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New 'Bonza' LCC launches middle 2022 with B737 MAX

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New 'Bonza' LCC launches middle 2022 with B737 MAX

Old 3rd Nov 2021, 22:35
  #141 (permalink)  
 
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Originally Posted by kiwi grey View Post
  • 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
thatís whole point of low cost carriers, they break the mould. Regional governments know the financial benefits that airlines bring to their regions.
The Hamilton catchment area has grown around 500k people since the last international services. Air NZ has driven a hub spoke model away from there pushing people into Akl.
Dunedin was a successful international port for Virgin up until Covid, will be interesting to see with their recovery and NZ borders restrictions if they pick it back up.
All ports have custom and immigration facilities available. It just comes down to who is going to pay for them.
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Old 3rd Nov 2021, 22:47
  #142 (permalink)  
 
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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.
Fiji has only limited seats available for foreign airlines and the Australia slots are already chewed up by the majors, Samoa and Tonga similar arrangements. Someone would have to give up capacity to Fiji to let another in, would have been fine if VA exited.
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Old 3rd Nov 2021, 23:07
  #143 (permalink)  
 
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Originally Posted by kiwi grey View Post
  • Dunedin no, has never had international traffic, no facilities
https://www.odt.co.nz/news/dunedin/i...unedin-airport
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Old 6th Nov 2021, 05:32
  #144 (permalink)  
 
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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
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Old 6th Nov 2021, 10:29
  #145 (permalink)  
 
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An interesting analysis, for sure. As others have commented on the original LinkedIn article,
  • ​​​​CASK probably isn't as important as RASK.
  • 2-3 jets is not going to be able to create any real economy of scale.
  • Nominating Merimbula as an ideal destination for Bonza doesn't seem to account for the performance of the Max; the 1600 metre runway would prove problematic I would think.

Separately, the author's fly v drive equation looks a bit off on a few counts. First, he seems to be overcooking the average Australian's recognition of the value/cost of their own time. One thing that the slow/low uptake of toll roads in most Australian cities demonstrates is a general reluctance to pay money to get time back.

Second, he does not account for the value many place on having a car at their destination. It is often the case that airport transfers alone end up costing more than the airfare.

Third, he is overcooking the way most people consider car costs. When thinking about the cost of a short road trip (4-6 hours), many (if not most) punters simply look at the cost of fuel as their cost. I doubt that many of the sort of pax that Bonza would be hoping to attract run a full total cost of ownership/operation calculation using numbers like the ATO or NRMA cost/km. The rational economic consumer model routinely fails to determine actual behaviours because consumers are frequently either not rational or not economic, sometimes both, when making decisions.

Last edited by MickG0105; 6th Nov 2021 at 10:40. Reason: Added point
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Old 6th Nov 2021, 10:38
  #146 (permalink)  
 
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Nominating Merimbula as an ideal destination for Bonza doesn't seem to account for the performance of the Max; the 1600 metre runway would prove problematic I would think.
The runway distance wont be a problem for landing as the Max will land and then as it decelerates it will sink into the ground and stop very quickly. Might be a while before it next departs the airport, on the back of a truck that is. Pretty sure the turboprops already operate with pavement concessions.
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Old 7th Nov 2021, 01:23
  #147 (permalink)  
 
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Originally Posted by 43Inches View Post
The runway distance wont be a problem for landing as the Max will land and then as it decelerates it will sink into the ground and stop very quickly. Might be a while before it next departs the airport, on the back of a truck that is. Pretty sure the turboprops already operate with pavement concessions.
Apart from the fact that the demand is not there. Itís only an hour to Merimbula in a turbo prop from Sydney or Melbourne, the runway wouldnít handle the weight and the terminal is too small. Not sure how you would make money in a 737.
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Old 7th Nov 2021, 07:05
  #148 (permalink)  
 
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I donít think the Bonz is in the business of making money.

(Iím not sure if itís actually technically possible for them to actually make money. No numbers add up)

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Old 7th Nov 2021, 08:26
  #149 (permalink)  
 
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I donít think the Bonz is in the business of making money.
Reminds me of one of my favourite movies "The Producers".
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Old 10th Nov 2021, 07:07
  #150 (permalink)  
 
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Originally Posted by PoppaJo View Post
I donít think the Bonz is in the business of making money.

(Iím not sure if itís actually technically possible for them to actually make money. No numbers add up)
They will if all the starts align. TT could do it... at times.
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Old 11th Nov 2021, 04:25
  #151 (permalink)  
 
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Since learning to fly in 1965 I've observed for around 20K hours the Australian aviation landscape from the front window of regional aircraft. In that time many dreamers have come and gone in trying to establish an airline in what they see is the great south land of undeveloped and undiscovered city pairs ripe for exploitation. In reality we are not the USA with dozens of Canberra sized cities scattered throughout our states and territories. All profitable city pairs in OZ that support medium sized jet transports are well serviced with little potential for extra capacity. There are many reasons for new entrants to fail in Australia, just one is that there are no further opportunities in terms of new markets to deploy 737/A320 sized aircraft at a viable utilization rate and load factor which would return a profit to investors.
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Old 11th Nov 2021, 08:14
  #152 (permalink)  
 
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I think you have just eloquently summarised in one paragraph what everyone is thinking.
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Old 11th Nov 2021, 08:42
  #153 (permalink)  
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Originally Posted by lamax View Post
Since learning to fly in 1965 I've observed for around 20K hours the Australian aviation landscape from the front window of regional aircraft. In that time many dreamers have come and gone in trying to establish an airline in what they see is the great south land of undeveloped and undiscovered city pairs ripe for exploitation. In reality we are not the USA with dozens of Canberra sized cities scattered throughout our states and territories. All profitable city pairs in OZ that support medium sized jet transports are well serviced with little potential for extra capacity. There are many reasons for new entrants to fail in Australia, just one is that there are no further opportunities in terms of new markets to deploy 737/A320 sized aircraft at a viable utilization rate and load factor which would return a profit to investors.
excellent summary.... the Australian population is just too concentrated for a booming aviation market... imagine if there were say 200K ppl living in Bairnsdale, another 200K in Mildura, 250K in Bendigo and 250K in Albury/Wodonga, the aviation industry even just within Victoria will be so much more 'vibrant'
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Old 11th Nov 2021, 10:02
  #154 (permalink)  
 
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It's not the concentration, its the lack of facilities. No new entrant can do anything different than what is being done, no real commuter slots are available. Melbourne has effectively one runway, with just options for when the wind changes. Sydney operates with two hands and a leg tied behind its back due to curfew. Both won't tell internationals to get lost from peak times to allow more commuter slots. So you get an A380 arriving at peak hour which chews up 5 minutes of spacing, etc etc etc. QF is allowed predatory practices to devour all the slots and pretend to use them and get to have an arrival bookings system that obviously favor a large operator that can just swing arrival times between companies. Any new entrant goes into a pool of users that scramble over the last few scraps and hopefully don't cop a 5 hour ground delay and that's before weather kicks in.

Reality is you need a complete overhaul of the current system to allow for competition, then you need at least 1 more decent airport at each major city. The feds are hung on the idea people will travel by train up the east coast, willing to spend trillions on that project while all they need is 1/10th that for some investment in new airports and their connections.

I have to laugh when Melbourne airport spruiks all its car parks and new taxiways, and have spent billions on them, yet a new runway? Nah, too expensive. We can just park planes on the taxiways while we organise the single runway.
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Old 12th Nov 2021, 01:02
  #155 (permalink)  
 
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About Melbourne, agreed. There is a plan to build a third runway but it wouldn't be completed for many years. What that city needs instead of a 3rd runway at MEL is a Western Sydney type airport but built to the south-east of Melbourne, closer to a large number of people in the eastern/south eastern suburbs. I remember there was a proposal for another airport somewhere near Tooradin (which has major roads and a rail line nearby), does anyone know if it's likely to progress?
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Old 12th Nov 2021, 01:13
  #156 (permalink)  
 
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It's not the concentration, its the lack of facilities. No new entrant can do anything different than what is being done, no real commuter slots are available. Melbourne has effectively one runway, with just options for when the wind changes.
You are 100% right this is the heart of the problem and the biggest issue facing Bonza and the industry as a whole. Until there are two airports in Sydney, Melbourne, Brisbane and Perth there is never going to be any real competition in aviation. Throughout the world all the real LCCs fly to secondary airports some of which are not even close to the city they claim they're flying to. As it stands the second airport in Sydney will just add congestion to the Melbourne Airport as they won't be able to handle any increase in traffic.
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Old 12th Nov 2021, 02:21
  #157 (permalink)  
 
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Avalon hasnít really been much success for Jetstar, itís subsidized by the Andrews government until the middle of this decade. Really need something in Melbourneís East in the burbs, or edge. Tiger was also subsidized at Avalon by a previous Victorian government.

These rural/secondary major ports only work if paid for by taxpayers.

Tullamarine needs a complete rebuild, or a second efficient competitor out in the East.
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Old 12th Nov 2021, 03:24
  #158 (permalink)  
 
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A major airport to the South East would have to be out near Lang Lang down along the coast of Westernport. Any further towards the city, South or West of Kooweerup will bring the ranges into play for a North/South runway, which is essential in the Melbourne area. I can see heaps of opposition to anything near Westernport, esp the wetlands area, so most likely never going to happen. Then there's all the precious horse trainers in the area that can't even stand light aircraft, or anyone for that matter. Avalon fails, and will continue to do so until there is viable city pairs and it actually looks like a modern airport rather than some sheds, then there's all the issues with en-carriage and connections and rapid transit.
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Old 12th Nov 2021, 04:27
  #159 (permalink)  
 
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Avalon will work in 100 years when Geelong finally connects Melbourne and a new metropolis starts to build in between the two. Long beyond our lifetimes. The region all connected will be miles higher than Sydney, one mega city will be 15m people. Thatís the forecasts. Avalon will be of use then.
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Old 12th Nov 2021, 04:56
  #160 (permalink)  
 
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You forget that in 10 years time they will sell the land as the center of this great new suburb, as no one is using it when J* pulls out. So a new airport plan out at Cobram will be required with high speed flying drone trains that use underground tunnels, just because it costs more.
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