Outgoing Virgin Australia chief executive John Borghetti says air travel will be supersonic much earlier than expected and for a reasonable price.
Speaking at the ANU Crawford Leadership Forum on Monday, just two weeks after announcing he would step down from the airline’s top job in the next 18 months, Mr Borghetti made a firm prediction.
“In the 2030s you will be buying airline tickets on supersonic aircraft,” he said. “Of that I can be sure.”
Tickets would be reasonably priced at roughly the same as a business fare on a normal flight, he added.
Mr Borghetti said the industry had come a long way since the failure of Concorde, which was based on 1950s engine technology.
The Concorde, which could travel at more than twice the speed of a standard plane, was first unveiled in 1969 as a project of the British and French governments. However, supersonic air travel never became widespread and the cost of flying on Concorde’s planes was well outside the average family budget.
“Engines today are 70 per cent more fuel efficient and the aircraft back then was very heavy because it was made with metal,” Mr Borghetti said.
Now that aircrafts were lighter and burnt less fuel, he expected the cost of flying at speed to be substantially lower, transforming the way people travel long distances.
Mr Borghetti said Virgin was talking “quite seriously” to US company Boom, which is developing supersonic aircraft.
Growth to flow from international business
Meanwhile, he expects Virgin Australia’s growth over the next five years to be in its international business, as the airline leverages off partnerships with its two Chinese major shareholders, Nanshan and HNA, to grow its business to Hong Kong and the mainland.
He said Virgin Australia’s collection of major shareholders, which include Etihad, Singapore Airlines and Richard Branson’s Virgin Group, were positive for the business.
“We’re fortunate that we’ve got very good shareholders,” he said. “Not another airline in the world has four airlines owning part of it.
“They might have different views on things but they all have one common view – to make sure that Virgin Australia continues to grow.”
Asked about succession planning, Mr Borghetti said there was a line of his direct reports ready to “jump in” to his position although the board was “quite rightly” also looking outside the company for a potential replacement.
“I’ve always said a CEO shouldn’t be in the job more than six or seven years,” he said, noting he had been at the helm for eight years.
“I do genuinely think you need new thoughts, new ways forward.”
Mr Borghetti recalled his first days as CEO of Virgin after 36 years at rival Qantas, where he started in the mail room.
“I came from the opposition and wore a tie so I was the devil,” he said, adding that perception changed quickly.
“We’ve got 130 odd planes, 10,000 people and a loyalty program with 9 million members,” he said. “Back when I started we had 70 odd planes, 5000 people, and 1.8 or 1.9 million members so the company has grown significantly.”
More long-term vision needed
He said there was too much “short-termism” in government and business, which meant there were not enough ambitious infrastructure projects – such as investment in high-speed rail – while companies were not encouraged to have a long-term vision.
“You need this long-term vision. If you don’t have an end point you don’t know where you are going.”
Mr Borghetti’s strategy to transform Virgin from a budget carrier to a full-service competitor to Qantas attracted some criticism for soaking up capital and taking too long to deliver a financial return. However, he said on Monday “the hard work has been done now” in terms of “establishing the base” and “starting to get the debt down”.
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