Airport expenses will play a big part in their cost base. They'll be looking to negotiate some serious deals with these regional airports. And I think these airports will play ball. They may likely offset charges with economic benefit by increased tourism traffic to their centres. It may or may not happen. The demand is there if the price is right. Bonza will have a very low cost base. They'll do that because they will base their office in regional Australia with likely heavy government incentives be it tax or other means.
They'll have a lean head office and they'll offer lower renumeration levels otherwise required to fund capital city employees. That will include crews, who I suspect will be regionally based teams too. All ground support will of course likely be fully outsourced. They can build their model from the ground up. Leveraging the best technologies available today. No legacy pain. Scale as required.
777 Partners has deep pockets and will enable Bonza to adjust their aircraft scaling as they see fit. No fixed commitments to ASK growth. An advantage that's never available to any other airline here. They'll also have very low maintenance expenses since the aircraft will be brand new for several years. And being solely independent - they won't have to do anything anyone else expects or directs them to do, which is what occurs with Jetstar and occurred with Tigerair. 777 Partners isn't private equity. They'll be in this for the long-haul.
They may look at capital cities in time if the price is right and it makes sense to do so.
I think this might just work.
Originally Posted by PoppaJo
The whole ULCC and LCC model is basically unviable with oil above $100.
That's really dependant on your cost base and how well one hedges.