Bonza’s future is in limbo as the fledgling budget airline enters voluntary administration – a well-trodden path in Australian aviation.
While Tuesday’s developments could be a blow to competition in an industry dominated by a duopoly, the abrupt cancellation of services and seizure of aircraft will bring back memories of a long history of fallen Australian airlines.
Related: Bonza is going into voluntary administration after abruptly canceling all flights across Australia
Bonza carried more than 750,000 passengers across Australia in the 15 months between its launch and its sudden grounding this week. In a fiercely competitive sector dominated by the Qantas group and Virgin, it had been a turbulent birth for the airline.
In 2021, Bonza announced its plan to operate low-cost, low-frequency flights between regional and holiday destinations now unserved by existing airlines, but it had to wait until January 2023 to receive regulatory approval and begin operations.
Its executives cultivated a brand it called the “bogan” airline, which made headlines by offering parakeet smugglers in its on-board store and eschewing traditional tour companies by selling tickets only through its smartphone app.
The airline has struggled with aircraft shortages and was forced to cancel several routes in the past year. As a result, it had only built a 2% market share, according to the competition watchdog’s latest domestic aviation report this year.
Bonza managed to grow from its Sunshine Coast base to also operate from larger airports such as Melbourne’s Tullamarine and the Gold Coast, eventually serving 35 routes, but was unable to gain access to Sydney’s lucrative airport.
Breaking into the Australian aviation industry has always been difficult. Government policy allowed only two airlines to serve routes between state capitals, while the laws that effectively maintained the Qantas and Ansett duopoly were only abolished in 1990.
Tony Webber, CEO of aviation analyst Airline Intelligence & Research and former chief economist at Qantas, said while Bonza’s business model was different and did not try to compete directly with the major airlines, it could be an uphill battle to gain a foothold. in the Australian aviation market.
Furthermore, without access to Sydney Airport, Bonza was unable to access much of its potential market. Access to slots in Sydney in particular remains a barrier to entry. The government launched a crackdown on the existing regime in February, accusing it of slot hoarding to eliminate competition.
“The incumbent airlines can be very competitive, especially Qantas, which is hyper-competitive,” Webber said. “They realize that to maintain profitability, they have to stay ahead of their competitors.”
Webber noted that Qantas had a market share of around 65%; together with Virgin, the two serve approximately 90% of the market.
“If you want to succeed, you need to have a strong point of difference with the incumbents. The fact that an overseas market with a similar population can successfully operate four or five airlines does not mean that [that] will succeed here,” Webber said.
With Bonza’s future set to play out through the administrative process, the airline appears to join a long list of airlines that have attempted to challenge Qantas’ dominance and Australian aviation’s duopolistic history.
Tigerair Australia, 2007-2020
Tigerair, the latest major Australian airline to disappear from airport departure screens, positioned itself as a low-cost carrier. In its 13 years in Australian airspace, domestic airfares between major cities fell to historically low levels as the airline competed fiercely with budget airline Jetstar, owned by Qantas.
Virgin Australia was initially owned by its Singaporean parent company, but acquired the airline over a number of years and took full ownership of it in 2014.
All Tigerair flights were grounded due to the Covid pandemic, and the brand was retired during the voluntary administration that saw Virgin Australia emerge as Australia’s leaner, significantly scaled-back second-tier airline.
Air Australia, 2011-2012
Growing from its previous cargo-only operations and rebranding as Air Australia in August 2011, the budget airline launched domestic and international flights with its fleet of four jets – an Airbus A330 and three A320s – from its base in Brisbane to cities including Melbourne, Honolulu and Bali.
However, in February 2012, the airline’s owners placed Air Australia into voluntary administration. A fuel supplier refused to refuel its planes in Phuket due to outstanding payments and the administration later discovered the airline owed up to $90 million to creditors.
About 4,000 passengers were stranded internationally and in Australia it came under voluntary management. A month later, Air Australia went bankrupt.
Ozjet, 2005-2006
The business class seat-only airline launched in November 2005 with multiple flights per day between Sydney and Melbourne. Although the airline had big expansion plans, it struggled to attract the domestic business market.
In March 2006, the airline announced it would discontinue all scheduled services. It later switched to charter flights and took over scheduled services between the Australian mainland and Norfolk Island, but eventually abandoned the concept of business-only scheduled services.
Related: ‘Keeping Ansett Alive’: an airline reborn in hipster clothing and basketball
BackpackersXpress, 2003-2005
Although the story of BackpackersXress is eerily similar to Bonza’s tongue-in-cheek “bogan” branding and marketing push, this low-cost airline never actually took to the skies.
Announced in 2003, the idea for BackpackersXpress was an airline that focused on low-cost flights between Europe, Asia and Australia to transport backpackers between continents. The airline had struck a deal to paint large VB logos on its engines, advertising the airline’s official brewer to fund its low-cost model, and had Neighbors actor Ryan Moloney – known for playing the mainstay of the series ‘Toadie’ – contracted as a crowd puller. sight.
The Australian-headquartered airline had hoped to raise $80 million but lost its funding after its applications to fly services to the UK were rejected after failing to prove it could actually operate the flights. The company went bankrupt in April 2005.
As such, the promised pub-in-the-sky feature of the Boeing 747 equipment never materialized.
Impulse, 2000-2001
Although Impulse had existed since 1992 as a regional operator of smaller aircraft, its expansion into a major low-cost airline operating larger jet aircraft in 2000 was a serious development for the aviation industry.
Together with the newly launched Virgin Blue – Virgin Australia’s original name – it meant competition for the duopoly that Qantas and Ansett had become. It even had a bright blue Boeing 717 with a cartoon cockatoo on its tail.
However, faced with a bleak financial outlook after funding was withdrawn, Impulse agreed to wet lease all its services – where an airline provides its aircraft and crew – to Qantas, which later bought out the airline and absorbed it into QantasLink.
Ansett, 1936-2002
A markedly different story to the slew of failed startups, Ansett was a mainstay of Australian airspace in the 20th century, operating regionally, across major domestic branches and internationally.
But competition from Qantas and other budget companies, in addition to expensive maintenance and payroll bills, meant the airline was bleeding cash and deals to buy Virgin Australia or be bailed out fell through.
The airline went into voluntary administration on 12 September 2001, and although the planes flew again after attempts to keep them in the air, Ansett eventually stopped all flights in March 2002, leaving its position in the duopoly for Virgin Australia.
Compass, 1990-1991, 1992-1993
Compass, Australia’s first budget airline after deregulation of the country’s aviation industry, launched flights between Melbourne, Sydney, Brisbane and Perth, and later Adelaide.
However, the airline went bankrupt in December 1991, twelve months after launch, due to intense competition and discounts from rivals and the inability to make money carrying cargo in the bellies of its aircraft.
The airline was revived in August 1992 by several owners who chose to use the brand. However, Compass Mark II was also hit by ongoing price wars, and after reporting a half-year loss of $10.95 million in its first six months, it collapsed in March 1993. The chairman was later convicted of false accounting linked to the airline’s demise.