Opinion: Are our skies big enough for more airlines?

Dear reader, I want to assure you, first of all, that there was no crack of thunder or ominous chord behind me as I – heedless of the danger – committed those words indelibly to paper.

Fast-forward a year and, well, we all know what’s happened: Bonza spectacularly collapsed into voluntary administration as lessors seized its planes. At the time of writing, the airline remains under the control of administrator Hall Chadwick as it tries to find a buyer, and we have no idea what’s going to happen next – by the time this issue hits your doorstep, Bonza might have been saved, or liquidated, or conquered by Martians for all we know.

But regardless of its fate, a lot of people will be asking the question: was the idea flawed from the start? Is there even room for another low-cost carrier in Australia?

Let’s have a look at things as they stand at the moment: assuming Bonza is toast, Australia will once again have only one true low-cost carrier. This would of course be Jetstar, given Virgin targets mainly the mid-range market.

Jetstar is a massive success story in low-cost carrier terms – but Jetstar has the big advantage of having the backing of Qantas, which is still Australia’s biggest airline. Could it survive on its own, for example, if Qantas were somehow forced to divest? Probably. Australians have an appetite for cheap flights if Jetstar’s $2.486 billion in revenue over the six months to 31 December 2023 is anything to go by.

Has Australia supported two low-cost airlines before? Well, yes – Tigerair was still flying as little as five years ago. Of course, for much of its time in our skies, Tiger was an arm of Virgin Australia, which used it as its own answer to Jetstar up until Bain Capital wound it up in 2020 after COVID-19 forced Virgin into administration.

Virgin probably won’t have the appetite for its low-cost arm again, given its shift to a more hybrid model – which may strike some as ironic, given Virgin itself was a low-cost carrier when it came to Australia as Virgin Blue in the early 2000s and was able to capitalise on the demise of Ansett.

All of that said, we can’t exactly do an apples-to-apples comparison of Bonza with Jetstar, Tiger, or Virgin Blue, because Bonza wasn’t trying to be any of those three. While Bonza’s average load factors between January 2023 and April 2024 were around 70 per cent, compared to Jetstar Domestic’s 88.5 per cent in the back half of 2023, Bonza was only competing directly with Jetstar on a handful of routes, with most of the rest being new services not operated by other carriers.

Many of these were routes that nobody had considered flying before, and by all accounts, at least some of them were working – Albury–Sunshine Coast being one surprise success. While some of the skinnier routes may have been better served by smaller planes like E-Jets or Dash 8s, filling on average 70 per cent of the seats on a 737, between regional destinations, with an app-first booking strategy – and in your first year – is noteworthy. Should Bonza go bust for good, other airlines might (and hopefully will) look seriously at picking up those routes it proved were viable.

The fact is, Australia does need more competition in domestic aviation, which is still dominated by the behemoth that is Qantas Group – Qantas and Jetstar combined carried 61.8 per cent of passengers in December 2023, with Virgin a distant second at 31.2 per cent and Rex trailing at 5.3 per cent (Bonza, if you’re curious, carried 1.7 per cent, though that’s unsurprising considering for most of the month it had all of four planes in the sky).

More competition means more choice for consumers, which means lower airfares – and in the regions, where airports were falling over themselves to entice Bonza to fly there, it often meant finally being able to travel cheaply to where you wanted to go, rather than having to take expensive diversions through capital cities.

Whether it lives or dies, there’s no denying Bonza has blazed a trail – and if it falls and people conclude it was doomed from the start, and nobody picks up the routes it proved could work, the Australian aviation sector will have learned the wrong lesson from its demise.