The new low-cost airline Bonza entered the Australian market with force.
To celebrate its first flight to the northern Queensland city of Mackay, the airline showed local rugby players wearing purple budgie smugglers and offered purple-themed cocktails.
The airline offered regional Australians the chance to holiday in tourist hotspots or see loved ones in underserved cities and towns at ultra-low prices.
“Our goal is to connect communities and give Australians the opportunity to fly direct to see their loved ones where it was previously too expensive or took too long,” Bonza chief executive Tim Jordan said at the time.
But less than 18 months after it first took to the skies in January 2023 to take on established giants Qantas and Virgin, Bonza is bankrupt and collapsing into administration with thousands of passengers stranded.
Accounting firm Hall Chadwick is now struggling to determine whether the low-cost airline has any future in the country.
So what went wrong?
These are the key factors supporting the decline.
New low-cost airline Bonza entered the Australian market with a bang (pictured Bonza CEO Tim Jordan)
The application-first approach
For most of its history, Bonza did not offer ticket purchases through a traditional website, accessed through a Google search.
Instead, the company promoted its Fly Bonza app, with customers booking flights directly through their phone.
Passengers can book flights, manage their reservations, check-in and order food on board through the app.
The apply-first approach may have excluded older Australians, who are generally not as tech-savvy as younger Australians, and Australian National University aviation guru Dr Zena Assaad said the approach posed serious “visibility problems”.
“I don’t know about others, but I go to Google Flights to book my tickets because you can see a comparison of all the different ticket prices and that’s when I choose which provider I’m going to go to, which one is the cheapest.” she said.
And Bonza is not in it. When you enter Google Flights, Bonza does not appear like this.
“If you go with an app-based approach and you’re not on any of these flight comparison websites, which is where most people go to get an idea of flight prices, you’re simply off the radar of all”.
The golden triangle
Bonza did not compete in the important Brisbane-Sydney-Melbourne market or in what the aviation industry calls Australia’s “Golden Triangle.”
This meant that the company lost the most concentrated pot of money on the market.
“The Golden Triangle is very important because it is where most of the action happens and where money is made,” Professor Rico Merkert, deputy director of the Institute for Transport and Logistics Studies at the University’s Business School, told NCA NewsWire. from Sydney. .
Robyn Ironside, Australian aviation writer, discusses Bonza’s collapse into voluntary administration. Budget airline Bonza has canceled all flights in Australia and gone into voluntary administration, leaving Australians stranded across the country.
“I think Bonza will need a big financial lifeline to get out of this current mess,” Ms Ironside told Sky News Australia.
‘With its entire fleet being repossessed by an airline leasing company. “We are starting to wonder if the market can support four operators.”
‘In terms of seats, both Sydney to Melbourne and Sydney to Brisbane are among the top 10 busiest routes globally and, when measured by revenue generated, Sydney to Melbourne is typically in the top three in the world and was the number 1 in 2023. versus London to New York.
“More importantly, having access to these three centers allows for building national and regional food networks.”
Bonza opted for regional routes, often flying directly to new tourist hotspots or linking smaller towns without passing through a major centre.
Dr Assaad said Bonza’s emptiness in Sydney may have been a factor in its downfall.
“Sydney is the largest airport in Australia, to the point where we now have Western Sydney Airport,” he said.
Small and competitive market.
The business world is tough. Most companies fail. And Australia’s airline market is brutal.
Even giants struggle to survive.
Virgin fell into administration in 2020, and was rescued by US private equity firm Bain Capital.
During the pandemic, Qantas shed billions.
In addition to the usual struggles that all airlines face, Australia’s domestic market is comparatively small.
Following the collapse of Bonza, Transport Minister Catherine King suggested that such a limited market would always present challenges for new entrants.
“I think we need to remember that even though we are incredible travelers, both domestically and internationally, we are a very small market,” he told ABC.
‘And it’s a small market in terms of the number of customers available and really in terms of what the market can support relative to that.
Dr Assaad also stated that the market was “extremely competitive”.
“We have three major airlines: Qantas, Virgin and Jetstar (a subsidiary of Qantas),” he said.
‘Because it’s such a small market, we’re not the United States or Europe, where we have the capacity that they have or even the airspace that they have and the number of airports that they have.
“It’s a small, concentrated market and I think it was incredibly difficult for them (Bonza) to take advantage of that.”
Bonza’s fleet.
Bonza operated with only four aircraft.
By contrast, Qantas has more than 100.
With such a limited fleet, there is little room for error and schedules can quickly become complicated.
The low-cost airline also leased Boeing 737-8s, which are large planes with 186 seats.
Professor Merkert said there may not have been “sufficient demand” to keep the fleet afloat.
“The Bonza story was a great one from a cost perspective, which was essentially getting super-cheap airplanes during the pandemic that were not only cheap from a capital cost perspective but also from an operating cost perspective,” he said.
Aviation expert Geoffrey Thomas discusses the future of budget airline Bonza amid reports its parent company has called in advisers to check finances.
The Coalition is calling on Labor to save the airline, saying Bonza has breathed new life into the aviation sector.
Thomas said he does not believe the low-cost airline needs help from the Albanian government. “I don’t think they need any help,” he told Sky News Australia.
“So I’m not sure where this is all coming from; it just doesn’t seem to make sense.”
‘Being new, they would surely also be popular with customers, especially with such low fares and operating on routes that no one else did, which accounted for 84 per cent of their routes.
‘And of course, Bonza optimized its cost structure to the extreme.
‘The problem is that this does not guarantee sustained profits.
‘Those planes had 186 seats and those seats want to be filled on as many flights as possible.
“I think Bonza did a great job developing these routes, but they probably didn’t measure up in terms of profitability.”
Turbulence from the beginning
Bonza suffered almost immediate damage to its reputation as flight delays and cancellations piled up.
The airline began carrying passengers in January 2023, and by July, customer complaints were already sweeping social media.
“I don’t know how long they’ll be here,” John Watt said.
‘First attempt to fly with Bonza(,) canceled the flight to the Sunshine Coast four (hours) before boarding with no options and canceled the return flight to Melbourne and rescheduled it for three days later.
“(Their) excuse, staff issues, they won’t book any more Bonza flights.”
Darren Boyes wrote: ‘I have booked five Bonza flights. And he never boarded a single plane. Goodbye Bonza.’
Frustrations over Bonza’s scheduling also mounted.
Just a few months after the launch, Bonza’s chief commercial officer, Carly Povey, apologized directly to customers and promised to readjust schedules and routes.
“The problem with Bonza is that their main target market is short-haul domestic travelers, but they don’t cater to people who want to spend a weekend away,” said customer Sarah Ryan.
“If they changed their flight schedules to leaving on Friday afternoons and returning on Sunday afternoons, they would see an increase in bookings.”
Just a few months after the launch, Bonza’s chief commercial officer, Carly Povey, apologized directly to customers and promised to readjust schedules and routes.
“We also know that in recent months not everyone has had a good experience with Bonza and we have to look directly at why, specifically when we cancel or delay flights,” he said in late July.
“We will be implementing a number of changes to our schedule starting August 1 based on what we have learned so far and the feedback we have been given regarding route demand.”
Competitive Frequent Flyer Moat
Australians love to rack up frequent flyer points and David Boyd, chief executive of comparison website Credit Card Compare, said programs offered by Qantas and Virgin acted as a “competitive moat” against new entrants to the card market. airlines.
“It’s a moat, it’s a defense,” he said.
‘If Bonza had been more successful, perhaps they would have gotten to the point where they could have created their own frequent flyer program.
“If you have a couple of hundred thousand points, or 50,000 points, and you need to take a trip near one of those destinations that Bonza was flying to, chances are they (Qantas or Virgin) have more planes running and you can redeem your points.
‘So I can redeem my points or take a chance with Bonza.
“You will continue to fall into the arms of Qantas and Virgin.
“The frequent flyer program is a huge pit.”
