The focal point of the airline appears to be regional leisure routes using Boeing 737-Max 8 aircraft. The Max-8 has a seat count of 162--210 and a runway take-off requirement that varies depending on temp., elevation, load and weather. This runway requirement could be challenging for some regional airports. The aircraft has a range of 6,500km so it covers all AUS city pairs.
I think the owners of Bonza have seen (1) Tigerair exit the market taking 7% of the market with it, (2) the size of Jetstar's CASK, and (3) the expected demand for an AUS leisure holiday over the next 12-24 months as many Aussies choose to holiday at home. (1) + (2) + (3) = you little ripper. Bonza in fact.
Let me elaborate on (2). The figure below indicates by world standards that Jetstar has a relatively high unit cost (CASK) for a LCC. The airline with the lowest CASK adjusted for sector length in the world in 2019 is Ryanair. Bonza would love to have its CASK of 2.8 US c/ASK but I think that is out of its reach given its lack of scale. Bonza is probably looking at a CASK that is closer to that of Spirit Airlines which is around 4.3 US c/ASK. After adjusting Jetstar's CASK for sector length, this will give Bonza a 2 US c/ASK cost advantage over Jetstar.
If I were a betting man, I think Bonza could take Jetstar head-on on key tier 2 leisure routes such as Ballina, Maroochydore and Hamilton Island (amongst others) if it can secure a cost advantage of 2 US c/ASK.
It may also head in a different strategic direction and open up completely new routes involving airports like Busselton, Merimbula, Port Macquarie, Coffs Harbour, Broome and Devonport. I really like the Merimbula (MIM) option because not only is it an amazing tourism spot but it is equidistant from MEL and SYD and can also cater for the CBR market.
If Bonza does decide to open up new markets that are relatively short sectors, the big question will be whether it can take cars off the road. The way I analyse this issue is to establish for each potential passenger whether the following holds:
P-AIR < P-TIMEx(Time-Car - Time-Air) + P-Car
where P-AIR = airfare, P-TIME = cost of time, Time-CAR = journey time by car, Time-Air = journey time by air, and P-Car = cost of travel by car per PAX. This inequality says that a passenger will go with air if the fare offer is less than the additional time opportunity cost of car travel plus the explicit cost per PAX of car travel. A critical parameter in this is P-Time. To see this, consider a family of four who wish to travel from SYD to MIM. The air time is 1 hr and the car time is 6 hrs. The car cost = 72 c/km (from ATO) or around $100 per PAX. If the time opportunity cost is $20 then the inequality is:
P-AIR < 20x(6 - 1) + 100 = 200
Bonza can attract this family if it offers fares below $200. The fare offer is higher if P-TIME is higher. Now that's Bonza (must be said like Steve Irwin)!
https://www.linkedin.com/posts/drton...038556160-rHGu