high flyer makes his connections

The Sydney Morning Herald December 4, 2010
John Borghetti relishes the chase for deals at his former rival, writes Matt O'Sullivan


HAVING notched up 37 years in the industry, John Borghetti's contact book has to be one of the largest and most valuable in Australian aviation. The breadth of movers and shakers is not a surprise, given the former third-in-charge at Qantas had oversight of the Chairman's Lounge, the exclusive domain of corporate chieftains and politicians.

Now six months into his new job as Virgin Blue's chief executive, the Italian-born Borghetti has again been putting his connections to good use. Described as the ''classic networker'', Borghetti strode into the US Department of Transportation's new headquarters in Washington DC on October 12.

Advertisement: Story continues below By his side was Kim Beazley, Australia's physically imposing ambassador to Washington - who has spent his fair share of time in Chairman's Lounges, too - and several other Virgin Blue executives.

The Australians had turned up at the new offices, a short walk from Capitol Hill, to meet the department's secretary, Ray LaHood, and his deputy, John Porcari. The meeting was scheduled for just half an hour but Borghetti was willing to do all he could to convince the department's heavyweights to overturn their opposition to Virgin Blue's tie-up with Delta Air Lines on the Australia-US route.

A few weeks later Beazley would again get a chance to whisper in the ear of the US Secretary of State, Hillary Clinton, when he accompanied her on a flight to Australia.

Virgin Blue's affable boss has long cultivated relationships at the top end of town and in Canberra. He hesitates at talking up those links, preferring to point to the government's recent lobbying effort on Virgin Blue's behalf as evidence of the ''importance of Australia having a second strong carrier''.

But if he can convince the regulators to change their minds, it will owe something to his relationships.

Virgin Blue, which has a 6500-strong workforce and 88 aircraft, has a lot riding on the Delta deal. It is one of three alliances central to Borghetti's plans to turn around its fortunes by doubling the number of business passengers within two years.

Since he took the reins from Brett Godfrey in May, Borghetti has been a man in a hurry as he axed unprofitable routes, rescheduled flights and installed a new management team. It has, however, been anything but an easy ride. Within weeks of his arrival at the airline's Brisbane headquarters he had to issue a profit warning. Then, four months on, his plans to turn the airline into an upmarket competitor to Qantas were dealt two blows in as many days after regulators opposed the Delta alliance and another with Air New Zealand.

But the low-point was reached in late September, when a computer meltdown knocked out the airline's booking system, causing severe disruptions to flights for 11 days. The disruption will delay slightly - by ''weeks, not months'', Borghetti insists - the introduction of products aimed at discerning business travellers next year.

His absence during the meltdown did not go unnoticed. He was overseas when the Navitaire-run booking system collapsed and opted to stay where he was so that he could remain in touch with his management team rather than hopping on a long-haul flight.

Borghetti, an avid deal maker during his time at Qantas, will not say where in Asia he was. This has raised speculation that he was in talks with another airline in Asia, which represents the last gaping hole in Virgin Blue's international network.

He emphasises that before he devotes his energies to Asia he wants to complete Virgin Blue's deal with the Middle Eastern airline Etihad, and gain regulatory approval for the Delta and Air New Zealand alliances.

But it is clear that Asia is a big part of his thinking. Virgin Blue needs a premium airline in Asia so that it can provide corporate travellers with a network that links Australia to the business hubs of Tokyo, Hong Kong, Shanghai and, to a lesser extent, Kuala Lumpur and Bangkok.

Borghetti concedes the British airline Virgin Atlantic ''can't fulfil our Asian strategy'' despite its daily services between Sydney and London via Hong Kong.

Industry insiders consider Malaysia Airlines or Japan's All Nippon Airways as likely alliance partners. Singapore Airlines would be the best bedfellow but it is undergoing a change of leadership and there is still understood to be wariness within Singapore Inc. towards Australian airlines.

Apart from Asia, there has been speculation that Etihad might consider taking an equity stake in Virgin Blue. But insiders say a more plausible scenario is for Air New Zealand to take a cornerstone stake.

Borghetti will not talk about possible partners in Asia but says he will unveil Virgin Blue's strategy for the region before the end of next year. Although an alliance is part of his thinking, Borghetti says the gap in its network in Asia can be filled in other ways because, unlike Europe and the US, ''Asia is wide and close'' which means it can be serviced far more easily from Australia.

Although he is a renowned networker and astute with customer needs, insiders say Borghetti's weakness is in the operational side of aviation, such as fleet evaluation, scheduling and flight operations.

The motor racing fan is also learning to lead an airline with a starkly different culture to the one he left in May 2009. ''My fear was that walking into Virgin Blue I was going to viewed as Satan because I came from the opposition,'' Borghetti admits. ''But nothing could be further from the truth. It always amuses me, this concept of culture - strategy usually drives culture if you have the right management.''

Borghetti spent five years designing the Qantas product aimed at the lucrative business traveller. And now he is doing the same at its rival. ''It's like playing chess against yourself. But we won't throw endless amounts of money at it.''

It leaves him engaged in a battle with Qantas's boss, Alan Joyce, which is seen as a more intense rivalry than that between their respective predecessors, Godfrey and Geoff Dixon.

After all, Borghetti and Joyce went head-to-head for the top job at Qantas. ''I don't know how people view it,'' Borghetti says. ''I have worked with Alan but I don't focus on his business any more than any other competitor. They are competitors and I will try and beat them because that is what I am paid to do.''

His near four decades in aviation has taught him to be ready for sudden shocks. A Qantas superjumbo's engine explosion last month and the subsequent grounding of its A380 fleet is a salutary reminder.

''You don't want to see it happen to anybody, whether they be you or your competitor. They are very difficult situations. The issue with airlines is that it is unforgiving. You are dealing with people's lives and not only your company's reputation but your position in the industry.''

At 55, the Glebe resident, who shuttles regularly between Sydney and Brisbane, reckons he is having the time of his life. ''I have absolutely not a shadow of a doubt that our strategy is right. We have a three-year plan and we will adhere to it.''