Qantas received a setback late last week in a closely watched legal case. The airline is attempting to delay a former executive joining archrival Virgin Australia. In a hearing on Friday in the New South Wales Supreme Court, Qantas lost its bid to have the case heard in Australia.
Virgin Australia poaches key Qantas Loyalty executive
As previously reported in Simple Flying, Qantas is taking Nick Rohrlach and Virgin Australia to court over the former’s defection to Virgin Australia. Mr Rohrlach was a high flying executive at the Qantas Group. One of his most recent jobs there was running Jetstar Japan. But last year, Mr Rohrlach took on a new job at Qantas Loyalty.
But shortly after taking on that job, Virgin Australia poached Nick Rohrlach to head up their own loyalty program, Velocity. Some might argue that’s all part of the hurly-burly of corporate life, but Qantas wasn’t amused. From Qantas’ point of view, Nick Rohrlach knows a lot of very sensitive information about Qantas Loyalty. They believe that information could potentially get weaponised in his new role at Virgin Australia.
Qantas cannot stop Mr Rohrlach from going to work at Virgin Australia, but they can try to delay it. Qantas says Mr Rohrlach is obliged to give them three months notice and then abide by a six-month no-compete agreement.
That three month period is pretty much up, but both Nick Rohrlach and Virgin Australia want the no-compete clause over-ruled. The new Velocity boss wants to begin his role in early May.
Qantas loses jurisdiction argument
Complicating matters is that Nick Rohrlach’s signed his employment contract with Virgin Australia in Singapore late last year. Because a clause in the contract said disputes were to be governed by Singaporean law, the New South Wales Supreme Court ruled on Friday that Singapore was the appropriate jurisdiction to hear any disputes.
It is a tactical win for Mr Rohrlach and Virgin Australia because Qantas loses the home ground advantage. Qantas argued that because all parties to the dispute were in New South Wales, it made sense to hear the dispute in New South Wales. But Justice Hammerschlag called the Qantas submissions “unsustainable.”
The Judge noted the even with international borders closed, it is the norm to hear cases remotely now. He said that might be inconvenient, but that was no barrier to arguing a case effectively.
Justice Hammerschlag ordered Qantas to pay Nick Rohrlach’s and Virgin Australia’s costs. After Friday’s hearing, Qantas indicated they would appeal.
Loyalty programs a big business at both airlines
Loyalty programs are big business at both airlines. Last year, Qantas Loyalty was a critical generator of revenue for the Qantas Group. In the six months to December 31, 2020, it tipped US$346 million into Qantas’ coffers. Qantas CEO Alan Joyce summed up the role of Qantas Loyalty succinctly recently, saying, “there is cash coming in for those points.”
Over at Virgin Australia, Velocity is equally valuable. So much so that not long before the airline went into voluntary administration, it bought back 100% control of Velocity for approximately US$534 million. Velocity is a stand-alone business within the Virgin Australia Group and was the only Virgin Australia business not to go into voluntary administration last year.
While Qantas ponders an appeal over Friday’s decision, Virgin Australia is reportedly pleased with the outcome.