Australia’s antitrust regulator has warned of “detrimental” effects to the domestic airline sector if Bonza – the start-up which collapsed in late April – is unable to resume services.
In its quarterly airline competition review, the Australian Competition and Consumer Commission (ACCC) says Bonza’s presence “represented an opportunity for greater competition to emerge” in the country’s “concentrated” domestic aviation sector.
777 Partners-backed Bonza abruptly suspended operations on 30 April hours after receiving notice of lease termination related to its fleet, a move that called into question its viability and financial health. The airline remains grounded until end-May as administrators Hall Chadwick work through the insolvency process.
In its competition report, the ACCC suggests several factors led to Bonza’s collapse, including Australia’s “high barriers to both entry and then expansion of operations” for new entrants. Bonza began operations in early 2023, with a fleet of 186-seat Boeing 737 Max 8s on a regional network comprising cities underserved or unserved by other airlines.
The ACCC notes that the launch of Bonza had been delayed as a result of regulatory approvals, which led it to take on extra costs. Industry watchers had also questioned if Bonza’s network was able to sustain large aircraft operations profitably, especially since it eschewed operating between the major cities of Brisbane, Melbourne and Sydney.
The commission also lists several implications from the collapse of Bonza. Given that most of its network was underserved – or not served at all – the ACCC says there is a high risk that connectivity will be lost.
“While some of these routes may attract the attention of the other airlines, it is reasonable to assume that the vast majority would cease to be served.”
More crucially, the ACCC bemoans the dwindling prospects of a more competitive airline sector.
“Bonza’s presence represented an opportunity for greater competition to emerge in the concentrated domestic aviation sector, such as if the airline had continued to grow with more aircraft and entered busier routes connecting Sydney, Melbourne and Brisbane,” states the ACCC.
It calls on Canberra to “support such entry and expansion as much as possible”, and notes that some moves - in the form of proposed slot reforms at Sydney – are a step in the right direction.
