Virgin Australia to aim lower as CEO Paul Scurrah flies off

Virgin Australia’s days as a full-service airline are set to end, exposing Australians to a new style of carrier pioneered in the US.

Former Jetstar CEO Jayne Hrdlicka will replace Paul Scurrah as Virgin Australia’s chief executive. Picture: Hollie Adams

Virgin Australia’s days as a full-service airline are set to end with the departure of chief executive Paul Scurrah, exposing Australians to a new style of carrier pioneered in the US.

The hybrid model proposed by new American owners Bain Capital will position Virgin between premium airline Qantas and low-fares carrier Jetstar in the hope of luring passengers from both.

The private equity firm reiterated its commitment to that model, as it was confirmed Mr Scurrah would leave the airline early next month, clearing the way for former Jetstar boss Jayne Hrdlicka to take over.

A statement to the stockmarket came after days of speculation that Mr Scurrah had fallen out with Bain over the airline’s recovery strategy.

The Australian understands Mr Scurrah was reluctant to undertake the sort of cost-cutting being sought by Bain to return Virgin to profitability following six months in administration.

Although he took annual leave on Thursday, he was expected to return to the office on Monday and work through until the sale to Bain was finalised, early next month.

“The time feels right (to leave) and I know the business will be in good hands,” Mr Scurrah said in a statement.

“I am proud of the work that has been completed to date to transition the business and remove complexity, allowing the airline to compete effectively once demand returns.”

He said Ms Hrdlicka’s aviation credentials were “strong” and she would be focused on seeing the business succeed. “I wish Virgin Australia well under her leadership,” Mr Scurrah said.

Despite arriving at the airline only 18 months ago, Mr Scurrah galvanised the workforce with his “happy staff, happy customers” mantra.

On Thursday, word of his departure devastated employees, with some taking to the airline’s internal discussion forum to express their dismay.

“We are all gutted and heartbroken,” said one worker.

“(Bain) have no emotional ­attachment to crew — they are wanting us to leave, to push crew out the door.”

Ms Hrdlicka moved north from Melbourne a fortnight ago with the expectation she would be a member of the new Virgin board. The US-born businesswoman had recently taken on a directorship of Hawaiian Holdings, the parent company of domestic and trans-Pacific carrier Hawaiian Airlines, and had been in negotiations with other companies for directorships.

She was also just one year into her second three-year term as president of Tennis Australia and will continue in that role after starting with Virgin.

Under Bain and Ms Hrdlicka, Virgin was not expected to be taken back to its budget origins but there would be changes to the fare structure, with more “pay as you go” options for passengers.

CAPA Centre for Aviation executive chairman Peter Harbison said the hybrid model was pioneered by the “original low-cost carrier” Southwest Airlines to broaden its market appeal. “It came from the corruption of low-cost models, when more frills were added that you would normally associate with a full-service operation,” he said.

“What you can expect is a product that tries to attract business class travel with much lower base costs. ”

He said the airline would be in good hands with Ms Hrdlicka who had been unfairly “demonised by the unions”.