Thursday, 1 June 2023

Budget airline Bonza eyes expansion, rules out cutting struggling routes


Four months on from Bonza's delayed launch, the budget airline is preparing to expand to a third base as it hopes to buck the trend of failed regional and low-cost carriers. The Sunshine Coast-based budget airline has been rolling out new routes since February and now flies to 17 mostly regional destinations, with 25 of the 27 routes not flown by other airlines.

Bonza's second hub is in Melbourne, but Bonza chief executive Tim Jordan said strong demand was causing the carrier to look for another base.

"We're certainly looking at growth opportunities in other bases, and also in existing bases, later this year," he said.

Australia has a history of budget and regional carriers that have failed, including Tigerair, JetGo, Compass and OzJet.

Veteran aviation analyst Peter Harbison said the key to low-cost airlines surviving was correcting mistakes quickly.

"You have to watch very, very closely whether something's working or not," he said.

"… There's only a limited period where you want to be losing money on a particular route."

Mr Harbison said Bonza was an "unusual" budget airline because it avoided busy routes such as Sydney to Melbourne in favour of regional destinations such as Mackay, Mildura and Coffs Harbour.

"They're generating new business basically," he said.

But he said it was hard to assess Bonza's progress because "there's not much transparency".

"You hear every now and again that this flight or that flight left nearly full, but they're keeping it pretty close to their chest," Mr Harbison said.

John Sharp, the deputy chairman of competing regional airline Rex, agreed it was hard to comment on Bonza because they were not a publicly listed company and did not publish their data.

A spokesman for Jetstar said the budget airline had been flying for 19 years and "remains committed to being Australia's low fares leader".

Based on available data, the ABC has calculated that Bonza's planes are about 75 per cent full on average, which is below the 90 per cent target set by Bonza's US owner.

In January, the 777 Partners founder Steve Pasko said the airline needed to operate at near-capacity to maintain profitability, which he predicted would come in the second year of flying.

Mr Harbison said the airline needed to expand to new routes to keep their planes in the air longer.

"If you can keep those aircraft flying for 12 to 15 hours a day, then the unit cost comes down considerably," he said.

"But if they don't have enough routes to fly the aircraft, then that unit cost goes up considerably, and so their break-even cost goes up."

Bonza is not yet selling tickets for flights past October, but Mr Jordan said the airline would release its schedule covering Christmas and the summer holidays "within weeks".

While some route frequency and timing will change, he sought to assure travellers that no routes would be "imminently" cut. "What we're trying to do is make sure that we give ourselves the maximum amount of time to learn … and then to reflect that in the schedule going forward," Mr Jordan

"It's unreasonable to judge markets when they've only been operating a number of weeks.

"We may need to add capacity or there may be too much capacity in certain areas."

Mr Jordan said the longer routes had generally been more popular than the shorter routes, which required convincing people to "break a habit" of driving.

Analyst Mr Harbison nominated Newcastle as an option for Bonza's third hub because the region had a "big catchment".

"It's certainly an ideal spot," he said.

"… Because it does tap that whole Hunter region as well as Northern Sydney all the way up the Central Coast."

A spokesperson for Newcastle Airport said they would "welcome any conversation around establishing airline bases at our airport".

"We look forward to supporting Bonza to grow, and we will welcome conversations to form a strategic partnership when the time comes," the spokesperson said.

Bonza has previously ruled out flying to Sydney Airport because the fees are way too expensive and landing slots are too scarce.

Story sourced from here
Sunshine Coast budget airline Bonza eyes expansion, rules out cutting struggling routes - ABC News

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