Discount carrier Bonza has received approval from Australian authorities to begin revenue passenger flights, clearing the way for the country’s first new national carrier in more than a decade.
The Australian Civil Aviation Safety Authority issued Queensland-based Bonza an air operators certificate on Thursday, the regulator said in a statement. The certificate is one of the final steps for any new airline before it can begin carrying flyers.
A Bonza spokesperson said a launch date would be set and ticket sales begin “soon.” The airline had planned to begin flying late last year.
Bonza, which is backed by U.S. private equity firm 777 Partners, plans to offer flights on point-to-point routes targeting leisure travelers with new Boeing 737 Max aircraft. A planned initial route map unveiled last year, showed bases in Melbourne and the Sunshine Coast with routes connecting the cities to other leisure points. The airline plans to offer low-frequency flights at cheap fares, similar to Allegiant Air in the U.S. and Jet2 in the UK.
Tim Jordan, industry veteran and CEO of the startup, described its strategy in a 2021 interview as connecting “A to C without the B,” with A and C being smaller and mid-size cities and B Australia’s traditional hubs in places like Brisbane, Melbourne, and Sydney. Bonza aims to stimulate new travel, he added, rather than siphon passengers from the country’s existing airlines.
“The lid is being held on the market to a certain degree,” Jordan said when asked about competition in Australia, which has historically been dominated by two airlines. Capacity has grown at slower rates than in other mature markets because of, as Jordan saw it, a lack of new competition since Virgin Australia acquired Tigerair in 2013. Virgin closed Tigerair as part of its restructuring in 2020.
The Australian Competition and Consumer Commission (ACCC) said in a December market report that airline capacity was “not keeping up with demand.” The regulator found that airlines were holding back capacity in order to “manage resource challenges.”
Travel demand in Australia remains strong. In November, the country’s largest airline, Qantas Airways, raised its pre-tax profit outlook for the six months ending in December by A$150 million ($104 million) to A$1.35-1.45 billion. The airline’s fiscal year ends in June.
Bonza enters a still evolving Australian market. Qantas, and its budget subsidiary Jetstar Airways, has emerged a more dominant player while Virgin Australia continues to recover after restructuring during the pandemic. In addition, regional carrier Rex Airlines has added Boeing 737s and is challenging Qantas and Virgin on key routes between the country’s largest cities.
At the same time, Qantas and Rex are expanding in Australia’s contract and charter sector, particularly of “fly-in, fly-out” services to the country’s vast interior. Rex plans to expand these services in Queensland and the Northern Territories following its of National Jet Express in October. And Qantas is awaiting a decision on its proposed A$614 million takeover of Alliance Airlines; Australia’s competition watchdog raised concerns about the deal in August.
Qantas and Jetstar had a 61 percent share of Australia’s 4.7 million domestic flyers in October, according to the latest data from the ACCC. Virgin had a nearly 34 percent share and Rex 5 percent.
Updated with comment from Bonza.