Can Bonza Prove its Doubters Wrong?

The room is packed and abuzz with energy, being the first major Australian aviation industry event since the dawn of the global pandemic nearly two years prior. Despite being perhaps the most appropriately dressed for a mid-December day in sunny Sydney, the Coffs Harbour resident undeniably stuck out beside colleagues and rivals alike. Be it by accident or by design, though, Jordan’s comfortable, casual attire as he approached the stage to present immediately reflected an appropriate message to the excitable – albeit sceptical – crowd; that Bonza is well and truly here to shake up the Australian domestic air travel market.

Since Bonza’s unveiling in October 2021, Jordan has consistently and passionately discussed the major “Bonza-sized” missed opportunity within Australia’s aviation sector. Under his guidance, Bonza is set to adopt and adapt a low-cost leisure travel model on a fleet of brand-new Boeing 737 MAX jets. It’s a model that has thrived overseas, but has not yet been tested in Australia. The Bonza team says its low-frequency model will allow it to offer extremely low fares starting from just $50, while its point-to-point leisure destinations, many of which are not yet covered by Australia’s airlines, will stimulate new growth in a long-stagnant domestic market.

Underestimated by peers

But after decades a domestic duopoly, and one year after Rex’s dramatic expansion into domestic Boeing 737 operations, Bonza’s entrance has not been warmly received to say the least. Back at the conference, dressed in his own sleek black suit and apt red tie, the contrast between the leader of Australia’s largest airline group, Qantas CEO Alan Joyce, and his small, newfound leisure competitor, could not be starker. And yet, Joyce all but declared war against Jordan’s Bonza, should it attempt to move on any of Qantas’ market share.

“There are some wonderful and experienced aviation professionals available out there who are looking to get themselves back into the industry.”

Joyce notes that while the airline would always operate within the ACCC’s competition framework, Qantas would not hesitate to actively take on Australia’s newest airline. “I think the ACCC are one of the most effective competition authorities in the world. But at the same time, it doesn’t mean you can’t be competitive, of course you can,” he says. “And are we going to be competitive, to defend our turf, and make sure that we offer the most competitive product and service and airfares? Of course, we are. I’m sure Bonza assumes that.”

Earlier, Rex deputy chairman John Sharp was among the first to publicly acknowledge, and disparage, Bonza. Given that Bonza is set to be a leisure carrier operating largely from regional airports, this makes perhaps a more appropriate rivalry, particularly in light of Rex’s recent operational ramp-up. Speaking at the Future Flying forum in November, Sharp suggested – having just navigated Rex through the regulatory processes of scaling up its own operations to including Boeing 737 flights between capital cities – that Bonza’s eight-month timeline was severely optimistic. “Bonza is claiming that they will be in operation early next year,” he says. “And yet to do that, they’ve got to get a high-capacity air operator certificate, and you won’t get that in under 12 months – if you can do it in that time. So, their start date I don’t think is ever likely to occur.” Sharp was also among the first to ask the pressing question: if there was a market for these flights, wouldn’t someone else have already made their move?

Sharp also questions what routes Bonza could possibly be considering that the incumbent airlines don’t yet focus on, that can handle a 737, and that have adequate demand to feasibly sustain a new market entrant. “That’s a mystery to us … what are those markets?” he asks. “If they are worth servicing, Qantas, Virgin or Rex would be in there doing it.” Optimistic timeline and network aside, Sharp also appears unenthusiastic that Bonza would make it off the ground at all, in light of the fate of similar potential start-ups. “I’ve been in this game a long time,” he says, noting that “every couple of years” an enthusiastic team, often ex-airline workers, would pull together a plan to launch and run an airline. “They make lots of publicity, and then the reality of the situation dawns on them and they just quietly disappear,” Sharp says.

Meanwhile, earlier this year, Virgin Australia chief executive Jayne Hrdlicka publicly shared her concerns that Bonza’s low-cost, low-frequency business model may not translate into Australia. “If you’re connecting two cities that have never seen a connection before, if you’re flying it twice a week, it’s very hard to build an underlying presence in that marketplace,” she says. “The way that’s done in Europe and in the US and Canada, it’s a huge market with millions and millions of people and you can approach that with group tours and things like that which don’t really exist in the same way in Australia.” Ultimately, Hrdlicka called Bonza’s strategy an “interesting idea” and “a different approach”. “We’ll just see how it plays out,” she says.

Within six months of Bonza’s soft-launch, Jordan has already gotten himself a golden ticket to speak at one of the country’s largest aviation industry events, and sent his would-be rivals into a tizzy. This all raises the question, who is this guy, and are we right to underestimate him?

The man in charge

The 53-year-old industry veteran has spent over three decades in the aviation business, working in everything from accounting, to sales and marketing, to network planning. In 2002, Jordan was appointed head of commercial distribution at Virgin Blue, and later served as the airline’s chief commercial officer. He went to hold similar roles at other airlines throughout the Asia–Pacific region, including Cebu Airways and Go Air. 

Before taking the helm of Bonza in mid-2020, Jordan was based in Kazakhstan, of all places. He had just spent the better part of two years pitching, planning and launching the country’s first-ever low-cost carrier, FlyAyristan, as the airline’s Managing Director. “FlyAyristan is a low-cost subsidiary of the Air Astana group, so it was like I was establishing the Jetstar equivalent in Kazakhstan,” Jordan says. In fact, thanks to the introduction of FlyArystan, Kazakhstan is now already one of the fastest-growing domestic aviation markets in the world. 

It was at this point in his life, standing in his kitchen in Kazakhstan, and just months after the global pandemic decimated the global air travel industry overnight, Jordan turned to his wife and said, “It’s now or never for Bonza”, so the story goes. Jordan said the FlyArystan experience provided “interesting learnings”, the key one being: “no matter where you live, you really want to fly. 

That aspirational need and want to explore near and far, that doesn’t change wherever you are in the world,” Jordan says. “So, you’ve just got to have a model and a pricing mechanism, which allows for the market to fully extend itself, so that people can actually do that. That’s what FlyArystan did and that’s what Bonza is going to do.”

According to Jordan, that the dream of Bonza, as a uniquely Australian brand and business model, came about over a decade ago, however he had to bide his time until he knew that dream could finally come to fruition. Then, after the demise of Tigerair during Virgin Australia’s administration in April 2020, a window of opportunity indeed opened.

Bonza’s tagline – ‘Here for Allstralia’ – epitomises the Bonza branding. The name Bonza itself is derived from Aussie slang meaning ‘great’ or ‘well executed’. Meanwhile, the customer experience will heavily focus on Bonza’s Australian roots, from a 100 per cent all-Australian onboard menu, to Bonza-branded budgie smugglers available for purchase in-flight. The tagline also encapsulates Bonza’s goal to directly connect corners of Australia that would never see a direct connection under a competitor.

A pandemic of opportunity

In fact, Jordan says not only did the pandemic, and collapse of Tiger, leave a hole in the domestic low-cost travel market, but presented a sea of new opportunities for Bonza that could not have occurred otherwise. In light of the COVID-19 crisis, thousands of professional, experienced aviation workers were stood down or made redundant, and are now in prime position to take on new roles at an up-and-coming competitor. Jordan said previously that if Bonza had launched two years ago or more, securing experienced aviation workers would have been considered more of a “hurdle” for the start-up, “whereas now it’s an opportunity for us”. “Now there are some wonderful and experienced aviation professionals available out there who are looking to get themselves back into the industry,” he said. 

Meanwhile, as airlines and employees continue to battle in court over post-pandemic enterprise agreements, Jordan says other applicants are simply choosing to jump ship. “We have applicants from all sorts of backgrounds,” he says. “Some who lost their jobs during COVID, some existing team members from other airlines, and some who were stationed at airlines overseas and are now looking for an opportunity to take a role back home.” “There’s certainly been some some existing team members from other airlines reaching out to us, that’s for sure,” he adds.

In another major opportunity for Bonza, capitalising on not only the pandemic but on Boeing’s massive two-year PR nightmare around its embattled 737 MAX aircraft, Bonza has secured up to eight brand new leased MAX jets, and is set to begin flight operations on a fleet of up to five of them. “The configuration, the efficiency and the availability of the MAX” make the aircraft an “absolute bonus” for Bonza, according to Jordan, who was initially anticipating that, like most start-up airlines, his would begin operating with a fleet of mismatched, older second-hand aircraft. Instead, the current operating environment allowed Bonza to secure brand-new 737 MAX 8s for a great price. Jordan says while outright costs are lower, maintenance on an older fleet would contribute to higher operating costs down the track, so the ability to lease new aircraft will make all the difference for Bonza.

“We were initially setting out a business plan, and the lease costs involved to sustain our operations, we thought that we would be leasing used aircraft, maybe five to 10 years old,” Jordan explains. “So, what we’ve ended up with is a far improved outcome.” Thanks to the ultra-fuel-efficient 737 MAX, the company’s forecast fuel burn is set to be “significantly lower” than anticipated, and clinching a good deal means the airline can boast a consistent fleet right from the get-go. “We’re going to the market with brand new aircraft, aircraft which are all configured the same way,” Jordan says. “This all allows us to have a great product going into the market and a much better product than we probably would have been envisaged two years ago.”

A serious contender

It wasn’t until over a year after Jordan left Kazakhstan that Bonza was announced to the world, in October 2021. The announcement was met with an understandable amount of scepticism, but also swathes of excitement. Now, Jordan was hardly the first eager would-be-airline founder to attempt to drum up buzz around an impending launch, but he has been by far the most successful of recent history, polo shirt and all.

Over the months that followed, Bonza in fact proved itself to be quite different to other airline start-ups of the recent past, such as former pilot Brad Coombe’s ‘brad’, which failed to receive any notable public or media support. Bonza’s Jordan came out swinging with a clearly defined business plan, buckets of experience founding and running airlines, and – far more importantly –  money in his back pocket.

Unlike other would-be start-ups, Bonza had already earned the support of US private equity firm 777 Partners before its name had ever been uttered in the public sphere. Notably, Miami-based 777 Partners is no stranger to the low-cost airline game, after it purchased a 25 per cent stake in Canadian ultra-low-cost carrier Flair Airlines. The private equity firm also purchases aircraft in order to lease these to the airlines it invests in. This fact allowed Bonza to boast a fleet of brand-new jets before even producing a concrete route network.

So, with the backing of a multibillion-dollar global private equity firm, straight off the bat industry and media alike knew the Bonza – and Jordan – were serious contenders. In the weeks after Bonza broke cover, the airline dominated the headlines as Jordan began the media rounds. Within a fortnight, the airline’s executive team was announced, brimming with highly-professional and experienced aviation executives. In recognition of Bonza’s sincerity in its launch plans, by December, Bonza was invited to join its soon-to-be rivals and attend the CAPA Australia Pacific Aviation Summit in Sydney, to divulge the details of its so-called “Bonza-sized opportunity”.

The Bonza model

Analysts, commentators, and other airline CEOs, have all questioned whether the Australian market has the capacity to support another domestic airline, particularly after so many others have tried and failed in the past. And yet, from day dot, Jordan has spoken confidently of the “Bonza-sized opportunity” that exists in the Australian domestic aviation market. 

“From a strategic perspective, as one of the largest 15 domestic aviation markets in the world, Australia is an outlier. It’s the only market that has just one low-cost carrier and no independent low-cost carrier. It doesn’t make any sense,” Jordan says. He also points to the fact that Australia’s affordable domestic aviation market has seen zero tangible growth in the last decade. “Back in 2010, Australia had 58 low-cost domestic routes in operation. In 2019, before the pandemic, Australia still had only 58 low-cost domestic routes in play. To put that in perspective, looking only at the low-cost market in North America, growth in the same time period was 256 per cent,” he says. “The market hasn’t grown in the same way that macro-economic indicators suggest that it should have done over the last 10 plus years, and that is largely driven by a lack of independent low-cost operators in the market. So that’s the Bonza-sized opportunity here that we’re going to fill.”

Bonza’s business model is marked by ultra-low-cost fares, low flight frequencies, and point-to-point routes that bypass unnecessary and time-consuming connections in capital cities. While a model such as this has never been trialled in Australia, it is not entirely unique. It is largely shaped off of similar business models in place overseas. “Think Allegiant in North America, or our sister airline Flair in Canada,” Jordan says. “We also really like the Jet2 model in Europe, and the place they’ve carved out in what is a very, very competitive market, with a very successful and profitable low-cost leisure network.” 

Critics would argue that the population of the US, Canada and Europe are all far larger than that of Australia, however this is where Jordan says Bonza is inspired by these models, rather than dictated by them. “Of course, we’re not going to be exactly like one of those carriers. We’ve got to fit our own backyard with our strategy,” he says. “We wouldn’t 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’.”

Bonza’s initial network under this model consists of 27 routes to 17 destinations, out of its dual bases in the Sunshine Coast and Melbourne Tullamarine Airport. Significantly, Bonza has said from day one that it has no intentions of flying the so-called ‘Golden Triangle’ that directly connects the east coast cities Brisbane, Sydney and Melbourne, largely known to be the most profitable routes in Australia given the sheer amount of demand. That isn’t to say that Bonza won’t fly to or from the capitals, but it plans to stay true to its point-to-point regional and leisure customer intentions. As such, the airline’s initial network includes flights to and from: Albury, Avalon, Bundaberg, Cairns, Coffs Harbour, Gladstone, Mackay, Melbourne, Mildura, Newcastle, Port Macquarie, Rockhampton, Sunshine Coast, Tamworth, Toowoomba Wellcamp, Townsville and the Whitsunday Coast. Bonza claims that of its initial network, 81 per cent of routes are currently unserviced by any other airline, such as Melbourne to Rockhampton, Tamworth to Sunshine Coast, and Toowoomba Wellcamp to Whitsunday Coast.

Where’s Brad?

In May 2021, just months before Bonza’s unveiling, former Compass and Trans Australian Airlines pilot Brad Coombe launched a public crowdfunding campaign to bring ‘brad’ to life. Pegged as a low-cost “people’s airline”, Coombe was hoping launch the first brad flights by mid-2022, after working on the project since 2015. In order to achieve this, he set out to raise $2.9 million through public donation in exchange for free tickets aboard his future airline. The money, he said, would be enough to lease brad’s first aircraft and achieved the airline’s Air Operator Certificate. However, as of May this year, the campaign achieved just $3,620 towards its goal, and Coombe has quietly stepped away from the public eye.

An educated guess?

If you’re going to come for Qantas, Virgin and Rex, in spaces they’ve never targeted, you must be fairly confident in what you’ve got up your sleeve, right? Well, interestingly, Bonza’s initial route network did not come as a labour of intensive on-the-ground analysis, nor as a result of great insider knowledge into where Australians want to travel. Instead, the network was put into place on the basis of two thing: population and airport slots. “I’d love to be able to cite some really complicated, clever formula. I won’t. There isn’t one,” Jordan says. “We won’t get everything right and we’re not that foolish to say that we will. Hopefully, we get most of it right, and I think we will get more things right than wrong. But there will be some markets that we put out there, which over time, may not be sustainable. So, the starting point is: what is the catchment population for these centres? And based on that, and based on reasonable stimulation assumptions, what can we sustain in terms of frequency levels?” 

And yet, Jordan is confident on what Bonza has up its black-polo sleeve. With the financial backing of a major global and aviation-driven investment partner, Jordan feels entirely comfortable that Bonza has the space, and resources, to test and perfect the Bonza model in Australia for the first time, regardless of initial demand and feasibility. 

“Our major investment partner is 777 Partners have assets under management of just under US$6 billion,” he explains. “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 6 billion assets under management says that they’ve got deep pockets. I think that puts us on a very firm footing in terms of what we’re executing in the market.”

As is always the case in aviation, airport slots obviously also played a large role in Bonza’s initial route network announcement. In October, Bonza sent out expressions of interest to 46 different Australian airports flagging its desire to operate to and from that airport. While Jordan says that the response to this was largely positive, there was a glaring omission from Bonza’s initial network – Sydney. As the country’s largest city and busiest airport, serving 20 per cent of the Australian population, it would seem pertinent for a new market entrant to have a presence in the NSW capital.

“There’s added complexity with Sydney,” Jordan told the Australian Aviation Podcast in February. “Slot usage by other carriers, who perhaps hold slots and don’t use them all, that’s an added complication that we don’t see anywhere else in our current network, and it’s definitely an impediment to new entrants like ourselves.” Jordan added: “But we do plan to introduce Bonza purple into Sydney, if we can reach the right commercial terms, and get appropriate slots to match.”

It appears that an airport’s ability to support Bonza – as opposed to the other way around – will continue to play a huge part in the make-up of the future Bonza network. Jordan says his team approached 46 domestic and regional airports in the lead up to Bonza’s network announcement. Of the 17 destinations that made the initial cut, each were asked, “Just how enthusiastic are you to house a Bonza service?” Again, speaking on the Australian Aviation Podcast, Jordan said that airport fees were a major factor in whether or not an airport made the cut, and that moving forward, the airline is prepared to walk away from airports that don’t come to the negotiating table.

Jordan said airport charges are the “single largest cost” for airlines, and airports that want to benefit from Bonza’s low-cost leisure customers will need to be competitive. “Really low fares don’t happen under the off-the-shelf pricing of airports, and we can’t work with that level of pricing for our business model. So yes, we have an intention of going across the country, in terms of serving all states in all territories, however, the onus is on the airports to get necessary pricing to support price-simulated travel,” he said. “If there’s a capital city with an airport that’s going to say, ‘Well, our pricing is our pricing, bad luck, take it or leave it’, I actually think that those communities will be pretty unhappy with those airports. Because they’re going to miss out on what will be price-stimulated travel. And that’s really great for tourism, and markets into and out of those particular cities.” 

He also said if airports won’t drop to a competitive level, that “it would be wrong” for Bonza to operate there, “knowing that we’re going to fail”. “If we can’t get the necessary pricing model, we’d rather not do it. We can deploy it elsewhere. We’re not short of choices.”

But if Bonza is successful in its goal to “grow the pie” of Australia’s domestic air travel market – that is, bring in new customers that would traditionally not have chosen to fly – then surely it is in the industry’s best interest to support.

Tim’s take

And yet, airlines and media alike have heavily criticised Bonza’s bullish attempt to launch, and join the exclusive ranks of Australia’s tight-knit aviation game. Despite this extensive criticism, Jordan has consistently proven to take the moral high-road in response – much to my surprise, and perhaps dismay. 

The first time I asked Jordan for his thoughts on the public response he replied simply, “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.” Most recently, I asked Jordan specifically about some of these instances in which Bonza’s plans were publicly brought into question, and yet he still responds with far more grace than would likely ever be afforded had the shoe been on the other foot: “This industry is very small, and it’s very hard. Particularly now, after the last two years that we’ve seen. In terms of Bonza, we’re looking at doing something really different to these other players, this isn’t about taking traffic from anybody else.” He adds, “We’re all in this together and we will continue to appreciate what the other airlines do, and we will continue execute our own plans as well as we possibly can.”

While many are planning on Bonza’s failure, perhaps another more pressing problem presents itself, should the would-be airline succeed. If this new carrier can walk into the market, drum up brand-new business on routes that have never been tested, and do so profitably, what on earth is to stop Qantas, Virgin and Rex from moving in on Bonza’s new territory?

In fact, in the months since Bonza’s unveiling, airlines have already made moves into what could be considered Bonza-esque routes. In November, Qantas announced new regional routes connecting Adelaide and Newcastle, as well as Wagga Wagga and Brisbane, serviced by regional subsidiary QantasLink. One month later, Virgin launched a number of new direct routes to the Gold Coast, including from Cairns, Hobart and Launceston, while Rex has reinstated its own Boeing 737 operations connecting Adelaide and the Gold Coast.

Despite this, and Qantas’ earlier threats of war, Jordan has suggested that while bigger, more established airlines “may well” attempt to encroach on his start-up airline’s planned routes, he sees little point in their efforts. “Most of these markets are currently unserved by any carrier,” he reiterates. “I guess that suggests that, from a market perspective, certainly for incumbent airlines, that the markets are not sufficient to support their existing cost basis. But we are going to be bringing a very low-cost product to the market which won’t allow other operators to drive the same degree of demand.”

Jordan has previously suggested that Bonza’s ticket costs could, on average, come in at around 40 per cent below the fares of other existing carriers, with an entry point of $50 for a one-way ticket. At this price point, Jordan says a mid-tier or full-service carrier is likely to find it difficult to compete – or do so at their own peril. Additionally, Jordan places unwavering faith in Australia’s competition watchdog, the ACCC, to allow it space to launch and thrive.

“There may be some Bonza routes that other airlines decide to service – but that’s just market growth,” he says. “If that became many, many routes, then at that point, the competition authorities may take a different view of that, and question whether someone is taking a different strategic intent towards those particular markets. I think any airline operating a market has to be able to validate that the fares that they’re offering are actually in line with their cost base. And whether that’s the case, time will tell,” Jordan adds.

In fact, Jordan almost laughs at Qantas and Virgin’s reluctance to welcome Bonza, given how vastly different their business models will be. He reiterates that Bonza’s model and customer base will vary quite significantly from the likes of theirs, which therefore makes it even more unlikely that they will be directly impacted by Bonza’s entrance. “We’re not talking about markets which are flown two, three or four times a day. We’re talking about markets which are flown two or three or four times a week. Even if someone did enter the market, the chances of them actually operating on the same days, at the same time as us are very unlikely. And if they did, then, you’d imagine that would also be a bit of a red flag to any competition authorities,” he says.

Overall, Jordan remains unbothered by other characters not yet seeing the benefit of Bonza. Instead, he remains ever-confident that Bonza’s plan to “grow the pie” of the domestic air travel market, and encourage broad swathes of the population that today would opt for 10 hours in the car to instead jump onboard an aircraft to get to their holiday destination. “We’re looking to execute in a brand-new market for Australia,” he says. “I think there is generally a realisation now, especially now that we’ve announced our first 27 routes, that we actually are going to be doing something very different. This isn’t about taking traffic or market share from anybody else; we’re going to increase the overall number of people travelling.”

As is always the case, time will tell what the future has in store Bonza, but Jordan remains confident as ever that this start-up is going to be a real gamechanger. “I won’t pretend to say that what we’re doing at Bonza is easy. If it was that easy, and that obvious, the opportunity wouldn’t be there,” Jordan says. “But we’re very confident in what we’re bringing to market, largely because it is so different. This is a tough industry. But what we are doing, is adding to Australia’s evolving aviation story, and we’re making a mark here in Australia.”