‘We’re not about prodding the other guys’ says Bonza CEO

Qantas’ chief executive Alan Joyce has played down its chances, but Bonza CEO Tim Jordan looks set to prove him, and other industry figures, wrong. At the time of going to print, the airline sold 10,000 seats after just 10 days on sale.

Here, Jordan discusses starting operations and how the airline will grow in the months to come.

How much of a blow was it not to have been able to launch before the busy Christmas period?

We’re here for the long term, and our investors are here for the long term. It’s not about one Christmas — it’s about all Christmases to come. With the best will in the world, even if we had been around just before December, the amount of flying that would have been able to be put into Australian skies would have been very limited. Now we’ve got the big purple tick of approval, we’re happy to move to a new stage. But in the overall scheme of things, we’re looking forward. We won’t spend too much time looking backwards.

Bonza was put in a challenging position whereby it wanted to launch as soon as possible but also had to respect that CASA would take its time in signing off its licence to fly. How did you approach that?

The process is thorough, as we would all expect. And I’m pleased we got the result, which was very well received!

How do they tell you the news? Do you get an email or a call? Because everything comes down to this moment.

We conducted proving flights during the first week of January and thought they had gone well. It was a Thursday afternoon, and I was pacing. And then, an email came into my inbox that I will always remember.

How quickly can you start your network, and how will it work?

It will be staggered. The teams are currently going through when we can start flying and making sure that it’s planned in a very methodical and appropriate way. Part of that is ensuring that our e-commerce platform is ready and loaded. Over the coming days, we’ll step out and go on sale with our Sunshine Coast-based aircraft. And then new aircraft deliveries for our second Melbourne base will come to us later this quarter, and we’ll launch soon after that.

Before you launched, you said fares would be as low as $50. With the war in Ukraine pushing up oil prices, rising inflation and staff shortages across the industry, will you be able to keep that promise?

We will be close to the headline numbers previously put out there. We have the most fuel-efficient fleet in Australian skies, which is a bonus, and we have the youngest fleet. You don’t need to put your brand-new car into servicing quite as regularly as something much older. So there are benefits with us coming to the market with brand-new aircraft.
There is certainly cost of living pressure everywhere that may have some impact in terms of the pricing, but it’s going to be manageable. If filling up your car costs you a small fortune, that leads more customers towards flying. So there is a ‘halo benefit’ in that regard. Why pay 50 or 60 bucks to drive for six hours when you can fly in less than an hour?

As a world, we’ve been tied down and locked down. The pent-up demand is being released, but it’s still there. The high cost of international flying is certainly a barrier for most people. And so domestic aviation will see a benefit from that. The other thing about the cost of living pressures is that the low-cost carrier industry is incredibly robust. Budget airlines tend to recover quicker when it comes to shocks and crises. We’re very fortunate to be a low-cost carrier and the only independent low-cost carrier in the country.

We’re seeing incredibly high prices across the domestic industry. Not only is the average price higher, but we’re also seeing next to no discount or sale tickets. Qantas, Virgin, and Rex would say this is not their fault and entirely the result of capacity constraints. The argument against this is obviously that these airlines are also making record profits at the moment. What’s your view?

It’s wrong of me to comment on the business strategies of other airlines. Our strategy is about market stimulation. It’s about generating new markets. We’re going to come at this from a different viewpoint, which isn’t a case of how much we can charge. It’s more a case of how little we can charge, and that’s a different viewpoint from some others. But the other carriers are very successful airlines in their own right, deploying their business model as they see fit for their business strategy. And all credit to them for doing so.

What would you say to the sceptics who said your business model wouldn’t work in Australia?

Everyone can share their feelings. But we’re about price stimulation. We’re about to bring low-cost fares into many of these markets for the first time. It’s also looking at the rest of the world and taking that experience and saying, ‘If there were low-cost fares available, would the market travel?’ History shows us that where there have been low-cost fares, the market does stimulate. Now, that’s going to work for our business model and the way that we fly. It doesn’t work for the other carriers and their business models.

The argument is: until you put a flight on, how can you possibly know there’s demand? Is that a philosophy you guys would agree with?

We’re going to learn a lot very quickly. Since Compass Airlines, the population of Australia has increased by 50 per cent. Since Virgin Blue launched 21 years ago, the population of Australia has increased by more than a third. That lends itself to exactly what we’re doing. We have a large degree of confidence in our actions. But you’re right. We will find out pretty soon.

Do you have long-term plans to take away routes that aren’t performing and add extra routes? How do you see that evolving?

Yeah, and that’s what our industry should be doing. Moreover, low-cost carriers are particularly nimble. They don’t sit and suffer silently for too long when it comes to routes. They do move if they have to. One of the things that infuriates me about this wonderful industry is we probably need to take advantage that our factory moves. If you’re in manufacturing and put a factory in a location, you’re stuck there. Our factories move, so if something’s not working, let’s move it. Let’s move our capacity somewhere else. And we don’t do that readily enough or quickly enough as an industry. The vast majority of what we put out there will work. Some of it may not. But we will learn from that. And we will learn quite quickly, and we will change it if necessary.

We have across all industries a talent crisis, exacerbated by people being made redundant during COVID-19. How did you find getting the right people on board? Was it a challenge being the new kid on the block competing against Qantas, Virgin and Rex?

Not overly, to be quite honest. We have unique appeals as our first aircraft base is on the Sunshine Coast. To live and work there is pretty good, especially if you are travelling to work on the Bruce Highway for three hours. We’re also able to attract people returning to Australia after working in Asia or the Middle East and various other locations worldwide. So it hasn’t been as tough as many people would have been thinking.

Your Aussie branding — including calling your aircraft Bazza, Shazza and Sheila — has generated lots of free publicity. It seems to have really cut through.

Yes, and credit to the team. But it is absolutely part of who we are. We are different, so we needed to make sure that it was recognizable [sic]. But that degree of recognition only happens if you resonate with the customer base. It’s giving us a huge degree of confidence in all of these locations that what we’re doing is hitting the spot. And there is a market out there for exactly what we’re going to put into the marketplace. Many people are enthusiastic and standing by, ready to book seats for what we will be putting into place in the coming days and weeks. And that acceptance is partly driven by being very well executed. Still, it’s also partly through the product, and what we’re doing is accepted and acknowledged, very importantly, by the consumers in those particular locations.

So what constitutes success? How much of that plane do you need to fill in the first year to think we’re making a go of this?

I look at every empty seat on board as a lost opportunity. We have the ultimate perishable product when the aircraft pushes back from the gate. Our business model requires high load factors. It is a lost opportunity if someone’s not sitting in that seat. So I was lucky enough to be involved with the FlyArystan start-up in Kazakhstan. And we ran 93 per cent load factors in our first year of operation as a new low-cost carrier.

How big can Bonza grow? You’re starting with three 737 MAXs and will grow to eight. Is that the limit, or could it grow to be the size of a Virgin or Qantas?

The market is going to tell us very honestly. There isn’t anything predetermined there. The market will tell us if we’re successful at stimulating new demand, then great, we will be bigger. If the market doesn’t stimulate as we expect it to, then we will be much smaller. So really, there’s nothing predetermined. I despise ‘market share’ to measure our industry because too many people get locked into it. It’s about profitability.

What has been your experience of almost coming out of nowhere to be a major airline CEO?

We need to execute well and focus on ourselves as much as possible. Because if we do that, that gives us the best chance of success. And if we focus too much on others, maybe that’s a little distracting, and we’re wasting effort in other directions. We are not about competing with other airlines — 25 of the 27 initial markets are not flown by other carriers. This isn’t about prodding the other guys in any shape or form. That’s not necessarily the case between the other operators in the market whereby they’re going head-to-head. So we’re focusing on executing well ourselves. Hopefully, our customers will get to see that.