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Bonza takes on new route, after dropping several due to low demand

Bonza is still eager to make a splash on Australia's regional travel scene.

Bonza is still eager to make a splash on Australia's regional travel scene. Photo: Bonza

Bonza is making the leap to add another unusual route to its low-cost offerings, just weeks after cutting other routes due to weak demand.

The young airline announced on Thursday it will be servicing its first route between mainland Australia and Tasmania, through a Gold Coast to Launceston direct route.

“Our strapline is ‘Here for Allstralia’ and today we take another step in delivering that promise with our first destination beyond the many incredible east coast locations we fly to,” Bonza chief commercial officer Carly Povey said.

“There will be more destinations for Launceston, and Bonza’s wider route map, to come. We look forward to revealing what’s next when the time is right.”

This comes after the airline, which carried out its maiden flight in January, cut five routes from its schedule and reduced the frequency of some of its other services in July.

Rather than competing on high-volume routes, Bonza’s main focus has been on opening up regional Australia at a low cost.

David Beirman, adjunct fellow in tourism at the University of Technology Sydney, said the airline is providing much-needed competition for the regions.

Traditionally, regional Australia has either been ignored by airlines, or faced high airfares under a single-carrier monopoly.

Bonza

Adding to its differences from major airlines, Bonza has embraced a more casual vibe for frontline staff. Photo: Bonza

“One of the reasons why fares to and from regional Australia, particularly from capital cities, are so high is that a lot of the routes are actually what we call monopoly routes,” Dr Beirman said.

“For example, the only airline that’s really flying regularly between Tamworth and Sydney is Qantas. So consequently, it charges these extortionate fares. It’s … not just about making a profit, but it’s making a super profit.

“And they’re not the only ones that do it. Rex, for example [used to have] a monopoly on Sydney-Broken Hill, and the fare with them was more expensive than going to Singapore.”

At time of writing, a direct flight between Sydney and Broken Hill can cost almost $800 for an economy ticket, and more than $1000 for business seats; a flight from Sydney to Singapore can cost as little as $656.

Although Bonza is bringing some much-needed competition to the regions, and there are bound to be mistakes made along in their early years, Dr Beirman said the recent route closures show the airline has room to improve on its market research before launching new routes.

Demand needs to be profitable

Tony Webber, Airline Intelligence & Research CEO and former Qantas chief economist, told TND the Gold Coast to Launceston route was “unusual” and he would be “surprised” if it works.

Hobart is usually the preferred entry point for starting up routes to Tasmania due to its larger population, and there historically hasn’t been enough demand to encourage other airlines to service direct routes to Launceston outside of hubs such as Melbourne and Sydney, he said.

Dr Webber said it’s a similar lack of profitable demand that saw some of Bonza’s other regional route options fall flat.

“If you were to set up a flight between the Gold Coast and Launceston and said, ‘Well, we’re going to charge nothing for it’, you’d fill the plane,” he said.

“So the issue is not whether there’s enough demand, it’s whether there’s enough demand at a profitable price, and so that’s where [Bonza is] struggling.

“They have to pull the price down so far to fill the plane, it’s not profitable to make it work. And that’s what they’ve discovered on the handful of routes that they’ve already discarded, and I’d be very surprised if this one works as well.”

Challenges for Bonza

One of the key factors working against Bonza is the price of jet fuel, which has remained elevated since the Russia-Ukraine conflict began.

Fuel can account for up to 40 per cent of an airline’s expenses, and Dr Webber said the current cost stands at $US105 ($163) per barrel.

This is down from the June 2022 high of $US173 ($269) per barrel, but still elevated compared to the pre-invasion price of about $US88 ($137) per barrel.

The cost of fuel is counted among a number of factors outside of Bonza’s control that could be affecting its success, such as the weak Australian dollar and inflation; as a primarily leisure carrier, everyday Australians having less spending money can make a big impact.

“[Bonza are] probably discovering that they can compete effectively against Jetstar, because they’ve got a lower cost base,” Dr Webber said.

“So in part I think a lot of their story will be that [they] can take a bit of share from Jetstar as well as try and stimulate some travel on new routes into south-east Queensland.

“But I think they’re doing it tough … Good luck to them.”

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