Bonza has its AOC
One can get dropped off at the Sunny/Goldie Coast and frolic at the beach/tourist attractions/strip clubs before their flight.
An enterprising soul could even get a Bonza shuttle bus running, like someone did with the AirAsia X flight to/from GC.
There are some interesting moves happening over in the US that have implications for Bonza. AIP Capital, which was set up last year to manage 777 Partners' 737 Max leases, has taken over the orders and lined up with a New York based insurance company. This means 777 is out of the aircraft business, so no more access to cheap(er) leases from the mothership. That's going to change the economics of how they scale up, although truth be told they could wring more utilisation out of what they've already got.
How deep are 777's pockets to keep bankrolling this one?
How deep are 777's pockets to keep bankrolling this one?
If you look at some of the data that is coming out on a monthly basis, you will find a large chunk of the demand isn’t new. Have a look at the Jan traffic from Brisbane, for comparable Bonza routes from its Gold and Sunny Coast bases. The traffic is actually going negative. Those who previously have commuted to Brisbane are taking the Bonza services. It might be an idea to focus some on the ground, local and digital marketing in some of the Brisbane Basin burbs. The regions can only give you so many passengers, which they are finding out with the likes of Mildura, Tamworth, Wellcamp and Rocky, the traffic is in the large metro areas, you just need to convince them to drive away from Brisbane.
Brisbane-Cairns -3.8%
Brisbane-Townsville -6.3%
Brisbane-Mackay -7.2%
Brisbane-Launceston -4.9%
Brisbane-Darwin -2.0%
Brisbane-Isa -2.9%
Brisbane-Cairns -3.8%
Brisbane-Townsville -6.3%
Brisbane-Mackay -7.2%
Brisbane-Launceston -4.9%
Brisbane-Darwin -2.0%
Brisbane-Isa -2.9%
All flights approximately 17000 seats per week each way
Their drop off is 3.8% or 646 seats
AB has 10 flights per week 5 Sunny 5 Goldy or 1840 seats per week each way
Their LF Based on the above quote would be 35% from current travellers that were using BNE + anything else they have generated point to point
Be interesting to see JQs LF on OLL-CNS where AB is running head to head
There are some interesting moves happening over in the US that have implications for Bonza. AIP Capital, which was set up last year to manage 777 Partners' 737 Max leases, has taken over the orders and lined up with a New York based insurance company. This means 777 is out of the aircraft business, so no more access to cheap(er) leases from the mothership. That's going to change the economics of how they scale up, although truth be told they could wring more utilisation out of what they've already got.
How deep are 777's pockets to keep bankrolling this one?
How deep are 777's pockets to keep bankrolling this one?
If you read the reports around how they are bankrolling the Everton purchase, by borrowing cash from Insurance providers in Bermuda, at 52.5%, you really need to ask do they really have deep pockets?
Bonza will need further loans of $100-200m over the coming few years if they wish to continue what they are doing. It would be in the best interest of this carrier if they can find a buyer with the deep pockets that can bank roll it for the years to come. If Bonza went to 777 for a further $50m and they said not possible, what next?
Their drop off is 3.8% or 646 seats
If you look at some of the data that is coming out on a monthly basis, you will find a large chunk of the demand isn’t new. Have a look at the Jan traffic from Brisbane, for comparable Bonza routes from its Gold and Sunny Coast bases. The traffic is actually going negative. Those who previously have commuted to Brisbane are taking the Bonza services. It might be an idea to focus some on the ground, local and digital marketing in some of the Brisbane Basin burbs. The regions can only give you so many passengers, which they are finding out with the likes of Mildura, Tamworth, Wellcamp and Rocky, the traffic is in the large metro areas, you just need to convince them to drive away from Brisbane.
Brisbane-Cairns -3.8%
Brisbane-Townsville -6.3%
Brisbane-Mackay -7.2%
Brisbane-Launceston -4.9%
Brisbane-Darwin -2.0%
Brisbane-Isa -2.9%
Brisbane-Cairns -3.8%
Brisbane-Townsville -6.3%
Brisbane-Mackay -7.2%
Brisbane-Launceston -4.9%
Brisbane-Darwin -2.0%
Brisbane-Isa -2.9%
In terms of getting a handle on the stimulation of demand, it is at least interesting, if not instructive, to look at the year-on-year data for the locations that Bonza flies into (bearing in mind that with Bonza only starting commercial flying at the end of January 2023, you won't see a full year's impact in the January 2024 data set). Their initial route structure saw them flying out of the Sunshine Coast to Avalon, Mackay, Prosperine, and Townsville, with a Townsville - Rockhampton service on top of that.
Bearing in mind that there was a baseline 8.1 percent growth in regional pax movements when comparing the year ending January 2024 to YE Jan 23, you see the following for the initial Bonza ports (and yes, I'm aware that there's some of the Bonza effect baked into the 8.1 percent baseline):
BBBBB
- Sunshine Coast 24.20%; 369,600 pax in total; 245,881 pax over baseline
- Mackay 7.11% ; 60,300 pax in total; 8,364 fewer than baseline
- Proserpine 11.95% ; 55,200 pax in total; 17,786 pax over baseline
- Rockhampton 28.53%; 142,000 pax in total; 101,686 pax over baseline
- Townsville 7.87%; 123,100 pax in total; 3,665 fewer than baseline
A bit of a mixed bag, but generally supporting the stimulated demand premise.
Next cabs off the ranks were Newcastle (late March), Mildura (early April to MCY, early May to MEL), Albury (early April), Toowoomba (mid-April), Port Macquarie (mid-April), Bundaberg (early May), Tamworth (early May), and Gladstone (mid-May).
Bbbbb
- Newcastle 10.83% ; 114,200 pax in total; 28,786 pax over baseline
- Mildura 22.92%; 42,600 pax in total; 27,542 pax over baseline
- Albury 23.47%; 50,600 pax in total; 33,136 pax over baseline
- Toowoomba 66.87%; 32,700 pax in total; 28,739 pax over baseline
- Port Macquarie 31.32%; 53,300 pax in total; 39,514 pax over baseline
- Bundaberg 47.25%; 49,900 pax in total; 41,346 pax over baseline
- Tamworth 22.48%; 31,200 pax in total; 19,957 pax over baseline
- Gladstone 15.19%; 30,300 pax in total; 14,141 pax over baseline
It's not the cleanest dataset, largely due to the timing issues, but it is probably good enough to get a feel for whether the underlying stimulating previously dormant demand premise is valid. By and large, you would probably have to say that it is; ports that they have started flying into have seen big upticks in pax movements in relative terms.
And the "relative terms" caveat is important when considering the other (arguably more important) part of the equation; is the stimulated demand enough build a profitable regional-regional network. And here the anticipated issue of their choosing to paddle in quite small ponds manifests itself. Even very high double digit growth, such as just shy of 67 percent for Toowoomba, only translates to relatively modest absolute pax numbers of around 30,000. The growth is almost certainly not enough to sustain even break-even loads given the frequencies that they need to fly to maintain a customer base.
It now comes down to what levers can they pull. I suspect that they have their cost base probably as low as they can reasonably get it, so the focus will likely need to be on the revenue side. That means increasing the number of bums on seats, increasing the price for said bum to get on said seat, or both. Price elasticity means the last option is generally nigh impossible, and trying to cover net yield by increasing prices on falling load factors similarly doesn't work (I suspect that Rex are currently getting a first-hand lesson on this).
Suffice to say that they have their work cut out for them.
Last edited by MickG0105; 12th Apr 2024 at 04:46.
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Good analysis. As a former statistician, I do find it quite interesting analysing the Bonza situation, it’s a unique set of data that hasn’t really been tested prior. However the overall point Mick makes is correct, they have some serious work ahead to make the model work. The model will need to shift focus very soon, that’s a given.
About half the network likely needs to be removed, I don’t believe it’s possible growing some of these markets to the magical 90% number they quoted previously over the near period. They also have cited the need for profitability in the second year, indicating potential limited access to further loans. They need to make profit headwinds pronto.
Looking at the route map, and the data that has been provided by the airports and government, I believe the below is how things look. It’s important to note the LF has settled around the 60-65 mark, that number is fairly even across many of the routes. I agree in that the number can be grown with some of the new initiatives they have rolled out, but I don’t see a 30% gain to hit the breakeven on many of these markets.
Still countless opportunities across the nation however. Just important they don’t spend too much time on some of these and move the equipment elsewhere.
Sustainable
Melbourne-Port Mac
Melbourne-Sunshine Coast
Melbourne-Mackay
Melbourne-Bundaberg
Melbourne-Gold Coast (however market suffers from heavy overcapacity)
Sunshine Coast-Cairns
Albury-Sunshine Coast, Gold Coast
Potentially Sustainable, more work required
Newcastle-Sunny Coast
Avalon-Sunny Coast
Wellcamp-Melbourne
Townsville-Sunny Coast
Gold Coast-Townsville
Newcastle-Whitsunday
Melbourne-Rockhampton
Melbourne-Alice Springs
Sunshine Coast-Townsville
Launceston-Sunny, Gold Coast
Gold Coast-Isa
Cairns-Gold Coast
Darwin-Sunny Coast, Gold Coast
Non Performer, Abandon immediately
Gold Coast-Rockhampton, Avalon, Mackay, Whitsunday
Melbourne-Mildura, Gladstone, Tamworth
Mildura-Sunshine, Gold Coast
Cairns-Rockhampton
Toowoomba-Townsville
Sunshine Coast-Mackay, Rocky, Whitsunday
Darwin- seasonal only
Launceston- seasonal only
Gold Coast-Cairns
About half the network likely needs to be removed, I don’t believe it’s possible growing some of these markets to the magical 90% number they quoted previously over the near period. They also have cited the need for profitability in the second year, indicating potential limited access to further loans. They need to make profit headwinds pronto.
Looking at the route map, and the data that has been provided by the airports and government, I believe the below is how things look. It’s important to note the LF has settled around the 60-65 mark, that number is fairly even across many of the routes. I agree in that the number can be grown with some of the new initiatives they have rolled out, but I don’t see a 30% gain to hit the breakeven on many of these markets.
Still countless opportunities across the nation however. Just important they don’t spend too much time on some of these and move the equipment elsewhere.
Sustainable
Melbourne-Port Mac
Melbourne-Sunshine Coast
Melbourne-Mackay
Melbourne-Bundaberg
Melbourne-Gold Coast (however market suffers from heavy overcapacity)
Sunshine Coast-Cairns
Albury-Sunshine Coast, Gold Coast
Potentially Sustainable, more work required
Newcastle-Sunny Coast
Avalon-Sunny Coast
Wellcamp-Melbourne
Townsville-Sunny Coast
Gold Coast-Townsville
Newcastle-Whitsunday
Melbourne-Rockhampton
Melbourne-Alice Springs
Sunshine Coast-Townsville
Launceston-Sunny, Gold Coast
Gold Coast-Isa
Cairns-Gold Coast
Darwin-Sunny Coast, Gold Coast
Non Performer, Abandon immediately
Gold Coast-Rockhampton, Avalon, Mackay, Whitsunday
Melbourne-Mildura, Gladstone, Tamworth
Mildura-Sunshine, Gold Coast
Cairns-Rockhampton
Toowoomba-Townsville
Sunshine Coast-Mackay, Rocky, Whitsunday
Darwin- seasonal only
Launceston- seasonal only
Gold Coast-Cairns
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Good analysis. As a former statistician, I do find it quite interesting analysing the Bonza situation, it’s a unique set of data that hasn’t really been tested prior. However the overall point Mick makes is correct, they have some serious work ahead to make the model work. The model will need to shift focus very soon, that’s a given.
About half the network likely needs to be removed, I don’t believe it’s possible growing some of these markets to the magical 90% number they quoted previously over the near period. They also have cited the need for profitability in the second year, indicating potential limited access to further loans. They need to make profit headwinds pronto.
Looking at the route map, and the data that has been provided by the airports and government, I believe the below is how things look. It’s important to note the LF has settled around the 60-65 mark, that number is fairly even across many of the routes. I agree in that the number can be grown with some of the new initiatives they have rolled out, but I don’t see a 30% gain to hit the breakeven on many of these markets.
Still countless opportunities across the nation however. Just important they don’t spend too much time on some of these and move the equipment elsewhere.
Sustainable
Melbourne-Port Mac
Melbourne-Sunshine Coast
Melbourne-Mackay
Melbourne-Bundaberg
Melbourne-Gold Coast (however market suffers from heavy overcapacity)
Sunshine Coast-Cairns
Albury-Sunshine Coast, Gold Coast
Potentially Sustainable, more work required
Newcastle-Sunny Coast
Avalon-Sunny Coast
Wellcamp-Melbourne
Townsville-Sunny Coast
Gold Coast-Townsville
Newcastle-Whitsunday
Melbourne-Rockhampton
Melbourne-Alice Springs
Sunshine Coast-Townsville
Launceston-Sunny, Gold Coast
Gold Coast-Isa
Cairns-Gold Coast
Darwin-Sunny Coast, Gold Coast
Non Performer, Abandon immediately
Gold Coast-Rockhampton, Avalon, Mackay, Whitsunday
Melbourne-Mildura, Gladstone, Tamworth
Mildura-Sunshine, Gold Coast
Cairns-Rockhampton
Toowoomba-Townsville
Sunshine Coast-Mackay, Rocky, Whitsunday
Darwin- seasonal only
Launceston- seasonal only
Gold Coast-Cairns
About half the network likely needs to be removed, I don’t believe it’s possible growing some of these markets to the magical 90% number they quoted previously over the near period. They also have cited the need for profitability in the second year, indicating potential limited access to further loans. They need to make profit headwinds pronto.
Looking at the route map, and the data that has been provided by the airports and government, I believe the below is how things look. It’s important to note the LF has settled around the 60-65 mark, that number is fairly even across many of the routes. I agree in that the number can be grown with some of the new initiatives they have rolled out, but I don’t see a 30% gain to hit the breakeven on many of these markets.
Still countless opportunities across the nation however. Just important they don’t spend too much time on some of these and move the equipment elsewhere.
Sustainable
Melbourne-Port Mac
Melbourne-Sunshine Coast
Melbourne-Mackay
Melbourne-Bundaberg
Melbourne-Gold Coast (however market suffers from heavy overcapacity)
Sunshine Coast-Cairns
Albury-Sunshine Coast, Gold Coast
Potentially Sustainable, more work required
Newcastle-Sunny Coast
Avalon-Sunny Coast
Wellcamp-Melbourne
Townsville-Sunny Coast
Gold Coast-Townsville
Newcastle-Whitsunday
Melbourne-Rockhampton
Melbourne-Alice Springs
Sunshine Coast-Townsville
Launceston-Sunny, Gold Coast
Gold Coast-Isa
Cairns-Gold Coast
Darwin-Sunny Coast, Gold Coast
Non Performer, Abandon immediately
Gold Coast-Rockhampton, Avalon, Mackay, Whitsunday
Melbourne-Mildura, Gladstone, Tamworth
Mildura-Sunshine, Gold Coast
Cairns-Rockhampton
Toowoomba-Townsville
Sunshine Coast-Mackay, Rocky, Whitsunday
Darwin- seasonal only
Launceston- seasonal only
Gold Coast-Cairns
Assuming that people are booking flights based on price I can outline a couple of examples
Running NTL-MCY 3 weekly and NTL-PPP 2 weekly, both with light loads could be changed to
NTL-MCY-PPP 3-4 weekly
Or
MLQ-OOL and MLQ-MCY and MEL-MLQ all running twice weekly could be changed to
MEL-MLQ-OOL-MCY-MLQ-MEL DAILY
Offering cheap seats
MEL-OOL 1 stop
MCY-MEL 1 stop
Both filling the capacity on the MLQ services
Same with services out of Launy and Darwin
LST-OOL-MCY-LST
OOL-MCY-DRW-MCY-OOL
Yes a bit of frigging around with luggage at the intermediate stops but doable
As you have said above there are some sectors that may never get to 90% as stand alone routes so tagging onward sectors or combining routes into triangles would address these sectors
Bonza may need to do some outside the box thinking in the short term to maintain their current model until WSI opens
Met up with some family yesterday on the central coast NSW. One of the family came from sunny coast. I asked how they got there, did they ride? (Boomers with Harley’s!!!!). No, they drove to Brisbane and then flew Jetstar to Newy as Bonza schedule didn’t fit and they would have had to pay a few days accom on the trip. Sort of defeats Bonza’s mantra……….
Met up with some family yesterday on the central coast NSW. One of the family came from sunny coast. I asked how they got there, did they ride? (Boomers with Harley’s!!!!). No, they drove to Brisbane and then flew Jetstar to Newy as Bonza schedule didn’t fit and they would have had to pay a few days accom on the trip. Sort of defeats Bonza’s mantra……….
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The issue appears related to this Flair aircraft parked up at the Sunshine Coast. It’s been 7 weeks.
Reeks of an issue with a lessor not letting a contract change registered operators without significant penalties and a re negotiation for a new term. I wonder who is paying for this expensive aircraft to sit. The going rate for 2 months is $1m. You will be hit with some costly engineering bills if it’s sits for much longer.
These continued stumbles don’t bode well for the longevity for this carrier. Planning isn’t their forte. Sadly it will probably be the death of them. These continued ad hoc costs might be too much for them to manage shortly, no surprise they are trying to now limit the use re wet leasing. If you look closely at the Tiger Airways launch, it is much the same here, wheels started coming off after the first year. Very similar behaviour in both. Why don’t people learn from other people’s past mistakes? Tiger was the template in how not to do things, this is now just copy and paste.
Reeks of an issue with a lessor not letting a contract change registered operators without significant penalties and a re negotiation for a new term. I wonder who is paying for this expensive aircraft to sit. The going rate for 2 months is $1m. You will be hit with some costly engineering bills if it’s sits for much longer.
These continued stumbles don’t bode well for the longevity for this carrier. Planning isn’t their forte. Sadly it will probably be the death of them. These continued ad hoc costs might be too much for them to manage shortly, no surprise they are trying to now limit the use re wet leasing. If you look closely at the Tiger Airways launch, it is much the same here, wheels started coming off after the first year. Very similar behaviour in both. Why don’t people learn from other people’s past mistakes? Tiger was the template in how not to do things, this is now just copy and paste.
Last edited by nomess; 13th Apr 2024 at 15:09.
Why don’t people learn from other people’s past mistakes?
Tony Fernandez had it right.
Reported in AFR in 2010…
https://www.afr.com/companies/airlin...20100113-iw6yq
AirAsia chief executive Tony Fernandes says his rival, Tiger Airways, must have been "on drugs" when it decided to set up a domestic airline in Australia and says he has no plans to do the same.
However, the outspoken head of Jetstar's new alliance partner said he planned to increase the number of routes AirAsia flew out of Australia and hoped to launch Sydney services within six months.
"Am I going to come up and set up AirAsia Australia? No. Tiger is on drugs doing it," Mr Fernandes told The Australian Financial Review.
"You (Tiger) are sitting on a market of a billion people and you go and put half your capacity in a market of 24 million which has two pretty strong airlines; it doesn't make sense to me."
However, the outspoken head of Jetstar's new alliance partner said he planned to increase the number of routes AirAsia flew out of Australia and hoped to launch Sydney services within six months.
"Am I going to come up and set up AirAsia Australia? No. Tiger is on drugs doing it," Mr Fernandes told The Australian Financial Review.
"You (Tiger) are sitting on a market of a billion people and you go and put half your capacity in a market of 24 million which has two pretty strong airlines; it doesn't make sense to me."
According to another site Nauru terminated the wet lease agreement the other week effective immediately. One would assume late or no payment, which indicates lack of cash available. Not many other reasons one would terminate a contract.
Seems accurate, as they have chopped the schedule back to only work with one of its own aircraft.
No idea which way this is all going. Not looking flash. It seems doubtful that it will last much longer, unless someone tips in some cash.
Seems accurate, as they have chopped the schedule back to only work with one of its own aircraft.
No idea which way this is all going. Not looking flash. It seems doubtful that it will last much longer, unless someone tips in some cash.
Last edited by nomess; 16th Apr 2024 at 08:31.