Australia’s newest low-cost start-up Bonza Airlines will provide vital low-cost competition in a full-service dominated market and could be a disruptive force. Covid-19 has presented Bonza Airlines with a prime opportunity to launch, and the current situation will aid its expansion plans.
Bonza Airlines is well-positioned to fill the void left by Tigerair’s exit and will place pressure on incumbent players Qantas Airways and Virgin Australia. There is a gap in the market for a new low-cost carrier, and Bonza Airlines fits right in. Although GlobalData figures show that 25 million domestic trips were taken by air in 2019 (pre-Covid) across Australia, competition between airlines has remained low and underserved communities have suffered. The new entrant’s strategy to connect underserved airports and target leisure travellers could see the airline become a sizable competitor over the coming years.
Financial concerns remain – low-cost flights attractive
GlobalData’s Q3 2021 Consumer Survey* has revealed that 77% of Australian respondents were ‘extremely’, ‘slightly’ or ‘quite’ concerned about their personal financial situation, reinforcing the need for lower-cost air connectivity in Australia.
The launch of a new low-cost carrier will be met positively by those looking for cheaper travel options. Covid-19 has placed a considerable strain on travellers’ budgets and the desire to escape on vacation has risen considerably. Operating a low-cost business model will bear fruit for Bonza Airlines. The low-cost base, coupled with expected pent-up demand for low-cost flights, could see the airline quickly become popular.
Furthermore, 54% of Australian respondents in GlobalData’s Q3 Consumer Survey* said affordability was the top factor taken into consideration when deciding where to go on holiday. Offering low prices will be vital to encouraging travel during the Covid-19 recovery period. Low prices, a favourable network and no-frills service will see Bonza Airlines thrive.
Now is an optimal time to launch
With domestic and interstate travel restrictions beginning to ease and travellers seeking a change of scenery, 2022 is an optimal time for Bonza Airlines to launch.
Covid-19 has provided an optimal environment to launch. An abundance of attractively priced second-hand aircraft, airport slots, and skilled labour (pilots and cabin crew) means previous barriers to entry have been lowered. Bonza Airlines is likely to possess a low-cost base, resulting in lower fares and the ability to win market share from competitors.
Furthermore, a lack of low-cost competition in Australia will see the carrier become popular with budget-conscious travellers. Leisure travel is expected to benefit post-Covid and the airline will be favoured by those seeking leisure destinations. All factors combined should equal a recipe for success for Bonza Airlines.
*GlobalData Q3 2021 Consumer Survey, 569 Australian respondents
