tap off, the company is turning to the Australian taxpayer to try and bail it out.” Rather than hinting at a debt guarantee, the government should have been urging Qantas to get its own house in order.
It looked increasingly likely, however, that the government would side with Qantas. But Joe Hockey was starting to get frustrated with them. This came to a head when he was late for a press conference in Sydney after Qantas canceled his flight. The Sydney Morning Herald said “it could be the most costly non-flight in its history.”
“I want to apologize upfront for running late,” he told the media. “I don’t want to talk about airlines, particularly now that they are asking for guarantees and they might not get it after today, because they canceled my plane!” Later on he added: “Virgin’s a terrific airline and, I’ll tell you, my Qantas plane was canceled this morning and I jumped on a Virgin plane, thankfully.” Of course, we had been more than happy to help!
The debate raged on and more and more of my time was spent fighting our corner. I was getting up in the middle of the night to do interviews with Australian press, writing letters to officials, drafting notes to John and the team and immersing myself in the facts and figures behind the issue. Finally, on 3 March, Prime Minister Tony Abbott was ready to announce his government’s decision.
“I have enormous faith in the ability of Qantas to compete and to flourish,” Abbott announced, “but I think it is best placed to compete and to flourish if it is unshackled, and unpropped up by government, I hasten to add.”
To my huge relief, they had seen sense and were not going to give the debt guarantee or A$3 billion unsecured loan. Rightly, Mr. Abbott explained that it was not the role of governments to underwrite debts for airlines, or help one airline over another. All Qantas needed was effective management: “If you look at the history of Qantas over the last decade or so, it was hugely profitable for most of that time. That demonstrates to me that a well-managed Qantas is more than capable of competing, and not just surviving, but of flourishing. I think this decision that we’ve made today also says something significant about this government. We do not believe in government by checkbook.”
It was also pleasing to hear Mr. Abbott’s view that Virgin Australia was just as Australian as Qantas. Yes, I am not Australian and nor are some of our partners (neither are many of Qantas’s shareholders, by the way). But Virgin Australia employs thousands of Australians, from the CEO down. There is no reason why one airline should get more support from the government than another.
I rather enjoyed Alan Joyce’s response to the news: “In the Australian aviation industry you can never be surprised about anything that happens,” he said. At last, there was something we could agree on!
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Back at Virgin Atlantic, after BA/AA’s effecti
ve merger had been allowed to go ahead, we had been thinking about how to respond. We needed our own “2,000-pound gorilla” in the States to create a more level playing field. Delta Air Lines was the biggest airline in the US, and on 11 December 2012, Delta Air Lines bought Singapore Airlines’ 49 percent stake in Virgin Atlantic.
While Singapore had been great partners, we needed a wider network and greater feed in the US. In return we could offer our brand, customer service expertise, wonderful staff and spirit of innovation. Like us, Delta is built on the principle that staff and customers are the most important parts of the business—shareholders will succeed if staff and customers are happy. Delta wanted to improve its presence at Heathrow and compete more effectively with AA across the Atlantic. Plus, they valued our experience. The deal was nothing like BA/AA’s, which was about maintaining a monopoly—this was about leveling the playing field. We finally had the network to compete with BA and other airline goliaths (and in July 2017 we agreed with Air France–KLM and Delta to form an enhanced joint venture, including Alitalia).
No prizes for guessing one person who wasn’t pleased about it, though. Willie Walsh threw his toys out of the pram and suggested that Virgin Atlantic would be history within five years.
“I can’t see Delta wanting to operate the Virgin brand, because if they do, what does that say about the Delta brand?” he said.
Willie’s claim was absolute rubbish—I had no intention of letting Virgin Atlantic disappear, and neither did Delta. At our joint announcement, a journalist asked Delta CEO Richard Anderson if there was any validity to what Willie was saying.
“No!” he said. “This makes my blood boil.” He had bought into Virgin because of the brand.
Willie then went on to attack me personally again, falsely insinuating I was preparing to retire: “I just don’t see that the guy has anything that stands out in terms of what he has achieved in the industry. I’ve said it publicly, I don’t respect him in the way I respect other people in the industry and that’s a personal view.”
While I usually laugh off criticism, when I see our competitors overstepping the line, I will protect my teams in every way I can. So I challenged Willie to a sporting bet: if Virgin Atlantic was still flying in five years’ time, BA had to give £1 million to our staff. If we were no longer in the air, I would personally pay £1 million to BA’s staff. His response to my wager was childish: rather than the loser giving the winner’s staff £1 million, he suggested they should receive a knee in the groin.
“It seems a very painful and foolish thing for Willie Walsh to propose,” I wrote on my blog. “But I would be happy to accept. We’ve got used to BA hitting below the belt over the years, but I’m confident it would be the other way around on this occasion.”
I called for the loser to also donate £1 million to a good cause of the winner’s choosing, so some good came out of this rather silly episode. I’m looking forward to Willie visiting our HQ in December 2017. If Willie is planning to have any more kids, he had better get a move on!
With so much change, it felt like the perfect time for new blood at the top of Virgin Atlantic. After nine years of wonderful service Steve Ridgway was ready to pass the mantle, and we brought in Craig Kreeger, who had spent twenty-seven years with American Airlines. He got the brand, had the industry nous to get the Delta deal running smoothly, and oversee a transformation of our aircraft, routes and services.
Picking the right CEO is critical—the wrong person at the top can sink a business, no matter how long it’s been running. Choosing the right partners is even harder, as trust and understanding takes so long to build up. One part of the Delta deal I initially saw as a negative was how long it took to go through—three and a half years from idea to rubber stamp. Perhaps if I was younger I would have got more impatient. Now, I saw the advantages—we had time to get to know our partners and build the foundations for success. At one point, Delta discovered a weakness in the contract that meant fluctuating fuel prices benefited them more than us. Before we even mentioned it, they brought it up and we resolved it. This is the way for true partners to behave. I am confident the relationship will last my lifetime and beyond.
Crucially, for all the serious business there is humor in the relationship, too. On my first visit to Delta’s base in Atlanta to meet the staff, I was onstage with Richard Anderson when I noticed he was wearing a truly ghastly polka-dot tie. With my trusty pair of scissors in my pocket, I crept up behind him and cut it clean off. As I held it aloft and called for the partnership to be a tie-free zone, Richard was laughing as much as I was.
Later, when Richard joined us for Virgin Hotels Chicago’s launch a few months later, he saw a huge wall of cut-off ties decorating the wall of our diner, Miss Ricky’s (an homage to my penchant for cross-dressing). This time, Richard was prepared. He walked into our meeting wearing a rather unique tie around his neck: it was made of chainmail, like an Arthurian suit of armor. I tried in vain to cut it off, and vowed to bring a chainsaw to our next meeting.
CHAPTER 22
Plain Sailing
“It’s cold and will only get worse but at the moment it’s bearable. Holly and Sam are coping well as are the rest of the crew.”
On 22 October 2008 at 18:23:03, I tweeted for the first time. I had no idea what I was doing and had yet to see the point of it. At that moment, I had more pressing concerns than the whys and wherefores of social media; we were in a boat in the middle of the ocean, attempting to break the world record for the fastest crossing of the Atlantic in a sailing boat, and I needed to keep my head together.
The idea behind the crossing had been to raise awareness about Virgin Money on both sides of the pond, as well as have another great adventure and, hopefully, another entry in Guinness’s famous book. This was a record attempt with a difference, though, given the individuals who had come along to join me as fellow crew members. After they had kissed me good-bye and wished me luck on so many previous expeditions, I was very proud to have my children on board; we had always wanted to take on challenges together as a family and now we were.
But while I was delighted, this was the hardest adventure yet for Joan: it wasn’t just her husband risking his life, it was her kids, too. As she had done before my round-the-world ballooning adventures, Joan told me: “If you die, it’s your fault, and I won’t be coming to your funeral.” When the children were small and I went on hot-air balloon adventures, Joan had to stay strong for them and not show her concern. Her attitude for this trip, as always, was cautiously supportive.
“I don’t think you can stop somebody doing what they want to do,” she told one of the team who asked how she felt about our trip. “You have to trust the network behind the project that they will keep them safe. And just stay upbeat. Every time you have a negative thought, you have to have a positive one.” Unbeknown to us until we arrived back home, Joan had a panic attack worrying about losing all three of us while we were at sea.
None of us realized quite how dangerous the trip was. We had every confidence in our companions, who were the British America’s Cup sailing crew TEAMORIGIN. Three of their number had won gold medals at the Beijing Olympics that summer, including Ben Ainslie, who would go on to become the first person to win medals at five consecutive Olympic Games in sailing. With such a crew, we not only felt safe, but had every confidence in breaking the record of 6 days, 17 hours, 52 minutes and 39 seconds, to become the indisputable fastest mono-hull sailing yacht to cross the Atlantic. As soon as they approached us, late the year before, I had jumped at the chance. Although I had already brought the Blue Riband trophy back to the UK by breaking the record for the fastest crossing of the Atlantic in any boat, this was a challenge I had never attempted, and the idea of doing it with my kids was very appealing.
As we waited in New York for a weather window, I didn’t really think too much about the risk. When the weather window finally came, it arrived with a small but sign
ificant caveat—it had a hurricane coming up behind us. We reasoned that it would give us extremely strong winds to help us break the record, as long as it didn’t break us first! During the first twenty-four hours the boat was absolutely screaming along, all the while making dreadful noises, as if it was going to capsize at any moment. The strain on the keel was enormous and the boat kept threatening to tip over. All the while, colossal waves were billowing over the boat. Although we were safety-lined into the boat, I still worried a wave could knock anyone overboard.
While the crossing was incredibly rough, spirits were high. Sam, in particular, got his sea legs almost immediately and loved every minute of the journey up on deck. The rest of us weren’t faring so well. The organizers had underestimated how much water we needed to pack on board, so we were having to drink cans of fizzy, sugary pop, which gave almost everybody upset stomachs. Holly and I became dreadfully ill. I couldn’t remember feeling so sick in my life and it was tremendously debilitating. I have been on many boats in tough situations and been fine, but on this occasion my body let me down. Meanwhile, Sam continued to happily wolf down packets of dried good that tasted like dog food, while Holly threw up in the sink next to him. We persevered; the trick is to batten down the hatches emotionally and take it one minute at a time.
As is so often the case at sea, circumstances change in a heartbeat. Just as I was feeling my worst, we had to abandon the record attempt. We were well ahead of target when huge waves crashed into our yacht from behind and took one of our life rafts. Olympic hero Ben Ainslie was bellowing instructions to us and adrenaline was pumping hard as the storm ripped through the mainsail. Very quickly I realized we were in serious danger. It was a scary moment as I looked around at Holly and Sam’s worried faces.
Finding My Virginity: The New Autobiography Page 20