THE words of Bonza chief Tim Jordan insisting the carrier would never be a “me too” airline have been ringing in my ears since news of its nation-wide grounding broke yesterday.
Speaking to travelBulletin before Bonza had a single plane in the air, Jordan insisted the business model would not seek to cut any other carrier’s lunch, but rather focus on leisure routes that were either under-served or unserved in Australia.
While not cutting into the lunch of competitors might sound like an unusually convivial approach to take in the often-fierce world of aviation, it might have been good idea for Bonza to factor in at least a few extra crumbs from the table given its current plight.
When Bonza launched, many may recall it was difficult to ignore.
The new challenger flew into the country wielding bold purple branding, line dancing its way through the terminals of some of the country’s largest regional airports.
This was often accompanied by a string of choice optimistic Australian colloquialisms in its campaigns to match its Bonza moniker.
Down at Bonza headquarters this morning however, the only Aussie slang reverberating through the office halls must surely be “bugger”.
After all of the fanfare and rosy banter, Bonza is now on the precipice of joining a litany of other hard luck stories in Australian domestic aviation, such as Compass and Ansett.
So, what went wrong?
Leaving its business model aside for the moment, the apparent financial troubles plaguing its parent 777 Partners have clearly not helped.
One of the first red flags was noticed in the UK courts earlier this year, where 777 Partners was accused of owing close to A$45 million over alleged non-payment relating to four aircraft that were leased to Bonza’s sister carrier in Canada, Flair Airlines.
Since that case, there has been a drip-feed of stories questioning the stability of the company’s finances.
The Miami-based investment company has its finger in a lot of pies – primarily sporting teams – and while Tim Jordan and the Bonza team are sweating bullets this week, reports today that a proposed acquisition by 777 Partners of the Everton Football Club in the UK could fall through can’t be filling the executive team with much confidence.
Everton has called in an advisory firm specialising in restructuring and insolvency after sources suggested pledged funding from 777 has not come through at the amount initially promised.
If this all sounds familiar, it’s because 777 Partners had recently called in its own agency, KordaMentha, to provide advice about how to proceed after its planes were rolled into a new investment vehicle by its senior funder.
The fleet of aircraft had been 49% held by 777 Partners and 51% owned by the management of AIP Capital, with AIP confirming its inventory of planes had been transferred to a new vehicle, Phoenix Aviation Capital.
This was the sequence of events that precipitated the repossession of Bonza aircraft here in Australia.
While Bonza’s problems from the top down are visible for all to see, many had already questioned whether Australia could support another major domestic airline in the market.
One of those doubters was former Qantas chief, Alan Joyce, who told a CAPA conference prior to the Bonza launch that Tim Jordan could “fill his boots” if he felt there were any profitable routes not currently served.
In Joyce’s own words, if there were viable routes to be served, Qantas would already be serving them.
Another rival casting doubts over Bonza was Rex Airlines, whose Chairman, John Sharp, told me prior to launch that he couldn’t see how the economics of what Bonza planned to charge would be feasible.
Specifically, Sharp was deeply sceptical about how a new carrier could charge only $50 a ticket in the face of a fee-happy sector that is still recovering from COVID, and maintain a margin to keep the business going.
“Don’t forget that 10% of that ticket goes to GST, and most airports, once you get past the honeymoon period, will be charging between $10 to $20 per passenger movement,” Sharp said.
“Then you have to pay the on-route charge, so it really doesn’t leave you with a lot of money to pay for the fuel, the leasing of the aircraft, the crew, and all of the marketing and overheads.
“I wish Bonza good luck, and I hope they succeed but it’s hard to see how it will work at that price,” he concluded.
Another pillar of the Bonza master plan was to service a growing population in major regional catchment areas, which Jordan pointed out to me at the time, had continued to rise rapidly while the number of low-cost routes has remained stagnant.
“The reason I’ve got so much confidence in that is because back in 2010, there were 58 low-cost routes operated in Australia by Tiger and Jetstar collectively, and by 2019, there were 58 routes operated by low-cost carriers in Australia, in other words there has been no change in all that time,” Jordan enthused.
“Whilst the population of Australia continues to grow, the GDP of Australia continues to grow, whilst there is growth in regional Australia, nothing has changed from a low-cost perspective.”
Despite the optimism, one of the major hindrances to Bonza’s plan has been a lack of access to the country’s largest hub of Sydney Airport.
While a reform of the highly dubious slot allocation system at the airport continues in the background, the flagged reforms have not come in time for Bonza, which has been effectively locked out of the country’s largest source market for domestic passengers.
During a Senate hearing into bilateral air agreements last year, Jordan admitted that his company had not even bothered to apply for slots in Sydney because he was told by sources at the hub in no uncertain terms that his request would not be granted.
Even before the troubles at 777 Partners, there were signs that the Bonza model of focusing on leisure travellers between underserviced regional hubs was striking turbulence.
In July 2023, the airline axed five routes in a bid to be “more reliable”, three of which were from its highly touted Sunshine Coast base.
The update also included reduced frequencies.
It would not be the only time Bonza made significant chopping and changing to its schedule either, later making a similar decision on its Gold Coast routes only last month.
While I write this, the final chapter on Bonza is yet to be written.
Some reporting has suggested Jordan is confident of a white knight investor buying the planes and fighting on.
But if it turns out that Bonza ends up a footnote in the story of Australian aviation graveyards, the real loser in this story will surely be the humble Australian traveller.
Whatever your thoughts are on Bonza, its model, and they way it has been managed, it would be a brave person to declare Australia doesn’t need any more competition in the domestic space.
I mean strewth, someone has to successfully crack the code, right?
