Compass has faltered since its inception in 1990. Photo: Bruce Miller
Running an airline in Australia’s skies is difficult, as Bonza discovered. Australia’s newest airline promises to be a boon for regional travel across Australia’s east coast, but Bonza’s airborne efforts have been repeatedly stymied.
The airline is yet to fly its first passenger after promising to start service in mid-2022 (later revised to September) Awaiting its air operator certificate Signed by the Civil Aviation Safety Authority (CASA). Meanwhile, Bonza’s three Boeing 737 MAX 8 aircraft “Bazza”, “Shazza” and “Sheila” are sitting idle at the airline’s Sunshine Coast base.
Australia’s aviation industry is littered with airlines that don’t survive long-term and face stiff competition from established players who are at times aided and abetted by the Australian government to ensure rivals don’t prosper.
Compass, Australia’s first low-cost airline, begins operations, 1990
Until the early 1990s, Australia had a government-mandated two-airline policy. Two domestic airlines – Ansett and Qantas – operate as a duopoly with the same fares, similar fleet sizes and operate mainly on the same intercity routes. East West Airlines, an early upstart, tried to force its way in with cheaper fares, but the government stepped in and pushed the airline into regional routes.
In October 1990, the Hawke government deregulated the airline industry with the aim of providing greater flexibility to passengers and allowing free market forces to set prices. This opened the door to low-price competition and a month later Australia’s first low-cost airline, Compass Airlines, began operations.
A successful low-cost competitor is a potential nightmare for the Ansett-Australia cartel, and Compass has faltered from the day it aired.
In Brisbane, Sydney, Melbourne, Perth and Adelaide, Compass was forced to use the terminal of its rival, which checks its planes to the Siberia gate. On routes where Compass competes, major carriers simply cut prices — and they take the hit for much longer than Compass does.
The nail in Compass’ coffin was a dispute between the airline and CASA over fees, and on December 20, 1991, Compass was grounded ahead of the Christmas rush. Revenues in that period may have been enough to shore up the airline’s finances, allowing it to continue operating. The following year, Compass Mark II (originally Southern Cross Airlines) attempted a relaunch and collapsed after just six months, being forced into liquidation due to unsustainable losses.
Anjiete cheated, 2001
Photo: Paul Harris
Founded in 1935 by “Reg” Ansett as a sideline to his Victorian road haulage business, Ansett Australia was once Australia’s largest domestic airline and the first to operate jet aircraft on domestic routes.
Growth is steady. In its heyday, Ansett operated a fleet of more than 100 aircraft serving Asia and the Pacific, but it quickly died out.
In early 2000, Air New Zealand took full control of Ansett, bought out News Corp., and had acquired Peter Abeles’ TNT stake in the airline. The move is aimed at propping up the New Zealand national carrier.
New Zealand had previously opened its skies to Ansett, which saw the launch of Ansett New Zealand, but under pressure from the Australian domestic airline, the Howard government reneged on an agreement that would allow Air New Zealand to establish operations in the domestic market.
Ansett has thrived over the past two decades, but the airline is facing headwinds. The Ansett fleet consists of more than 15 types of aircraft, ranging from Fokker Friendships to DeHavilland Twin Otters to five Boeing 747s. In addition to complex maintenance, some of these planes, such as its 13 Boeing 767s, have reached the end of their life.
Competition from low-cost Virgin Blue is affecting its revenue streams, especially on the lucrative Melbourne-Sydney route. A series of rash financial decisions under TNT-News Corp’s previous ownership — building the Hamilton Island resort and spending millions to become the official carrier for the 2000 Sydney Olympics — saddled the airline with debt. The general drop in air traffic following the September 11, 2001 terrorist attacks in the United States was another blow.
Soon after Air New Zealand took over, Ansett was losing $1.3 million a day, a loss its parent company couldn’t afford. In September 2001, with $3 billion in debt, Ansett entered receivership on behalf of creditors.
Tigerair Australia, a victim of the pandemic, 2020
Photo: Rebecca Harras
In November 2007, Tigerair operated its first flight in Australia under the name Tigerair Australia, which is owned by a Singapore-based holding company backed by several low-cost Asia-Pacific airlines. Tiger has succeeded with its astonishingly low fares, operating as many as nine flights a day between Sydney and Melbourne, although it has received little love for introducing additional fees to Australian travelers, such as checked-baggage charges, These concepts have supported the profitability of overseas low-cost airlines.
Seeing the airline as a competitor, Virgin Australia Holdings smothered the airline with a takeover bid after it changed its name to Tigerair Australia and became majority shareholder in July 2013. The following year, Virgin Australia took full control and Tigerair became Virgin’s low-cost arm and rival to Qantas’ Jetstar airline.
Tigerair operated flights from Melbourne, Adelaide and Perth to Bali and Denpasar for a while. In February 2020, Virgin Australia announced its intention to reduce Tigerair’s fleet size from 13 to eight aircraft, suspend five loss-making routes and close its Brisbane base.
Tigerair suspended operations the following month as it was hit by COVID-19 travel restrictions. Virgin Australia parent company was struggling for the same reason, and a few months later Bain Capital announced it was the preferred buyer of Virgin Australia and Tigerair. In mid-2020, Virgin Australia announced that Tigerair would not resume operations, but it would retain its air operator certificate in case market conditions allowed the ultra-low-cost airline to resume operations.
OzJet, the brave business airline
OzJet only operates business class flights between Sydney and Melbourne. Photo: John Woodstra
OzJet, which began operations in November 2005, is the brainchild of Melbourne-based Paul Stoddart, conceived as an all-business-class airline operating between Sydney and Melbourne using Boeing 737 aircraft in a 60-seat configuration.
It looked good on paper, operating on one of the world’s busiest routes and laden with executive fliers, but passenger appetite never met the airline’s expectations. The launch’s ill-timed launch coincided with the end of OzJet’s target market for business execution and the airline’s neglect of business-class lounges, a deal-breaker for many business travelers.
At times, Ozjet operated with just three paying passengers, leading millionaire owner Paul Stoddart to the guillotine and turning to the leisure market, offering two tickets for the price of one. Desperation grew as the airline revealed plans to add Perth to its network, but not before Stoddart hit the eject button and shut down the airline, just 14 weeks after it was launched .
qantas airlines
This is a division of Strategic Airlines, an air freight company that specializes in oversized cargo. In 2009, Strategic established Qantas Airways, a passenger airline operating flights from bases in Melbourne and Brisbane to resort destinations in the Asia Pacific.
The business looked solid, but in February 2011, Qantas’ founder and executive director quit the company after a disagreement with another executive director who had big dreams of emulating Richard Branson’s. High-level departures including executives, COOs and commercial managers.
The airline fell through the cracks in February 2020 after a supplier refused to refuel a Phuket-based Qantas plane due to an unpaid bill. With no cash in the piggy bank, the airline applied for voluntary administration and suspended flights, leaving 4,000 passengers stranded in Bali, Thailand and Hawaii.
See also: A country with two airlines: Why starting a new airline in Australia is so difficult
