By Mark Evans
Bonza Attempts to Gain Traction in Australian Market
Australia will have a new low cost carrier next year. Subject to regulatory approval, the new airline will start selling tickets in early 2022. According to the new airline’s website, customers can expect to fly on Boeing 737-800 aircraft, meaning they can offer ulta-low prices while reducing carbon footprint. The new airline will not be serving international routes, with Bonza claiming that it exists to allow Aussies to see more of their own backyard.
But can the notoriously difficult Australian market sustain another carrier?
Australia has long been a duopoly for most mainline routes with Qantas and Virgin Australia dominating for the last two decades. The introduction of Virgin Australia, originally Virgin Blue, back in 2000 was one of the major reasons for the collapse of Australia’s previous major airline, Ansett Australia, in 2002.
Australia does have a low cost carrier by the name of Jetstar, but it is wholly owned by Qantas. Thus, the Qantas Group controls around 70% of aircraft used for passenger flights within the country.
Qantas has been accused of dirty tactics in attempts to squash competition in the past. This occurred most recently last year when Regional Express entered into the mainline market after Virgin Australia went into voluntary administration. After previously serving only regional destinations with Saab 340s, Regional Express acquired six Boeing 737-800s to compete on major routes with Qantas. The Australian flag carrier responded by opening nine new routes previously only operated by Regional Express.
The deputy chairman, John Sharp, accused Qantas of capacity dumping, knowing they would lose money in an attempt to push Regional Express off the routes. Virgin Australia has since entered back into the market, re-establishing itself as the second mainline carrier. With most domestic borders closed for the last four months due to Covid-19, it is yet to be seen if Regional Express will be able to compete with both.
Bonza’s CEO Tim Jordan was an executive at Virgin Blue and is now attempting to successfully infiltrate the market again. However, he claims the independent start-up is not trying to take traffic away from the business carriers, suggesting that more than half of the routes flown will be uncharted territory.
Focusing on the leisure market, Bonza wants to establish routes from secondary destinations and will not be flying the golden triangle between Sydney, Melbourne and Brisbane. Given that Sydney to Melbourne was the third busiest route in the world in 2018, with the other pairings coming in at number 18 and 34, this may seem a strange decision. Industry experts have already thrown skepticism at the decision, but it would seem they are replicating the same model used very successfully in Europe by Ryanair and Wizzair.
There are many regional options for Bonza, which has already contacted 45 airports about establishing new routes. Flights to many of these locations are often served by just one airline to a major city and can cost several hundred dollars. This makes it very difficult for locals to travel quickly and affordably around the country with many resorting to long arduous drives when they want to travel.
Bonza is backed by a private U.S. firm, 777 Partners, who own an aviation leasing company and successfully launched Flair Airlines in Canada. Along with Tim Jordan at the helm, who has 25 years’ experience, most recently helping to establish FlyArystan in Kazakhstan, the airline looks to be in a solid starting position.
Australia’s newest carrier has identified a gap in the market, creating new demand on new routes. If the big boys play nice, Bonza may have a strong chance of survival.