Add Category
“All of a sudden, a market which stays at home, or if it must go it drives, will look to the skies.”
Bonza will avoid the lucrative “Golden Triangle” between Sydney, Melbourne and Brisbane, and focus on regional towns and holiday hotspots from a base in either regional NSW or Queensland (that’s yet to be settled).
More than half Bonza’s routes will connect destinations where there is 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, chairman of the industry intelligence firm CAPA - Centre for Aviation, says Bonza’s biggest challenge will the might of Qantas and its budget arm Jetstar, which will jump on any new routes where Bonza is successful.
“There’s certainly a market there and it will be great for consumers,” he says. “[But] Qantas is just so big and powerful... there’s just really no place to hide.”
Qantas has launched around 50 new domestic routes since the start of the pandemic and has grown its market share from around 60 per cent to 70 per cent since Virgin’s collapse.
Earlier this month Qantas announced it would start flying from Adelaide to Newcastle and Wagga Wagga to the Sunshine Coast – which Harbison says are “exactly the sort of routes that Bonza would be looking at”.
As Rex attempted to muscle into its turf this year, Qantas boss Alan Joyce has repeated the maxim that Australia can only sustain two airline groups. That has held true over the past 30 years, with Ansett, Compass Airlines, OzJet and Tiger all ending up in the boneyard.
Virgin shut down 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 50 per cent since Compass first tried to break the airline duopoly in the early 1990s. It’s swelled by a third since Virgin Blue launched and Ansett collapsed in 2002.
Of the 15 largest domestic aviation markets in the world, Jordan says Australia is the only one without an independent low-cost airline.
“There isn’t a good understanding what an outlier Australia is in terms of this product not existing in one of the largest domestic aviation markets in the world,” he says.
Jordan lists Britain’s Jet2, Spain’s Volotea and the Las Vegas-based Allegiant Air as the kind of successful, ultra-low cost leisure careers Bonza will try to emulate.
Rex has already brought 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 – Canada’s only independent low-cost carrier which has 11 aircraft and plans to grow that to 50 over the next five years. Flair is also minority owned by 777 Partners.
Nobody would finance Bonza when Jordan first tried to get it off the ground in 2016. But when he pitched it to 777 Partners and its head of aviation, ex-Virgin Blue executive Rick Howell, they “didn’t need much convincing”.
“They got it immediately, because they were already executing it in a like-minded country such as Canada,” he says.
Loading
Bonza will lease its planes from 777 Partners which in March ordered 24 Boeing 737MAX aircraft and secured purchase rights over 60 more.
That will make Bonza be the first local airline using new MAX model after it was recertified to fly following its almost two-year grounding while Boeing fixed a flawed flight control system which caused two fatal crashes. The jet’s improved efficiency means Bonza’s fuel bill will be about 15 per cent below its rivals, which Jordan says will help it offer cheaper airfares.
While Bonza is still finalising where it will fly its first three jets, Jordan says it should launch with 15 to 20 different routes. That’s possible because it will only fly to each destination a few times a week, which he says is frequent enough for leisure travellers.
“And there’s no intention of us wanting to stay at two or three aircraft – that’s not why 777 Partners have got involved in this,” he says.
Bonza may have its doubters but Jordan says what has happened in aviation markets around the world shows there is no reason Australians should be stuck with an airline duopoly.
“This may be relatively new for Australia, but it’s not new for the rest of the world. These models already exist and are very profitable,” he says. “I don’t think that Australia being such an outlier is probably a long-term situation that anyone reasonably expects.”
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.