Two former executives at Virgin Blue have broken cover to announce they plan to launch a new budget airline in Australia next year – but it won’t fly major capital city routes.
Rick Howell and Tim Jordan have said ‘Bonza’ is backed by US investment firm 777 Partners, who have already poured cash into Canadian low-cost carrier Flair.
The business said fares will be up to 40 per cent lower than its competitors and would focus on launching routes in regional centres capable of landing a 737. Its initial fleet will comprise just two or three of the Boeing narrowbody aircraft.
“Of the 15 largest domestic aviation markets in the world, Australia is the only one with just one low-cost carrier, being Jetstar, so that doesn’t sit right,” said Jordan.
Unlike rivals Virgin, Qantas, Jetstar and Rex, the new airline will focus on routes not currently served by existing operators, and would be limited to “two, three or four services a week”.
Bonza said its executives are currently negotiating with airports in order to develop a network while keeping prices low.
Howell was previously Virgin Blue’s general manager of flight operations, while Jordan was its chief commercial officer, who subsequently became the architect of Kazakhstan airline FlyArystan.
777 Partners is an experienced aviation investor and has also invested in a regional airline alliance in APAC called Value Alliance.
The managing partner of 777 Partners, Josh Wander, said, “There is a huge opportunity to both do good and do well by democratising air travel through lower costs. We want to increase consumer choice and make travel more affordable and more accessible for all Australians.”
Jetstar currently has the budget market to itself after Virgin closed subsidiary Tigerair during its administration last year.
Bonza’s announcement comes after Rex announced in May last year that it would rival Qantas and Virgin to take on domestic routes between capital cities, and in November confirmed it had secured a $150 million investment.
Both Rex and Virgin are pursuing a ‘hybrid’ pricing strategy that sees them sit between Qantas and Jetstar. However, in August, Virgin announced it would launch a new cheap ticket that doesn’t include a baggage allowance.
The airline said almost one in three customers don’t require check-in baggage on domestic routes, with this number increasing on the country’s busiest Golden Triangle routes between Melbourne, Sydney and Brisbane.
“Every customer is unique and has different needs and budgets, and we want to welcome all of them onboard to experience our award-winning service, in the way that best suits them,” a Virgin spokesperson said. On top of the three-tier economy booking system, Virgin will also continue to offer Economy X and business class fares.