The future of Bonza is in limbo as the fledgling budget airline enters voluntary administration – a well-trodden path in Australian aviation.
While Tuesday’s developments may come as a blow to competition in an industry dominated by a duopoly, the abrupt cancellation of services and seizure of planes will trigger memories of a long history of fallen carriers.
Bonza transported more than 750,000 passengers across Australia in the 15 months between its launch and sudden grounding this week. In a fiercely competitive industry dominated by Qantas group and Virgin, it had been a turbulent birth for the airline.
In 2021 Bonza announced its plan to run low-cost, low-frequency flights between regional and holiday destinations that are not now serviced by existing carriers, but it was forced to wait until January 2023 to gain regulatory approval and begin operations.
Its executives cultivated a brand that saw it dubbed the “bogan” airline, making headlines by offering budgie smugglers in its inflight shop and for shunning traditional travel outlets to only sell tickets through its smartphone app.
The airline struggled with aircraft shortages and was forced to cancel several routes over the past year, and, as a result, had only amassed 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 out of larger airports including Melbourne’s Tullamarine and the Gold Coast, ultimately servicing 35 routes, but it was unable to gain access to the lucrative Sydney airport.
Breaking into Australia’s aviation industry has always been tough. Government policy allowed for only two airlines to serve routes between state capital cities, with the laws that effectively maintained the Qantas and Ansett duopoly only unwound in 1990.
Tony Webber, the chief executive of the industry analyst firm Airline Intelligence & Research and a former chief economist at Qantas, said that while Bonza’s business model was different and not trying to directly compete with the major airlines, it could be an uphill battle to gain a foothold in the Australian market.
Additionally, without access to Sydney airport, Bonza was unable to access a large chunk of its potential market. Access to Sydney slots in particular continues to be a barrier to entry, with the government in February flagging a crackdown on the existing regime and allegations of slot hoarding to shut out competition.
“The incumbent carriers can be very competitive, particularly Qantas, which is hyper competitive,” Webber said. “They realise that to preserve profitability they have to get on the front foot with the competitor.”
Webber noted that Qantas had roughly 65% market share; together with Virgin, the two operate about 90% of the market.
“You’ve got to have a strong point of difference to the incumbents if you’re going to succeed,” he said. “Just because an overseas market with a similar population can successfully run four or five carriers, it doesn’t mean [that] will succeed here.”
With Bonza’s future now to play out through the administration process, the carrier appears set to join a long list of airlines that made an attempt to dent Qantas’ dominance and the duopolistic history of Australian aviation.
Tigerair Australia 2007-20
The latest major Australian airline to have vanished from airport departure screens, Tigerair positioned itself as a low-cost carrier. Its 13 years in Australian skies saw domestic air fares between major cities plummet to historically low levels as the airline fiercely competed with the Qantas-owned budget operator Jetstar.
Initially owned by its Singaporean parent company, the airline was acquired by Virgin Australia over several years, coming to fully own it by 2014.
All Tigerair flights were grounded due to the Covid pandemic, and the brand was retired during the voluntary administration from which Virgin Australia emerged as Australia’s leaner, significantly scaled-back second airline.
Air Australia 2011-12
Growing out of its earlier freight-only operations and rebranding to Air Australia in August 2011, the low-cost carrier launched domestic and international flights with its fleet of four jets – an Airbus A330 and three A320s – from its Brisbane base to cities including Melbourne, Honolulu and Bali.
But by February 2012 the airline’s owners placed Air Australia into voluntary administration. A fuel supplier refused to refuel its aircraft in Phuket due to outstanding payments and administrations later discovered the airline owed creditors up to $90m.
About 4,000 passengers were stranded internationally and in Australia when it entered voluntary administration. A month later Air Australia went into liquidation.
Ozjet 2005-06
The airline with business class-only seating launched in November 2005 with several services a day between Sydney and Melbourne. While it had grand expansion plans, Ozjet struggled to attract the domestic business market.
By March 2006 the airline announced it would cease all scheduled services. It later pivoted to charter flights and took over regular services between the Australian mainland and Norfolk Island, but ultimately abandoned its business-only scheduled service concept.
BackpackersXpress 2003-05
While the story of BackpackersXpress presaged 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 airlines aimed at cheap flights between Europe, Asia and Australia to ferry in backpackers between the continents. The airline had a deal to paint large VB logos on its engines, with the advertising for the airline’s official brewer to fund its low-cost model, and had signed the Neighbours actor Ryan Moloney – known for playing the series mainstay “Toadie” – as its public face.
The Australian-headquartered carrier had hoped to raise $80m but lost its funding after its applications to fly services to the UK were rejected on the basis it hadn’t proven it could actually operate the flights. The company folded by April 2005.
As such, the promised pub-in-the-sky feature of its Boeing 747 fitout never took off.
Impulse 2000-01
While Impulse had existed as a regional operator of smaller planes since 1992, 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 new-to-market Virgin Blue – the original name of Virgin Australia – it meant competition for the duopoly that had become Qantas and Ansett. It even had a bright blue Boeing 717 with a cartoon cockatoo on its tail.
But, facing a bleak financial outlook after funding was withdrawn, Impulse agreed to wet lease – where an airline provides its planes and crew – all its services to Qantas, who later bought out and absorbed the airline into QantasLink.
Ansett 1936-2002
An airline with markedly different story to the swathe of failed startups, Ansett was a mainstay of Australian skies in the 20th century, operating regionally, across major domestic legs and internationally.
But competition from Qantas and other budget ventures, alongside costly maintenance and wage bills, left the airline haemorrhaging money and deals to purchase Virgin Australia or be rescued fell through.
The airline entered voluntary administration on 12 September 2001 and, while its planes did fly again after efforts to keep it in the air, Ansett ultimately ceased all flights in March 2002, bequeathing its position in the duopoly to Virgin Australia.
Compass 1990-91, 1992-93
Australia’s first budget airline after the deregulation of the country’s aviation industry laws, Compass launched flights between Melbourne, Sydney, Brisbane and Perth, and later Adelaide.
But the airline collapsed in December 1991, 12 months after launch, due to intense competition and discounting from rivals, and its failure to make money by transporting freight in the bellies of its planes.
The airline was revived in August 1992 by different owners choosing to use the brand. But Compass Mark II was also hit by sustained price wars and, after reporting a half-year loss of $10.95m in its first six months, it collapsed in March 1993. Its chairman was later convicted of false accounting linked to the airline’s downfall.
