Introducing Bonza: Here for Allstralia

Australia, meet your newest budget airline, ready to shake up the domestic market

ON TUESDAY, 12 October 2021, Australia was introduced to what is set to become the nation’s newest low-cost carrier, Bonza.

Headed up by CEO Tim Jordan and chairman Rick Howell, both former executives at Virgin Blue, the new airline claims it will disrupt Australia’s airline duopoly by introducing new customers to the market, who have previously been priced out. The airline is looking to launch its inaugural flights in 2022, subject to regulatory approvals, with a fleet of two to three brand new Boeing 737 MAX jets.

The new airline is backed by US investment firm 777 Partners, and boasts it will o er average fares that are around 40 per cent less than the incumbent players. Bonza is also striving to focus on a network of direct point-to-point regional destinations that eliminate the need for layovers in Sydney’s capital cities, and will in fact be avoiding the ever-popular ‘Golden Triangle’ of routes connecting Australia’s east coast capitals Sydney, Melbourne and Brisbane.

To learn more, Hannah Dowling sat down for a conversation with Bonza founder and CEO Tim Jordan.

Thanks for sitting down with us, Tim. Tell us a little bit about how you started Bonza, where on earth you thought of the name?

Well, the actual origin dates back to about 2016. Anyone who’s ever been in a start-up situation will know you often literally brainstorm these things on a whiteboard, and come up with a very, very long list of potential names. Then one by one you then cull that list down to a workable number, and then get into the detail of it.

Does that fit from a cultural perspective? Does that work from a trademark perspective? Are there other businesses out there, operating in a similar space, whereby there’s going to be issues in terms of registration, and so you know that may curtail some other names that were on the list, and then, ultimately, you begin to stress test it with a smaller number of people, your friends and family.

Ultimately, we felt very comfortable with Bonza and the emotion and the sentiment that it drove. When we actually shared it. And I think the biggest thing is, it says very clearly that we’re different, and that’s exactly what we wanted to get across.

Perhaps our favourite definition of the word Bonza comes from Urban Dictionary where it defines it as “great” and “well executed”, and we thought that word and definition was just a really good fit for what we needed to be in the Australian market. We needed to be great from a consumer perspective, and well-executed clearly, so that worked for us.

The other thing we wanted to do was really tell everyone that we’re different. We are going to be doing something different. With a name like Bonza, we were putting a marker down in terms of saying ‘yes, we are different’.

And then lastly, we wanted to very proudly say, “Yes, this is a uniquely Australian opportunity.” This is about being Australian and proud of it, and there’s no better word to use than Bonza.

Since you launched, there has been a bit of conversation around whether or not Australia can sustain a budget carrier without the backing of a bigger player, like Jetstar has with Qantas. What do you say to people who have those concerns about Bonza?

The most wonderful thing is that we live in a free market economy, whereby we can all have our own individual opinions, which is fantastic. And the fact that people have those opinions is a credit to where we live. In terms of Bonza, our major investment partner is 777 Partners, which is a private investment firm based in Miami, and they have assets under management of just under US$6 billion.

We are one company in their portfolio of over 50, and 777 Partners are not private equity – they invest for the long term. In fact, they have never exited one of their investments. We are here for the long term; our investment partners are here for the long term. And, you know the US$6 billion assets under management says that they’ve got deep pockets. So, I think that puts us on a very firm footing in terms of what we’re executing in the market.

So, maybe some of the commentators weren’t aware of all of that detail, and that’s OK. I think as people pull back the layers in terms of what we are about, in terms of our strategy, in terms of our owners, and in terms of our management team, I think people will have a better understanding of how positive this can and will be across Australia.

You’ve told the media in the past that your budget, point-to-point, leisure and regional market business model is something that hasn’t yet been tested in the Australian market. Can you elaborate?

The model we’re taking is different here – but it’s not different in the rest of the world. This model is deployed, whether you’re in North America or in Europe, very successfully. And so yes, it hasn’t been effectively executed here in Australia previously, but it certainly has elsewhere around the world.

We work in a wonderful industry whereby lessons learned from elsewhere in the world can absolutely be transferred to Australia. And that’s one of the big drivers of the opportunity here is, you know, whether you’re Allegiant in North America, or to a certain degree Frontier, or in Europe, whether you’re Jet2 or Volotea, those are the types of models that we’re looking to replicate.

I should note that we’re not going to be exactly like one of those carriers. We’ve got to fit our own backyard with our strategy, and that’s what we will do with Bonza. The strategy needs to work for Australia, we’re not going to be foolish enough to pick up the exact same strategy from elsewhere in the world, but we are going to look and learn from those strategies and go, ‘that’s a good idea, let’s deploy that in Australia’.

You’ve also said your business model doesn’t really challenge the bigger players, and that you’ll be taking on routes that no other airline offers. How are you so confident that Bonza can succeed without the lucrative Sydney-Melbourne-Brisbane market, and that there’ll be demand on the routes you’re looking to take on?

There is absolutely demand out there for this type of network, and the rest of the world demonstrates it to us. In fact, large swathes of Australia demonstrates that to us. If you actually look and correlate where the propensity to travel across Australia is, there is a high correlation between where there are low-cost fares and where there is a higher propensity to travel.

Currently, it’s not a case of people not wanting to travel, it’s a case of having the means to travel, and the availability of low fares.

We are very fortunate to have the fantastic airlines that we do in Australia. What Bonza will do will help to grow the market. This is not about stealing traffic from other incumbent operators.

Why am I so sure of that? The vast majority of the markets that we will be flying on and not currently operated by any airline. So, we will stimulate new markets, but that only happens if we offer low fares. If we pretend to offer low fares, the market doesn’t stimulate, and the market doesn’t work. If we really stimulate the market with really low fares, markets will grow. Now that has to be the low-cost model. There’s no other model that works for that.

Plus, we will not appeal to business travellers. If we’re flying two or three times a week, particularly on a new route, that isn’t going to be of any interest to business customers. We’re not going to be flying at the right time for them to make a morning meeting. We’re not going to be having frequent flyer programs or lounges, or any of the other ‘bells and whistles’ that a full-service carrier does offer, and as a customer, they require. So, we’re not going to be stealing traffic in those markets from anybody.

VIRGIN EXPERIENCE
Virgin Blue was established as a low-cost carrier in Australia in August 2000. The airline benefited hugely from the collapse of Ansett in 2001, and by 2004, Virgin Blue was carrying as many passengers per year as Ansett prior to its collapse, with a workforce that was less than a third the size.

Virgin hit turbulence with the introduction of Qantas’ own low-cost carrier, Jetstar. By 2010, then-Virgin CEO John Borghetti took the opportunity to rebrand and transition into a full-service airline to challenge Qantas, rather than continue to battle in the low-cost market with Jetstar. By 2011, Virgin Blue became Virgin Australia.

Bonza CEO Tim Jordan served as Virgin Blue’s head of commercial distribution from 2002 to 2004, and the airline’s chief commercial officer from then until May 2005. Meanwhile, Bonza chairman Rick Howell served as Virgin’s general manager of flight operations from May 2009 to August 2012.

Where we do offer a service on a route flown by an existing operator, we still won’t be stealing their market share, because we are targeting a new customer market segment. We are talking only to the leisure customer, and that leisure customer can’t fly at the moment, generally. The entrance point for a flight is $200 in most cases, one way. And that is just beyond the reach of the teachers, tradies, kids and carers. That is our market, the new market that we’ll be stimulating. This is not about stealing market share, it’s about creating a bigger pie.

Something else to note is that since Virgin Blue ceased 20 years ago, the population of Australia has actually increased by a third. That’s a staggering demographic change in the country. So that adage about ‘Australia’s only big enough for X airlines’, just doesn’t ring true anymore.

The population has grown, the demographics have changed, regional centres are one of the growth factories for the country, so it’s not all just about the state capitals anymore. Regional economies are going on in leaps and bounds, and this was all happening well before COVID.

When you mention ‘regional routes no one else has flown’ and ‘capable of handling Boeing 737 MAX’ in one sentence, it really begs the question as to how many airports overlap those two categories. Can you let us in yet on where you’re specifically looking to fly?

Not surprisingly, it is still very hush hush for now. We have approached approximately 45 different airports across the country to assess if they would like to be our airport partners going forward. Based on their responses, we will finalise our initial network and subsequent growth plans. So far, early indications are very positive, and I think we will have a lot of airports, regions and cities, putting their hands up saying, ‘we get this, we see the opportunity, our regions are calling out for this’.

I will say this much: if you were to look at airports capable of handling a Boeing 737 across the country, you can basically work backwards from there to work out who we have been speaking to. The process has really only just started, but I can say that we have had very good feedback so far, and are hoping to soon be able to start talking publicly about the network.

BONZA’S LIVERY
Bonza’s livery features a purple lowercase ‘Bonza’, with the ‘B’ notably in the shape of a thumbs up. Jordan says the livery, like the name, is to highlight that his airline is different to other players, and to appeal to a new customer base.

Why did you choose the MAX, and did you ever consider a smaller aircraft?

The configuration of the MAX, the efficiency of the MAX and the availability of the MAX is what made it so appealing to us. When we were initially looking at our business plan, and the type of lease costs that we would be able to support for such an operation, we really thought we would be using used aircraft, maybe five to 10 years old.

What we’ve obviously ended up with is a far improved outcome. We’re going to the market with brand new aircraft. Aircraft that are all configured the same way. When you look at history, most start-ups end up with a fairly sometimes revolting mix of different aircraft from different sources, with different configurations, and different onboard issues in terms of seats in terms of galleys. And we’re not going to have any of those issues.

We’re going to the market with brand new aircraft that all are configured the same with everything about the aircraft exactly the same. That’s a wonderful proposition, not only from a customer perspective but also from an efficiency perspective and a day-to-day operational perspective as well. Our fuel burn is going to be significantly lower than what we thought it would be initially, because older aircraft are far less fuel-efficient. The MAX aircraft is an absolute bonus for us.

Are you worried at all about how the Australian market will respond to the 737 MAX given its turbulent history with passenger safety?

I think just about every major regulator in the world now has given the given approval to MAX operations. So, I’m really not concerned about that.

Fiji and Singapore Airlines are both already flying the MAX aircraft into the country. They have approvals to do so from the Australian regulator. So, it’s really not something we are concerned about.

You mentioned that you now have a pool of highly trained aviation professionals to choose from. What’s the recruitment process looking like at Bonza right now?

Our initial focus immediately is the AOC process, which is currently underway, however we definitely do have one eye on recruitment.

We recently posted our first job advertisement for our first head of flight operations, which is being well received. Elsewhere on our website, within the first four days of announcing our launch, we received over 2,000 applications from professionals looking to work at Bonza.

The response is fantastic, but it also shows that there are a lot of people who, unfortunately, have been displaced through everything that has happened in the world throughout the pandemic. And there’s some wonderful aviation professionals out there who are looking to get back into the industry.

How far into the regulatory process are you and what are the next steps for you?

CASA was obviously made aware of us and our plans a good few weeks ahead of our launch announcement, and they were involved in that process. We are now continuing with the AOC procurement process, however we are in the early stage of that currently. Our next major steps are to continue recruitment, continue discussion with airports, and finalise our network plans.