New 'Bonza' LCC launches middle 2022 with B737 MAX
The whole ULCC and LCC model is basically unviable with oil above $100. These words came from an ex Irish loco boss that I once worked for.
The others have loyalty programs, contracts, corps, and the ability to hike prices to play it out.
Rex and Bonz will lose an absolute ****load if Fuel sat at such prices for the next year or two. More likely than not it seems. Especially in that they are only charging airport costs to fill the machine, let alone paying for fuel.
The others have loyalty programs, contracts, corps, and the ability to hike prices to play it out.
Rex and Bonz will lose an absolute ****load if Fuel sat at such prices for the next year or two. More likely than not it seems. Especially in that they are only charging airport costs to fill the machine, let alone paying for fuel.
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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.
That's really dependant on your cost base and how well one hedges.
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.
737-800/900 cost between $5000 and $10000 AUD per operating hour to run. The figure is wildly variable depending on mostly utilisation and economy of scale to bring down the huge fixed costs, but also sector length, crew cost and of course fuel price and maintenance. Council airport charges will be a couple of hundred bucks, security will be per passenger, which will be required at all ports due to the aircraft size. That figure does not include ground handling, airways, etc... The main airport costs will be the large end user ie Gold Coast or Cairns, who really won't give a dam about doing deals unless you are shuffling a lot of airframes in and out, one flight a day at minimum cots you will get shafted to freight apron with a container for check in, and still pay more than what QF do.
As far as head office costs, its more related to what CASA wants and the cost of compliance, what you want is irrelevant there. The next part is basing in the country you have to get people of high enough calibre to leave the city to work there. No point having a head office if its full of inexperienced monkeys with no idea. Just getting pilots to base in the country is hard enough let alone a high end business leader that's worth his salary.
Then you have to have a huge Marketing budget, LCCs require constant advertising to remind the public they are cheap, especially in the early days. No marketing, expect a dribble of passengers, that fluctuates with other airlines offerings. Anything is possible, but airlines are shoe string returns at best, in the Australian domestic market you are surrounded by large operators with economies of scale, meaning where you save in small streamlining, they save on just having lots of everything and bargaining power.
Good luck but all this sounds very naive.
As far as head office costs, its more related to what CASA wants and the cost of compliance, what you want is irrelevant there. The next part is basing in the country you have to get people of high enough calibre to leave the city to work there. No point having a head office if its full of inexperienced monkeys with no idea. Just getting pilots to base in the country is hard enough let alone a high end business leader that's worth his salary.
Then you have to have a huge Marketing budget, LCCs require constant advertising to remind the public they are cheap, especially in the early days. No marketing, expect a dribble of passengers, that fluctuates with other airlines offerings. Anything is possible, but airlines are shoe string returns at best, in the Australian domestic market you are surrounded by large operators with economies of scale, meaning where you save in small streamlining, they save on just having lots of everything and bargaining power.
Good luck but all this sounds very naive.
No doubt, the US especially is printing money and giving it away. The national debt figure has just been blown away by Trump and now Biden and is massive compared with the Obama days where they tried to block supply because of debt. Massive Covid stimulus on the back of GFC stimulus, it's starting to bite now and the economy has become used to living with high stimulus input. Add the stupid US/China Trade war and yes, the next few years will see US inflation go bonkers unless something drastic happens.
Australia has managed to remain almost fiscally sensible in all this, that does not mean we are immune, but much better off at a baseline. Still actual inflation, when you take into account all the things mentioned is through the roof. CPI is a silly measure of inflation as the government uses the supermarkets to cap basic item prices here so the number means very little. Ever wondered why milk stays $1 a litre? Bread $2 a loaf... so on, if inflation had affected those goods they should now be at least double those numbers and maybe significantly more.
Australia has managed to remain almost fiscally sensible in all this, that does not mean we are immune, but much better off at a baseline. Still actual inflation, when you take into account all the things mentioned is through the roof. CPI is a silly measure of inflation as the government uses the supermarkets to cap basic item prices here so the number means very little. Ever wondered why milk stays $1 a litre? Bread $2 a loaf... so on, if inflation had affected those goods they should now be at least double those numbers and maybe significantly more.
It should also be noted that a sizeable amount of US Debt is actually based on US Bonds owned by Americans I believe, although I may be wrong on that.
Don't forget that Clinton got debt to a manageable level and produced surpluses, then "W" got in and created more debt than all 41 previous presidents.
And just think how rich Australia will be when every house is worth $10 million. Heck, let's make it $100 million. And all the superannuation funds invested in residential housing will be worth $100 trillion. Heck, let's make it $1,000 trillion. What could possibly go wrong?
I own my own house, so bring it on. I can sell it and then move to France and buy a small walled village and run my own totalitarian regime. Or even Russia and become an oligarch and spend summer hunting with Putin.
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The main airport costs will be the large end user ie Gold Coast or Cairns, who really won't give a dam about doing deals unless you are shuffling a lot of airframes in and out, one flight a day at minimum cots you will get shafted to freight apron with a container for check in, and still pay more than what QF do.
Airports are wary of LCCs because they are here today, gone tomorrow. They are loath to provide infrastructure because the LCC will want everything, but want to pay nothing. LCCs also bring LCC problems, like LCC passengers, lowest tender GHAs, minimal staffing (if any) when things go wrong, etc.
Not saying Menzies are like that now but it does tend to reinforce the efficacy of the old adage....... "pay peanuts, get monkeys"....
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New Aussie start-up Bonza says more than 35 airports have so far expressed interest in hosting its flights as it collects bids prior to determining its domestic network.
Bonza hopes to start services in the second quarter of 2022 and is calling on airports that have not yet expressed an interest to do so before the closing date of November 15.
The start-up invited 46 airports it sees as potential destinations to bid for its services and is also talking with state and territory governments about a head office site to be based in a regional center.
“Bonza’s entry to the Australian market will bring more travel choices than ever to everyday Aussies and in turn, stimulate demand for regional destinations that have traditionally struggled with perceptions like distance and cost,’’ chief executive Tim Jordan said.
“We are moving at pace to have flights on sale, so we encourage airports to work with us now on finalizing our network.”
The call comes as the airline’s chief commercial, Carly Povey, started work on Monday and takes responsibility for airport partnerships.
Povey has worked with easyJet, Jetstar and UK start-up Jet2.com and said she had seen first-hand the impact low-cost carriers have on regional communities in terms of employment and economic benefits.
“Working to better connect the regions is so important and timely with the pent-up demand to see more of our own backyard,” she said.
“I encourage airports to challenge themselves to provide the best possible deal to secure their own future. It will help us not only with our launch network decisions but, critically, with a projection of future growth potential and partners prepared to support us as we stimulate additional leisure travel demand.”
The start-up has announced its leadership team and is seeking regulatory approval to start services using Boeing 737 MAX 8 aircraft on routes to regional and leisure destinations.
Is it backed by US private investment firm 777 Partners which is also sourcing the fuel-efficient Boeing planes.
Bonza will enter a market that has thwarted several previous attempts to launch airlines, including by experienced players such as Singapore Airlines.
However, Jordan and his backers believe there is scope for an independent, ultra-low-cost entrant in the Australian market despite the existing battle for market share between Qantas Group, Singapore-backed Regional Express and Bain Capital’s Virgin Australia.
Bonza hopes to start services in the second quarter of 2022 and is calling on airports that have not yet expressed an interest to do so before the closing date of November 15.
The start-up invited 46 airports it sees as potential destinations to bid for its services and is also talking with state and territory governments about a head office site to be based in a regional center.
“Bonza’s entry to the Australian market will bring more travel choices than ever to everyday Aussies and in turn, stimulate demand for regional destinations that have traditionally struggled with perceptions like distance and cost,’’ chief executive Tim Jordan said.
“We are moving at pace to have flights on sale, so we encourage airports to work with us now on finalizing our network.”
The call comes as the airline’s chief commercial, Carly Povey, started work on Monday and takes responsibility for airport partnerships.
Povey has worked with easyJet, Jetstar and UK start-up Jet2.com and said she had seen first-hand the impact low-cost carriers have on regional communities in terms of employment and economic benefits.
“Working to better connect the regions is so important and timely with the pent-up demand to see more of our own backyard,” she said.
“I encourage airports to challenge themselves to provide the best possible deal to secure their own future. It will help us not only with our launch network decisions but, critically, with a projection of future growth potential and partners prepared to support us as we stimulate additional leisure travel demand.”
The start-up has announced its leadership team and is seeking regulatory approval to start services using Boeing 737 MAX 8 aircraft on routes to regional and leisure destinations.
Is it backed by US private investment firm 777 Partners which is also sourcing the fuel-efficient Boeing planes.
Bonza will enter a market that has thwarted several previous attempts to launch airlines, including by experienced players such as Singapore Airlines.
However, Jordan and his backers believe there is scope for an independent, ultra-low-cost entrant in the Australian market despite the existing battle for market share between Qantas Group, Singapore-backed Regional Express and Bain Capital’s Virgin Australia.
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Sydney
Melbourne
Brisbane
Perth
Adelaide
Gold Coast
Cairns
Canberra
Hobart
Darwin
Townsville
Launceston
Newcastle
Sunshine Coast
Mackay
Alice Springs
Rockhampton
Ballina
Proserpine
Karratha
Hamilton Island
Ayers Rock
Broome
Coffs Harbour
Port Hedland
Newman
Kalgoorlie
Albury
Gladstone
Mildura
Wagga Wagga
Port Macquarie
Dubbo
Mount Isa
Emerald
Tamworth
Paraburdoo
Port Lincoln
Hervey Bay
Bundaberg
Devonport
Armidale
Toowoomba Wellcamp
Geraldton
Moranbah
Thursday Island
Learmonth
Mount Gambier
Weipa
Roma
You can pull out the likes of Port Hedland, Karratha, Newman, Paraburdoo, Moranbah as being mainly FIFO. I'm sure that someone will be able to nominate the ones that you wouldn't get a B737 in to/out of.
Last edited by MickG0105; 3rd Nov 2021 at 22:33. Reason: Typo
The vast majority of the bottom half of the list couldn't take an even half full 737, ignoring how insanely low some of their load factors would be. Lucky to be 40 there that can (including the mine sites).
So to get 35 even, either the mine sites in the middle of nowhere were pitching for a LCC tourists, airports with NFI applied, or he's having a lend
So to get 35 even, either the mine sites in the middle of nowhere were pitching for a LCC tourists, airports with NFI applied, or he's having a lend
The vast majority of the bottom half of the list couldn't take an even half full 737, ignoring how insanely low some of their load factors would be. Lucky to be 40 there that can (including the mine sites).
So to get 35 even, either the mine sites in the middle of nowhere were pitching for a LCC tourists, airports with NFI applied, or he's having a lend
So to get 35 even, either the mine sites in the middle of nowhere were pitching for a LCC tourists, airports with NFI applied, or he's having a lend
Let’s open that list up a bit further.
Port Vila
Nadi, Suva.
Auckland, Hamilton, Tauranga, Palmerston North, Wellington, Christchurch, Queenstown, Dunedin, Invercargill.
Tonga, Samoa, Rarotonga.
Bali.
Honiara, Port Moresby.
Port Vila
Nadi, Suva.
Auckland, Hamilton, Tauranga, Palmerston North, Wellington, Christchurch, Queenstown, Dunedin, Invercargill.
Tonga, Samoa, Rarotonga.
Bali.
Honiara, Port Moresby.
- Auckland yes
- Hamilton not likely, no Customs, hasn't had international traffic in a decade
- Tauranga, no, has never had international traffic, no facilities - don't think anything bigger than an ATR72 has ever been there
- Palmerston North not likely, no Customs, hasn't had international traffic in a decade
- Wellington yes
- Christchurch yes
- Queenstown yes, but pilots & aircraft require special endorsements
- Dunedin no, has never had international traffic, no facilities
- Invercargill no, has never had international traffic, no facilities