Why business start-up Bonza sees room for another airline in Australia

“All of a sudden, a market that stays at home, or if it has to go it drives, will turn to the sky.”

Bonza will avoid the lucrative ‘Golden Triangle’ between Sydney, Melbourne and Brisbane, and will focus on regional towns and vacation hot spots from a base in the NSW or Queensland area (this remains to be worked out) .

More than half of Bonza’s routes will connect to destinations where there are currently no direct flights, Jordan says, and where there is competition, Bonza will aim to be around half the price, with an average fare of $ 100. $ or less.

Peter Harbison, president of industrial intelligence firm CAPA – Center for Aviation, says Bonza’s biggest challenge will be the power of Qantas and its budget arm Jetstar, which will jump on all new routes where Bonza succeeds.

“There is definitely a market out there and it will be great for consumers,” he says. “[But] Qantas is so big and powerful … there really is no place to hide.

Qantas has launched around 50 new domestic routes since the start of the pandemic and has increased its market share from around 60% to 70% since the collapse of Virgin.

Earlier this month, Qantas announced it would start flying from Adelaide to Newcastle and from Wagga Wagga to the Sunshine Coast – which Harbison said are “exactly the kind of routes Bonza would consider”.

As Rex tried to gain a foothold in his territory this year, Qantas boss Alan Joyce repeated the maxim that Australia can only support two air groups. This has been true for the past 30 years, with Ansett, Compass Airlines, OzJet and Tiger all ending up in the graveyard.

Virgin closed its budget arm Tigerair after COVID-19 pushed the group into administration last year. Credit:James morgan

But Jordan says Australia is a different place today, with a population that has grown by 50% since Compass first attempted to break the airline duopoly in the early 1990s. ‘one-third since the launch of Virgin Blue and the collapse of Ansett in 2002.

Of the world’s 15 largest domestic aviation markets, Jordan says Australia is the only one that does not have an independent low-cost airline.

“There isn’t a good understanding of what Australia outlier is in terms of this product not existing in one of the world’s largest domestic aviation markets,” he said.

Jordan cites British Jet2, Spanish Volotea and Las Vegas-based Allegiant Air as the kind of successful, super-low-cost leisure careers Bonza will attempt to emulate.

Rex has already introduced new competition to the aviation market this year, taking on Qantas and Virgin.

Rex has already introduced new competition to the aviation market this year, taking on Qantas and Virgin. Credit:Sam D’Agostino

But the airline most in line with his vision is Flair Airlines – the only independent low-cost carrier in Canada that owns 11 aircraft and plans to increase that number to 50 over the next five years. Flair is also minority-owned by 777 Partners.

No one wanted to fund Bonza when Jordan tried to get him off the ground for the first time in 2016. But when he introduced him to 777 Partners and its chief aviation officer, former Virgin Blue executive Rick Howell , they “didn’t need a lot of conviction.”

“They got it immediately, because they were already running it in a like-minded country like Canada,” he says.

Loading

Bonza will lease its planes to 777 Partners who, in March, ordered 24 Boeing 737MAXs and obtained the rights to purchase 60 others.

This will make Bonza the first local airline to use the new MAX model after being recertified to fly after being grounded for nearly two years while Boeing repaired a faulty flight control system that caused two fatal crashes. The jet’s improved efficiency means Bonza’s fuel bill will be around 15% lower than its rivals, which Jordan says will help it offer cheaper plane tickets.

While Bonza is still finalizing where he’ll fly his first three jets, Jordan says he should throw with 15-20 different routes. This is possible because he will only serve each destination a few times a week, which he says is quite common for leisure travelers.

“And we have no intention of wanting to stay two or three planes – that’s not why 777 Partners got involved in this,” he says.

Bonza may have his skeptics, but Jordan says what has happened in aviation markets around the world shows that there is no reason Australians should be stuck with a company duopoly. aerial.

“It might be relatively new to Australia, but it’s nothing new to the rest of the world. These models already exist and are very profitable, ”he says. “I don’t think Australia is such an outlier is probably a long-term situation that anyone reasonably expects.”

The Business Briefing newsletter features important articles, exclusive coverage and expert opinions. Sign up to get it every morning on weekdays.

Source link

About admin

Check Also

Breeze Airways increases pilot compensation and hires Australian pilots; Shortage

Breeze Airways is one of many airlines bracing for the global pilot shortage as air …