HRMT20028 – ORGANISATIONAL CHANGE

MANAGEMENT
ASSESSMENT 3

ANALYSIS OF VIRGIN AUSTRALIA

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 EXECUTIVE SUMMARY
This case analysis is based on the case study of Virgin Australia Airline and the
downfall that it is facing. It also talks about the importance of change in today's world and
how not catering to it will cease an organization from existing (Doyme, Dray, O’Sullivan &
Schäfer, 2019) In the past year’s change has become inevitable, therefore, for growing in
such an unpredictable world with a high amount of uncertainty organizations need to upgrade
itself or change the way it has been working. These situations gave rise to the subject of
Organizational Change Management, it defines both organizational development and its
transformation. This study shows the reasons behind the downfall of the particular aviation
company and the probable recommendations that can be taken in order to stay in the market.
Virgin Australia has always promised to make money in the future but has never been
successful in doing so in the present times (Mosolena, 2020). It sold its products at a lower
cost to maintain its loss-making operations by the flow of heavy flow of investor money.
After this pandemic, Virgin Australia faced almost a total blackout and made immense losses
and thus it was believed that it would stop working (Doyme, Dray, O’Sullivan & Schäfer,
2019). Therefore, this analysis also finds out the probable reasons for bringing in changes and
the type of changes it requires to fight the situation.

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 Table of Contents

INTRODUCTION......................................................................................................................4

VIRGIN AUSTRALIA ANALYSIS.........................................................................................4

KEY CHANGES AND REFORMS IMPLEMENTED IN THE MANAGEMENT.............4

FUTURE CHANGES AND STRATEGIES..........................................................................5

KEY FACTORS FOR DRIVING THE NEED OF CHANGE..................................................6

HUMAN RESOURCE DEVELOPMENT STRATEGIES.......................................................6

ACCESSING THE CASE STUDY BASED ON THE CONCEPTS........................................7

RECOMMENDATIONS...........................................................................................................8

CONCLUSION..........................................................................................................................9

REFERENCE...........................................................................................................................11

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INTRODUCTION
Changes are very crucial for one's living, be it for an individual or society as a whole
or any organization. It is noticed in the past couple of years that change has become
inevitable and the only constant in this dynamic environment is changing. Therefore, for
growing in such an unpredictable world with a high amount of uncertainty organizations need
to upgrade itself or change the way it has been working so that it can match steps with the
running time (Akbar & Kisilowski, 2020). These dynamic situations gave rise to the subject
of Organizational Change Management, it helps in defining both organizational development
and its transformation. Organizational development is a process which defines the process
which needs to be followed in order to bring in a change in the organization’s culture by
implementing behavioural science (Doyme, Dray, O’Sullivan & Schäfer, 2019). Therefore, it
can be said that an organization can only work sustainability in today's world only if it adopts
changes and makes it their new normal, long term stability is not possible in such a dynamic
world.
This case analysis study on Virgin Australia Airline deals with the probable reason for it
making losses for a couple of years and also deals with the kinds of changes it has already
implemented in their organization and the further changes that can be implemented in order
to make it sustainable.

VIRGIN AUSTRALIA ANALYSIS

KEY CHANGES AND REFORMS IMPLEMENTED IN THE MANAGEMENT

This study deals with the key changes and the reforms which Virgin Australia
implemented in their management in order to cater to new changes (Akbar & Kisilowski,
2020). This particular airline was performing somewhat okay in its lifetime but the main drift
came in the scenario when the lockdown came it understood that it was not any online retailer
or an app maker and suffered a huge loss during this time.
Therefore, they found the requirement of implementing changes in their management and
resorted to Organizational Transformation, which takes less time for responding than
Organizational Development. From the year 1999-2012, the Virgin Australia airline was
named as the Virgin Blue, but after the year 2012, the name and the colour both were
changed. The name was changed into Virgin Australia and the basic colour was changed

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from blue to red in order to make itself equivalent to the competitors. This also made the
airlines design new uniforms for its employees and cabin crews. This was done to make the
company strong in both leisure and corporate market positions (Welc & Esquerdo, 2018). It
also bought back certain shares of velocity which was its own frequent flyer which made it
fall into huge debt in the market.
There are three types of change model namely, the Lewin’s Change Model, Action Research
Model and The positive model (Mosolena, 2020). These three models initiate changes in an
organization but in a different manner. The Virgin Australia Airline resorted to changes
which were envisioned as the key factors for competing with its competitors, it implemented
internal as well as external changes to cater to it. The change cycle of Virgin Australia started
from assessing the need for the change. Top defining why the changes are needed and the
probable strategies which were formulated in order to adopt those changes, then it measured
the results of it and discussion was held in the internal management. Virgin Australia also
requires few changes in its organizational levels and strategies in order to come out of loss.

FUTURE CHANGES AND STRATEGIES

Virgin Australia has resorted to various strategic models which implemented various
sorts of changes in the management, but certainly, they are not enough on which the company
can rely on as it has proved to be of least effective. And in the current period the airline
company is being subjected to complete blackout losses, it also happened because of poor
understanding and analysis of the dynamic environment (Whyte & Lohmann, 2016). The
change models which Virgin Australia resorted to involved the internal and the external
environment, including the employees of the organization. But the evaluation that took place
at the end of the whole process being implemented did not provide satisfactory results.
The Future changes and strategies that Virgin Australia will resort to will probably bring
some light of hope into the organization and its operations. Being the second-largest airline
group in Australia the airline company has successfully found a new buyer for itself and
entered into Voluntary administration in April 2020, this stated Virgin Australia to be the
first-ever airline casualties in this pandemic (PAN, 2019). Deloitte, the administrator partner
of Virgin Australia has also entered into an agreement with Bain Capital, which will purchase
the airline. This particular company Bain Capital has brought in Deep aviation experience
and commitment in Australia in the past 20 years, therefore it will help virgin Australia to
return its core strength and will also help in re-establishing itself as an iconic airline.

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It will further focus on restructuring its demand both inside Australia and outside Australia by
simplifying operations, overhauling the cost, focusing on customer value, harnessing culture,
investing in new digital platforms and focusing more on data technologies. The airline is
cutting its workforce down by 6000 people (Ma, Wang, Yang & Zhang, 2019). It will also
focus more on maintaining and improving its domestic routes as well as selected short
international routes (Lohmann & Spasojevic, 2018). It promises further on re-platforming
itself and its frequent flyer model in the near future.

KEY FACTORS FOR DRIVING THE NEED OF CHANGE

Changes are inevitable and that change is the only constant which organizations or
individuals need to understand and adopt in order to work properly (Lohmann & Spasojevic,
2018). Changes are needed because of the following reasons such as health crisis, increase in
costs, global challenges and opportunities, climatic changes, technological development and
workplace injuries (Markham, Young, Reis & Higham, 2018). In order to avoid or reduce the
above-mentioned risks and crisis, changes are needed to be implemented.
The key factors which are driving Virgin Australia towards change are the global
competition, technological development and increase of debt (Mitchell, 2019). The case
clearly depicts that Virgin Australia in spite of the probable changes that it has taken into
account has not been proved as efficient and effective. The airline company has sunk into
debt and losses in recent years, this was more affected by the lockdown which took place
during the pandemic (Alexander & Merkert, 2017). The demand for its services has lowered
immensely both domestically and internationally. Moreover, the investments which it has
done on buying back its shares of Velocity has also pushed the management and the company
in the vicious hole of debt. Virgin Australia is thriving hard to survive the lockdown and in
the initial days of the lockdown, the existence of it became a question mark as stated by
Bloomberg.
Organization change arises when the organization does not perform up to the mark and there
exists a deviation between the desired results and the actual result or the outcome (Izhar,
Torabi & Bhatti, 2017). Changes are initiated by a data collection and feedback cycle which
starts with collecting data, then analysing it, feeding back the data, following up and again
planning to collect data, this cycle is a continuous process of determining the need for change
in an organization.

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HUMAN RESOURCE DEVELOPMENT STRATEGIES
Virgin Australia has implemented various organizational changes in the past years. In
the year 2012 when it changed its name from Virgin Blue to Virgin Australia and also
changed the colour of its logo and theme from Blue to red it also focused on changing the
uniform of its employees and cabin crew members.
With the passing days, Virgin Australia is majorly focusing on the people asset it has.
It has become more people-centric and is developing various strategies which are human
force centric and is designed to steer talented individuals and future leaders (Whyte &
Lohmann, 2016). Also, the HRD of Virgin Australia revealed that they are pushing their
organization towards diversity and also focusing on managing ROI (Welc & Esquerdo,
2018). It is working on defining effective and efficient people plans which will add value to
the organization and to its core objectives. Also, the management is focusing on developing a
more targeted recruitment strategy which will help in selecting the best of the lot.
For creating more value to the organization the airline is focused on developing better human
resource strategies by analysing the requirement of the organization and by putting the right
person for the right job, it will be able to implement strategies and policies which are
essentially required and will cut down human resource spending.

ACCESSING THE CASE STUDY BASED ON THE CONCEPTS

Lockdown has crippled almost the entire world’s airlines except for a few like Virgin
Australia where a seven-year spiral has brought it undone. Virgin Australia’s staff always
wanted to save the airlines as it brings into voluntary administration. Virgin Australia has
never made money but always promised to make money in the future (Izhar, Torabi & Bhatti,
2017). It sold its products at a lower cost to maintain its loss-making operations by the heavy
flow of investor money (Alexander & Merkert, 2017). After this sudden lockdown, as Virgin
Australia wasn’t any other online retailer shop, it faced almost a total blackout for quite some
time and no matter how much Virgin tried to spend, it stretched out more due to tension and
as a result, the company had a downfall.
Virgin has a dark record in loss-making like last year it lost $315 billion, the year
before $650 million and $186 million and $225 million in 2017 and 2016 respectively.
Virgin Australia ditched the blue colour and adopted the red colour scheme in their name in
order to minimise their differences with their biggest competitor, Qantas. In 1999, Virgin

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Australia had brought in a discount carrier and decided to become a full-service airline in
2012.
Virgin tried to out-Qantas flying kangaroo by hiring a senior Qantas executive as their CEO,
but still Virgin failed to get their services as fully air-borne and thus it crashed badly.

From the above graph, we can see how Virgin was accumulated in debt of $5.3
million. A very big example of that uprising debt was when Virgin had spent $700 million to
buy again its own frequent flyer program called Velocity in 2019. Affinity capital partners, a
private equity investment company had brought Velocity for $335 million and funding this
back buy, Virgin had faced several bonds that weren’t secure (PAN, 2019). There are two
types of debts: secure and unsecured debts. The debts that get paid first are secured debts like
bank loans. Certain employment entitlements are also secured, but the companies who loaned
Virgin are at a huge risk and are seconding their own decisions now.
Virgin has $2.8 billion of financial documents worth of planes, but $2.3 million of them are
under certain loans. So, flying the planes out of collaterals might be very risky and it is
suggested that the planes must be left in Virgin’s hands unless they come out of
administration.

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RECOMMENDATIONS
Below mentioned are certain recommendations which Virgin Australia needs to follow in
order to reposition itself into the domestic as well as international market, they are as follow:

Increasing flights and modify routes:

In order to cater to a lot more passengers the airline company needs to increase its
number of carriers and flights, more services to the routes from Sydney to Perth and vice
versa needs to be focused on (Mitchell, 2019). Modified routes will help the airline company
to lessen time and therefore will help in providing timely services and less traffic.

Alliances with international organizations:

It needs to create alliances with international organizations and companies so as to
hedge the risk from the domestic market and thus increase its revenue (Thaichon, Poddar,
Balaraj & Jaiswal). Collaborating with international players will help them cover the routes in
a collaborative way rather than covering the whole by itself.

Providing travellers with business class services:

The flight service should start providing its passengers with the business class
services and thus train its employees and cabin crew members likewise (PAN, 2019). This
will help in attracting customers by not only services by personalized products and beverages
provided by the airline. This is one of the musts that they should implement in order to
reposition itself.

Transformation of the existing organization:

Changing the way the company was already working and implementing new
strategies and organizational structure will help in modifying the whole company into a new
one (Alexander & Merkert, 2017). Motivated human capital will also help in achieving
organizational goals as only a motivated CEO alone cannot force new changes into an
organization, it needs the whole team to work with the same level of dedication and zeal.

CONCLUSION
As seen in the above case analysis that change is a part and parcel of everyday life
and cannot be ignored be it for an organization or any other entity. If one becomes stagnant

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and does not change with the market demand and supply force then one can cease to exist
within a very short time (Mitchell, 2019). In recent times keeping the lockdown period in
consideration, it has become very difficult for Virgin Australia to work, it has been subjected
to immense loss and debt since a few years and the pandemic has added more to it. Therefore,
it needs to go through an organizational development and transformation process to ensure its
growth in the aviation industry. The change management process should be the most vital
issues and strategies that Virgin Australia should submerge itself in planning out as it is the
only way out to outshine in the market. It needs proper market analysis, competitor analysis
and self-analysis for the better vision which will help in formulating strategies (Zhang, Wang
& Fu, 2017). Therefore, for Virgin Australia to become one of the major powers it has to
manage and adapt changes skillfully and with greater dedication.

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REFERENCE
Akbar, Y. H., & Kisilowski, M. (2020). To bargain or not to bargain: Airlines, legitimacy and
nonmarket strategy in a COVID-19 world. Journal of air transport management, 88,
101867.
Alexander, D. W., & Merkert, R. (2017). Challenges to domestic air freight in Australia:
Evaluating air traffic markets with gravity modelling. Journal of Air Transport
Management, 61, 41-52.
Doyme, K., Dray, L., O’Sullivan, A., & Schäfer, A. (2019). Simulating Airline Behavior:
Application for the Australian Domestic Market. Transportation Research Record,
2673(2), 104-112.
Izhar, T. A. T., Torabi, T., & Bhatti, M. I. (2017). Modeling concept and analytical
dependency between data and goal: A case of Australian Airlines. International
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Lohmann, G., & Spasojevic, B. (2018). Airline business strategy. The routledge companion
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Ma, W., Wang, Q., Yang, H., & Zhang, Y. (2019). An analysis of price competition and price
wars in Australia's domestic airline market. Transport Policy, 81, 163-172.
Markham, F., Young, M., Reis, A., & Higham, J. (2018). Does carbon pricing reduce air
travel? Evidence from the Australian ‘Clean Energy Future’policy, July 2012 to June
2014. Journal of Transport Geography, 70, 206-214.
Mitchell, D. (2019, October). An empirical analysis of route-based differences in Australian
air fares. In Australasian Transport Research Forum (ATRF), 41st, 2019, Canberra,
ACT, Australia.
Mosolena, T. (2020). Exploring the experiences of female pilots in commercial aviation.
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Strategy. DEStech Transactions on Social Science, Education and Human Science,
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Raynes, C., & Tsui, K. W. H. (2019). Review of Airline-within-Airline strategy: Case studies
of the Singapore Airlines Group and Qantas Group. Case Studies on Transport Policy,
7(1), 150-165. (Raynes & Tsui, 2019)

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Thaichon, P., Poddar, D., Balaraj, A., & Jaiswal, A. TO FLY OR NOT TO FLY–FACTORS
INFLUENCING CUSTOMER PURCHASE INTENTION AND SWITCHING
INTENTION IN THE AIRLINE INDUSTRY.
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Undervalued Airlines. In Applied Regression Analysis for Business (pp. 257-276).
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Whyte, R., & Lohmann, G. (2016). Airline business models. Air Transport Management: An
International Perspective; Budd, L., Ison, S., Eds, 107-121.
Zhang, Y., Wang, K. &Fu, X., (2017). Air transport services in regional Australia: Demand
pattern, frequency choice and airport entry. Transportation Research Part A: Policy
and Practice, 103, pp.472-489.

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