More than 300 staff at budget airline Bonza have been laid off as the government leaves the financially struggling airline without a lifeboat.
Thousands of passengers were left stranded in Australia when Bonza flights were canceled on Tuesday morning without warning. The airline was placed into administration hours later.
Many of those stranded were allowed to buy tickets after the company was warned it would be forced to ground its planes.
In a further update late on Friday, Hall Chadwick confirmed that 302 workers had been made redundant out of a total workforce of 323 people. They were briefed during a virtual meeting Thursday night.
The collapse of Bonza and confirmation that there would be no government bailout is another blow to hopes of increasing competition – and affordability – in Australia’s highly concentrated aviation sector.
Qantas, its subsidiary Jetstar and rival Virgin carry around 95 per cent of all domestic passengers.
Bonza unexpectedly entered voluntary administration on Tuesday morning and the government said on Friday there would be no bailout.
Former Qantas chief executive Alan Joyce (pictured with Prime Minister Anthony Albanese and his girlfriend Jodie Haydon) has accepted a billion-dollar bailout to prevent Qantas from going bankrupt.
During the Covid-19 pandemic, the government came to the aid of Qantas, which received $2.7 billion from taxpayers, including $900 million from the JobKeeper program.
The airline’s chief executive, Alan Joyce, said bankruptcy was just 11 weeks away at the time.
Virgin did not receive the same treatment and was only saved after the American company Bain Capital intervened with a purchase.
Even though Qantas posted a profit of $2.47 billion in 2023, the airline refuses to return any of the money.
Bonza administrators Hall Chadwick revealed breach notices were issued to the airline on April 17, almost two weeks before customers had to scramble to get alternative flights.
Bonza leased its entire fleet of Boeing 737-8 aircraft and those agreements were terminated Monday night.
Company directors said the actions taken by lessors that forced them to suspend flights “were neither foreseen nor expected,” Hall Chadwick said in a statement.
Insufficient cash flow and financing prevented Bonza from continuing to operate, the administrator said.
They said administrators were in talks with government organizations regarding employee assistance.
Federal Transport Minister Catherine King previously ruled out providing financial assistance to Bonza, saying the government’s priority was to ensure stranded travelers could return home.
But his cabinet colleague Bill Shorten later said the government would arrange transition support to ensure employees received the wages they were owed if administrators were unable to pay their entitlements.
“Unfortunately, it’s a terrible time for these workers,” he told ABC Radio.
“As a union representative, I went through the Ansett collapse and saw what happened to Virgin.”
All planes have been grounded at least until Wednesday, five days longer than previously planned.
More than 300 employees were fired and thousands of passengers were stranded at airports
Administrator Hall Chadwick revealed breach notices were issued to the airline on April 17, almost two weeks before customers had to scramble to get alternative flights.
Passengers with upcoming flights have been told not to travel to an airport unless they have secured a seat on a different airline.
“The administrators appreciate that this is not the news that employees, customers and other key stakeholders would like to hear; however, there is no alternative course of action available to the administrators at this time,” Hall Chadwick said.
Emily McMillan, leader of the Transport Workers Union, called on Bonza to “strain every nerve” to ensure workers receive their pay.
“These are hard-working people with bills to pay and families to feed,” he said.
“This is a devastating blow and a cause for great concern in a cost of living crisis.”
Refunds are not being processed and customers have been asked to contact their bank or travel insurance provider.
The Sunshine Coast-based company was launched in October 2021 and its first flight took off in January 2023.
It originally flew 27 routes to 17 destinations, but began cutting services during its first six months.
The 95 per cent market dominance of Qantas, Jetstar and Virgin is almost unheard of in similar areas with high aircraft traffic, such as the Sydney, Melbourne and Brisbane routes.
Compared to airlines, Woolworths and Coles, which have been the subject of multiple investigations into concentration in the supermarket sector, control about 65 per cent of that market.
The Transport Minister said the government was committed to increasing competition, reliability and affordability in the aviation industry.
“Over recent years it is clear that the sector has not met the expectations of Australian travellers,” a spokesperson told AAP.
He said recent changes to slot availability at Sydney Airport had helped increase competition and more measures would be revealed in the Aviation White Paper, expected to be published in mid-2024.
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