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Saturday, January 28, 2023

Bonza: Australia’s New Low-Cost Airline to Launch in 2022

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Bonza, a new ultra-low-cost domestic airline, is trying to capitalize on the post-lockdown surge in air travel by offering a variety of services to regions that are currently underserved by existing carriers.

Bonza has announced its intention to enter the Australian domestic airline market by early 2022, and industry analysts believe the airline’s goal of transporting budget-conscious passengers to tourist areas will fill a gap in the market – assuming regulatory approval.

Tim Jordan, Bonza’s CEO, sent out expressions of interest to 46 airports in all 50 states and territories on Tuesday, asking for “regions and cities to step forward to be part of our initial route network.”

Bonza will try to compete with the low ticket costs offered by EasyJet and RyanAir on short-haul European routes, according to Jordan, a seasoned aviation figure and former executive of Virgin Blue.

He compared Bonza’s strategy to that of British carrier Jet 2, which he claimed had successfully battled on pricing with EasyJet and RyanAir but concentrated mostly on leisure destinations rather than frequent services between capital cities – a strategy he said he would replicate in Australia.

“Our product will not appeal to business travelers because there will not be many frequencies each day from which to chose for those who need to return later that day,” he said. “On a weekly basis, there will be three or four frequencies on a route.”

“This allows us to fly itineraries where there is no nonstop service between the two points at the moment… We won’t be taking business away from other airlines; instead, we’ll be increasing demand for domestic travel. No other carrier now serves more than half of the markets where we will operate.”

With the exit of low-cost carrier Tiger after its parent company Virgin went through an administration process and repositioned itself towards the lower end of the market, and the expansion of Rex to fly on routes to major capital cities, Australia’s aviation landscape has changed over the course of the pandemic.

During the Delta lockdowns, government assistance was established and extended to keep skilled workers employed and ensure that airlines were ready to resume flights whenever border restrictions were released.

The effect of carrier disruption during the epidemic and the initial reopening of internal borders earlier this year, according to Tom Youl, a senior industry analyst at IBISWorld, has resulted in discounted pricing to incentivize travel to Australians keen to go.

Youl predicted that “regulatory clearance for Bonza is not a given,” and that “Qantas and Virgin will push pretty aggressively.”

“I wouldn’t be surprised if they didn’t fight back.”

If Bonza did enter the market, Youl predicted that its business strategy would succeed because “leisure destinations are the natural gap in the market.”

“I expect them to compete with Jetstar for budget-conscious passengers who don’t care about the frills and just want a seat.” This has a lot of potential in the market.”

Tiger was successful when it entered the market on its own in 2007, according to Youl, before being entirely bought by Virgin Australia in 2015.

Jordan was undeterred by the recent stormy history of independent airlines attempting to join the Australian market.

“This is novel for Australia, but not for the rest of the world,” he said, noting that Australia was one of the top ten domestic aviation markets in the world without an independent low-cost airline.

Bonza intends to operate Boeing 737-8 aircraft and is supported by 777 Partners, a private investment business based in the United States that funds a number of low-cost carriers around the world, particularly in Canada and Asia.

Jordan was convinced that, given 777 Partners’ track record of supporting aviation initiatives, Bonza’s backers were “with it for the long haul” and would see the airline through any challenges.

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