The purpose of the report is to analyse the Virgin Airlines Case study and to understand the likeliness of the success and the failures of the company. The renowned Virgin Australia staff has faced crises due to the airlines crashing and facing business failures. Not only the staffs but customers and even the voluntary administration are trying their best to revive up the situation and the condition. The company has also faced the crises due to the outdated technology, having the failure in management and the other problems, leading to loss-making operations. It has also resulted in the loss in the heavy flow of investor money to overcome the loss-making operations. However, during the COVID crises, the problems have been seen to create a negative impact in the online retailer or an app maker and there has been total blackout from the lockdown. The company has faced crises and hard time since its inception.
Key changes and reforms that have already been implemented.
Changes and strategies that have been proposed for future implementation.
Key factors driving the need for change.
Human resource development strategies.
Change management strategies and provide appropriate recommendations.
The purpose of the report is to discuss and understand the Virgin Australia crises and facing business failure. Not only is the company suffering in terms of the management failures, but also the loss of operations. The company is known for its brand reputation and so far, the company has built a brand reputation of Australia’s second-biggest airline. However, recently with the pandemic situation and the travel ban, it has resulted in the company operations failure. An estimated of the 16,000 jobs has been cut down and there has been a threat faced by organization of shutdown operation due to the shortage of cash-crises (van der Meulen, 2016). The solution lies in the voluntary administration to recapitalize the business (Pringle, 2018).
Virgin Australia has surrendered itself voluntarily to the administrator due to liquidity issues and its heavy debt and now stands at the mercy of administrator and government to help them bail out of the present situation. The situation is worsened by travel bans due to COVID-19 pandemic and resulting in further losses and uncertain recovery. The administrators have decided to follow a full-fledged cost-cutting measure and working on route rationalisation in discussion with Virgin team. As a result of this, VIP lounges were surrendered and services discontinued. Although the administrators are working to retain as many jobs however some certain jobs and roles were scrapped and salaries and perks of the staff were reduced (Krobath, 2018).
Competition Crises: During the crises time, the company has still faced major competition from the Qantas Australia, and competing with the United Continental Holdings Ltd, Singapore Airlines Ltd etc. The company operates on the low-cost business model and aims to maximize the revenue, but faces tough competition from the Southwest Airline, Ryan air etc. that has coasted roughly $8.75m a day in 2014 (Gössling, 2018).
Market Share: The Company has faced the major market share loss of the 25% to the other competitors, due to the lack of the strategy during the crises times (Joubert, 2017). Not only the company didn’t change its current strategy, but also were not adaptable due to the lack of quality services and even unable to engage its loyal customers (Prentice, 2020). The company has aimed to achieve the enhancement by the 30%, through the strategy of providing the cheap airfare, but it resulted in the loss of the case funds and even lost its market reputation by 65% of market share (Pringle, 2018).
the business model of the company is to operate at the low-cost model and to compete for the market share, but due to the cashless funds to reinvest and even unable to manage the losses making operation (Parsells 2017)
As per the step1: Create Urgency: As per the Kotter (1996), the change that has been introduced in the organization is of that wants it. It is 75 per cent of a company's management that can focus on the successful change (Pringle, 2018).
Step2: To form a Powerful Coalition: The company should create a successful key people of the organization and bring a change in the coalition effectively that can encourage the changes to be successful. In this, the process of the leaders focuses to mobilize the people and can confidence by associating with the key people for the company that could bring a change with the goal.
Step3: Having a Vision for Change: The Company exists with the values that could engage in the essentiality in everything. It also considers the values that could bring a core to the changes. It is also to bring core changes and the changes are required for something to be asked for and to do something.
Step4: Communication -: The vision has to be communicated purposefully and to understand the criticality of the success. It is important to understand the continuity of the vision. Through the proper transparency in communication, it is necessary to bring in the changes to the criticality to succeed (Krobath, 2018).
Step5: Remove Obstacles: It is necessary to bring in the changes and to handle it efficiently, with the proper strategies such as efficient change managers and how to bring in the change in the organizational structure that could be rewarding and even be contributing to the process of change deemed helpful (Gössling, 2018).
Step6: Short-term Wins: The targets would be based on the one long-term goal and to have the winning process changes.
Step7: To support the Changes: It is the long-term process and aims to bring in long-term success (Gao, 2018).
Step8: Build and bring Changes within the Corporate Culture: The changes can bring in the necessary steps to change the perception and ideologies.
Cost Cutting-: Strategically speaking they would need a very effective means of cost-cutting wherein the passengers and their safety are not compromised and airlines start covering its variable and running costs. It is also important to understand that the operations would start on a very minimal basis and thus it is important for airlines to cooperate amongst each other and probably share customer (Doppelt, 2017). It is also an evident change that the freebies to customers, staff and others would not be there or would be at a minimal best to cover basic costs. Other factors that need change are opening of corporate offices so that air travels start with similar operations (Doppelt, 2017). Tourism also needs to start as people are sick and tired of sitting at home and need a much-needed break and change.
Government support-: Government needs to help them with lower taxes and also not charge taxes on air tickets so that passengers are prompted to travel and thus increase in economic activity takes place. With travel and tourism, a lot of other expenditure is also done and government exchequer can earn there at (Johnson, et al 2018). With small businesses getting cash flows, it would translate into expenditure from their side in buying stocks and other aspects and the gradually whole economy would start getting some relief. Such small little contributions would help economic bailout at a macro level and would help in the long run (Cameron, 2019).
Some of the strategies that Virgin Australia needs to follow to reposition itself as a carrier for corporate flyers as well as leisure travellers are described below.
Revamping the aeroplanes:
Virgin Australia should focus on bringing innovation, distinctive features and luxurious seats, sufficient leg-space, well-lit and comfortable interiors should be the airline's approach.
The company can focus on the world-class service, the company should train its staff with the better cultural practices and to have the new dress uniforms for the staff, to have the refined services and better practices, can help the company to survive (Gao, 2020).
More flights and more routes:
Though the company is cashless and having more routes and the more flights can be challenging, but as the company only focuses on the Australian customers, it should either expand its operations elsewhere or simply have the more routes.
The company should focus on the international ways to hedge the risks and also overcome the risks faced against the domestic market shocks, and increase revenues (Gössling, 2020).
The company should bring a management change and introduce a good leader that could bring transformation.
To overcome resistance change, through revamping the structure like in processes and in the policies. The HR team needs to assure the employees that their interests are secured but due to temporary phase that they are into would need some adjustments from all the staff and stakeholders to help the airlines be ready to start operations again.
(1). Analysis and understand the current organization demand and to forecast with the planning and future stories. The company HR has to understand current requirements and the future demand, according to which HR can plan, evaluate and recruit the desired staff (Krobath, 2018).
(2). Understanding of the internal workforce-: Virgin Australia is known for its customer services and operations that could be provided with the quality engagement and the services. For this, the company HR should train, develop and have a set of modules and strategies to blend employees (Gössling, 2018).
(3). Mapping the requirements-: if the more workforce is required in the given operation or the given department, then the company HR should understand the job roles, responsibilities and the requirements to perfectly blend them into the system.
The organisational structure should be reviewed to make it lean and simple with many layers and roles being merged and other departments were closed. To schedule the post resumption of services there would be limited routes open for services and there would be lesser flights taking off. The banks should check the current present plans for the restructuring of debts as the aviation industry. Virgin Australia had filed for bankruptcy in August 2020 and subsequently bought by the Bain Capital, an American company. The new owners have decided to reduce the fleet size and change the headquarters. Also, approximately 3000 jobs have been cut and there could be further job cuts in the future. It is also a part of a strategy to remove its fleet consisting of ATR, Boeing 777, Airbus A330 and A320s aircraft (Gao, 2020). Thus Virgin would be an all-Boeing 737 fleet (Doppelt, 2017). The low-cost carrier Tigerair brand should be shut down. High cost control measures and revamp of services as decided by new owners Bain Capital. Operational costs should be rationalised through measures (Lewis, 2016).
As understood the aviation industry worldwide is bleeding, and the situation of erstwhile Virgin Australia with the heavy debt of US$ 7 billion is a big sum and only future would tell us how the same recovered by Bain Capital. As per their strategies, a certain amount of cash would get free from the sale of aircraft. Restructuring is and discontinues many of the routes and carriers (Ewens, 2018). With the closure of TigerAir, the staff strength is bound to go down and probably could see a further reduction.
The Organisation to Overcome Resistance to Change
Change is an internal part of the company and the leader and under the leadership role of John Borghatti’s, can motivate and bring the changes. The company should strategies to integrate the senior and the middle management, to embrace the changes. For example, the company has no dress code, under the new leadership, the company staff would not only be trained and developed with the code of ethics, conducts, but they should also have the better customer services (Doppelt, 2017).
Secondly, to motivate the employees and bring a change in the leadership and management styles, having a future vision of the company and make the employees aspire to achieve the goals (Fischer, 2017).
To invest and bring a change in the operations and the working and cut down loss-making operation, restructure and use the financials for the better services.
Under the leadership of John Borghatti’s, the company initiated restructuring, reformed changes and even has the stringent code of ethics to be followed. Employees as well (Fischer, 2017),
The company change management strategies can be formal and informal ways. Staff should be taught about how to attract the customers of premium class and be strong in understanding customer needs and preferences.
If required forming alliances with the international airlines can help to inculcate effective communication and negotiation skills (Joubert, 2017).
The strategy to counter with the competitors and the managers should form distinctive attitudes while identifying the new changes and reforms.
Customer satisfaction: The Company should formulate ways to improve business to consumer interactions and focus on feedbacks (Fischer, 2017).
It is concluded that the renowned Virgin Australia staff has faced crises due to the airlines crashing and facing business failures. The company has struggled during the coronavirus pandemic times. Apart from the cash crises, the company has faced creditors risk, reputation risks and even the loss of customers and valuable staffs. It is due to the mismanagement of the funds and during the crises, time have a lack of vision and low people empowerment to keep them engaged. It is recommended to bring a change in the management and to have fresh strategies that could bring innovations in thinning and even in the approaches.
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