End of the line for OzJet

The company said in a statement released that day the suspension of services was due to it not being able to add cargo aircraft to its air operator’s certificate. “The resultant lack of revenue has resulted in a significant impact on the airline’s overall business plan.” CASA spokesman Peter Gibson later denied that the Authority had been holding up OzJet’s application to add freighters to its

OzJet also said that it was owed money by major customer IndoJet Asia, for which it operated charter services from Perth to Denpasar.

OzJet said that this “had further exacerbated the situation,” and led to the suspension. However IndoJet, which is understood to be owned by Balinese resort operators, later issued a statement through a lawyer denying that it was owing money, and said that it had always paid OzJet for the flights in advance.

As a result of the grounding, OzJet said in the statement that it was subcontracting its sole RPT route, from Perth to Derby, as well as other general charter obligations to Alliance Airlines. As of early June, Alliance had also been operating flights to Denpasar, which is understood to be an interim measure on behalf of Indojet.

After making the announcement of the suspension of its services, an administrator was appointed for the company, while the fleet of four Boeing 737s and one 727 Freighter had been listed for sale on an American website. It is understood that approximately 60 staff are likely to lose their jobs.

The carrier is understood to owe Perth Airport hundreds of thousands of dollars in landing and other airport charges. “They’ve broken dozens of promises to address their arrears and that culminated this week with the parent company, Heavylift, advising us that they no longer support OzJet. So it became a case of them becoming a very significant continuing credit risk,” Perth Airport CEO Brad Geatches told The Australian newspaper.

OzJet said that it did indeed owe a substantial amount to the Airport, but claimed that this had “substantially reduced” in recent times.

Originally starting life as a concept for a low-cost airline by Paul Stoddart in 2004, the airline changed its business model to focus on being a niche business class only airline before launching in 2005. It later shut its scheduled operation to focus on charter and wet-leasing with its fleet of four Boeing 737-200s. The company was then sold in 2008 to Heavylift Cargo Airlines.

Soon after the acquisition, CEO Willie O’Neill told Australian Aviation that it planned to replace the 737-200s with newer model 737s. He also flagged the airline’s intention to add quick-change and freighter aircraft to its operations, and gain further synergies with the HeavyLift operations.

A key aim for HeavyLift’s acquisition of OzJet was to gain access to an Australian AOC and therefore the ability to offer freighter services domestically, something it had not been able to do with its foreign registered 727 freighter fleet. Indications are that the carrier was looking to operate 727s on trans-Australian services on behalf of a number of cargo clients.

However, the soon after its sale, the airline lost a number of key wet-lease and charter clients, with Norfolk Air choosing to lease a 737-300 from Nauruan carrier Our Airline, while other customers Solomon Airlines and Airlines PNG also made alternate arrangements.

Since February 2007, OzJet has operated a three times per week RPT service from Perth to Derby. The airline was granted protection by the WA state government for up to three years, and was underwritten by three mining companies. At the time of writing, Australian Aviation has been told that OzJet still holds the sole route authority.

At the time of writing, the Administrator had not made any announcements on the likely course of action, but given the current status of the industry it seems unlikely that the carrier will be rescued and may face liquidation.

Should that happen, it is expected that some of the other operators – such as Alliance, Cobham or even Virgin Blue or Qantas – could seek to take over the Perth-Derby route. However, it is not known if any operator would be granted protection from competitors on the route as the state government is expected to announce a new regional air services licensing policy in the coming months.

It appears likely that OzJet will add the growing list of Australian carriers which have disappeared over the last 18 months, which includes SkyAirWorld, MacAir and O’Connor Airlines.