BONZA: Is there a future for this budget leisure airline?

I’ve been wondering about Bonza Airlines for a while. Their email marketing campaigns seem to constantly offer AU$39 airfares or 30% off the cost of flights. These are bargains for customers, but does this look like an airline for the long haul?

Many articles recently report that something is not quite right at the airline and its parent. Advisors have been called in, and conservative National Party politician Briget McKenzie is calling for the government to step in and save the airline.

Bonza cuts back on routes, frequencies and aircraft

From the beginning of May, Bonza is cutting the frequency of flights between Melbourne and the Gold Coast, down to one a week. Conversely, flights between its base on the Sunshine Coast and Melbourne will increase to 5 per week.

Flights on the Gold Coast to Launceston, Tasmania, once three times per week, will fall back to once a week. The Gold Coast/Mount Isa route will be scrapped for May and June. That is on top of five other routes being cancelled in the first six months of the airline’s operation.

Aircraft delivery to Bonza was initially plagued by diversions to other airlines owned by its parent company, 777 Partners, such as Flair in Canada. Now, Bonza has its newest plane, Bruce, standing idle awaiting ‘re-certification’ by the Civil Aviation Authority.

Call in the advisors for buget leisure airline

Financiers who support both 777 Partners and Bonza called KordaMentha, usually known for their work with companies in voluntary administration, like Ansett Airlines, immediately after the September 2011 attacks in the USA.

In this case, KordaMentha has been asked to assess the airline’s operations. Bonza’s fleet has been re-birthed to a new company, Phoeniz Aviation Capital, wholly owned by A-Cap. They now hold all of 777 Partners aircraft, some 30 Boeing 737-MAX 8s. But the operator of Pheonix is AIP Capital. If you want to delve further into the ownership structure and financing, see this AFR article. CEO Tim Jordan has denied that Bonza has any relationship with KordaMentha. That may be so, since one of the other entities named above might be the commissioner of the advice.

Bonza and 777 Partners challengers

Managing Director of Bonza, Tim Jordan, says that ten aircraft are needed to make the budget airline profitable in its chosen strategy of servicing new routes, mainly in the leisure travel market. The challenge is to amass those ten aircraft in a very tight leasing market.

Bonza financier 777 Partners is facing its own challenges, including Irish aircraft lessors suing over unpaid leasing fees. Think that’s bad? The Justice Department in the USA is also interested in 777 Partners concerning some money-laundering allegations.

2PAXfly Takeout

The Australian airline industry is littered with failed airline startups (Tiger, Advance, Air Australia, Compass – to name a few), let alone major players like Ansett. It’s not easy to launch something new with a very dominant player (Qantas) along with its duopoly partner, Virgin Australia.

Bonza has a bold plan, trying to create a new secondary market for the price-conscious leisure traveller. Many feel that the model is flawed. I tend towards that view myself. However, hats off to anyone attempting a new airline in the Australian market, especially trying to service a new market.

I hope that Bonza survives. Unfortunately, the auguries are not optimistic.