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A history of failure: Bonza set to join the airline scrap heap

The first Bonza plane is bound for an unknown overseas destination.

The first Bonza plane is bound for an unknown overseas destination. Photo: AAP

Bonza’s financial crisis threatens to send the budget airline to the scrap heap of history alongside other failed third airlines in Australia like Tigerair, Air Australia and Ansett.

Qantas and Virgin Australia remain dominant fixtures in the current market, with Bonza the latest carrier to fall in a market that has seen multiple attempts to disrupt the airline duopoly.

Jetstar remains the dominant low-cost offering in Australia but is owned by Qantas, while Rex operates on mostly regional routes and on a much smaller scale to the two big players.

Justin Wastnage, an adjunct industry expert at Griffith University, said the lack of density in Australia’s population centres plays a huge role in the viability of airlines outside of the big two.

“The United States has 250 population centres with over 100,000 people, while Europe has around 400,” he said.

“Australia has 27 cities greater than 100,000 within narrow-body [aircraft] range, including New Zealand and New Caledonia.”

American private investment group 777 Partners owns Bonza, alongside several football clubs around the world – including a stake in A-Leagues side Melbourne Victory and Canadian low-cost carrier Flair Airlines.

777 Partners have been accused of breaching contracts, failing to pay debts and acting fraudulently throughout its business holdings.

A history of failure

Australia has seen several airlines come and go over the years.

Ansett Australia was founded in 1936, but heading to the turn of the millennium it was losing $180 million a year.

It collapsed in March 2002 after a turbulent period of financial difficulty, almost two years after Virgin launched in Australia.

Ansett planes were a fixture in Australian airports for more than 60 years. Photo: Getty

Air Australia followed a similar – albeit less storied – path, having been founded in 1991 and lasting in the industry for just over two decades.

Originally focusing on air freight, it won contracts to transport Australian Defence Force troops in the early 2000s and expanded into destination and major route travel.

It entered administration in 2012, stranding 4000 passengers in overseas holiday destinations and domestic airports in similar circumstances to Bonza.

When the books were looked over, it was found that it owed $90 million to creditors and was unsellable.

Other airlines like Tigerair Australia have tried to offer similar low-cost offerings to Bonza, although they have quickly run into trouble.

After being launched in 2007 by its Singaporean owners, Tigerair was bought by Virgin Australia in 2014 for just $1.

It ceased operations during the Covid-19 pandemic as travel was stymied and planes were grounded.

Tigerair Bali

Virgin Australia abandoned the Tigerair brand during the pandemic. Photo: Getty

The exception

Rex Airlines was launched in 2002 after a consortium set up by ex-Ansett Australia employees merged two other airlines – previously owned by Ansett – to form the new company.

Rex has instead focused on operating routes that Virgin Australia and Qantas do not while offering a cheaper alternative on popular routes.

Wastnage said that the airline has remained viable because of the focus on regional routes feeding into major airports and being able to get a good deal on leasing aeroplanes.

“They have loyalty from their customers and the pilots whom they train themselves, who also have good contracts,” he said.

“Bonza played a different game by focusing on offering cheap flights on major routes.”

It launched its own flight school and aviation academy in 2008 and has acquired other airlines that focused on fly-in, fly-out services for the mining industry to expand its regional footprint.

Rex

Rex has embraced niche routes and services to remain viable in the airline industry. Photo: AAP

Wastnage said that airlines are also more competitive in markets with a second airport.

“Ticket prices in Melbourne, with Avalon Airport, are around 25 per cent cheaper than Sydney, and in Brisbane with Gold Coast Airport operating as a kind of secondary airport we see similar results,” he said.

“Western Sydney Airport should reduce constraint on Sydney airport and open up access for airlines.”

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