When Bonza chief executive Tim Jordan launched Kazakhstan’s first low-cost airline, FlyArystan, in 2019, he shocked local taxi drivers by charging lower fares than an alternative six-hour ride. by car to a regional center.

With fares starting at US $ 13, it’s no wonder that within 10 months of launching with just two planes, the airline had carried over a million passengers, mostly first-time travelers, with a rate 93% occupancy, above what any Australian airline achieves. .

The same formula applies with Australia’s first ultra-low-cost airline, announced this week, which is expected to shock more than taxi drivers.

According to Gus Gardner GARDNER, London travel and tourism analyst Gus Gardner GARDNER, Bonza will be a major disruptor “because competition between airlines has remained weak and underserved communities have suffered”.

“Bonza Airlines will provide vital low cost competition in a market dominated by full service which could be a disruptive force,” said Mr. Gardner.

“The new entrant’s strategy to connect underserved airports and target leisure travelers could make the airline a strong competitor in the coming years. “

Growth is certainly on the radar with Bonza’s backer, Miami-based investment firm 777 Partners, increasing its 737 order from 24 to 38 in recent months with 60 options.

Rick Howell, aviation investment director of 777 Partners and executive chairman of Bonza, told AirlineRatings.com that he is focused on “creating long-term value through smart people who can profit from missed or unloved opportunities ”.

Bonza’s business model is similar to that of the ultra-low-cost U.S. airline Allegiant Air, which has perfected serving routes that other airlines ignore.

Allegiant only faces competition on 18% of its 518 routes that cover 129 destinations across the United States.

In Australia, Howell says at least half of the routes Bonza will serve will have no competition and none will have a low-cost competitor.

Bonza’s model also mirrors the very low-cost European giant Ryanair which has opened numerous airports that are as small as 2,000m of concrete in a sunflower field and thus become the largest and most profitable airline in Europe.

There are a multitude of routes and centers in Australia that are overlooked for jet service.

For example, the only service from South Australia to Western Australia is from Adelaide to Perth.

Cities such as Broome, Exmouth, Kununurra and Busselton / Margaret River could easily support seasonal weekly direct services to and from Adelaide if the price was right.

Aside from Pt Hedland, Kalgoorlie and Karratha for FIFO, Victoria is only connected to Perth, Broome and soon Busselton / Margaret River, while NSW is connected only to Perth and Broome from Sydney for leisure travelers.

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There are dozens of route combinations that offer tantalizing possibilities, but a limiting factor may well be hotel capacity on the ground.

Mr Jordan told AirlineRatings.com the airline “is now in talks with 40 airports across the country” and interest is high.

Tim Jordan, CEO of Bonza at FlyArystan.

Rather than a hindrance, COVID-19 has provided Bonza Airlines with a great opportunity to jump into the current situation by helping its expansion plans to fill the void in Australian air routes, Gardner said.

“Bonza Airlines is well positioned to fill the void left by the exit of Tigerair and will put pressure on historical players, Qantas Airways and Virgin Australia.

“There is a vacuum in the market for a new low cost carrier, and Bonza Airlines fits in perfectly,” said Mr. Gardner.

The ultra low rates promised by Bonza will suit tighter household budgets perfectly. GlobalData’s third quarter 2021 consumer survey found that 77% of Australian respondents were “extremely”, “slightly” or “somewhat” concerned about their personal financial situation.

“The launch of a new low-cost carrier will be greeted positively by those looking for cheaper travel options. COVID-19 has strained travelers’ budgets and the urge to get away on vacation has increased dramatically.

“The low cost base, coupled with the expected pent-up demand for low cost flights, could see the airline quickly become popular.

However, it won’t be a dream race with Qantas Group and Virgin Australia expected to re-evaluate other routes they had previously ignored.

In response to the closure of international borders, over the past 18 months, Qantas Group has added 45 new domestic routes, including Perth to the Gold Coast, while Virgin Australia has added 12 new routes, including Perth to Hobart and Launceston.

Qantas also added capacity with a lease with Alliance Airlines for 18 94-seat E190 jets to service regional hubs, while Virgin Australia is providing nine more 176-seat 737s.

At stake is market share with Qantas chief executive Alan Joyce saying 70% is the line in the sand with Virgin’s Jayne Hrdlicka wanting 35% with Rex and his six 737s getting next to nothing.

This line was crossed because the ACCC’s fourth report on airline competition in Australia found that the Qantas group’s share of total domestic passengers fell from 74% in the December 2020 quarter to 69% in the March quarter.

According to Peter Harbison, founder of the Center for Aviation, there is going to be a “long period of readjustment” in the domestic air transport market.

He sees all the players flooding the market with the ability to secure market share with the resulting low prices.

“Passengers will be enticed by the price – especially in the first six months after the lockdowns are lifted,” Mr. Harbison said.

“It will be some time before we get stability in the market. “


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