Is There Room for a 3rd Independent Airline in Australia?

Bonza was grounded not long after take-off. Rex is battling to cling to regional routes. What will it take for a third airline to break through the clouds?

A Rex Airlines Boeing 737 departs Tullamarine Airport in Melbourne, Australia, on July 29, 2024. William West/AFP via Getty Images

Bonza’s routes connecting smaller towns with big cities were heavily celebrated by regional Australians who'd long pined for flights that could take them far away.

In some locations, airports were buzzing and crowded as eager travellers waited for their flights.

For anyone who has lived in regional Australia, the picture is unusual.

Smaller airports typically offer minimal routes. Bonza brought a buzz to some of the nation’s quietest airports.

Just as it appeared all was well, Bonza crash-landed. There was no buyer for the business placed in administration, and hundreds of staff lost their jobs.

Countless regional Australians lost a direct service out of town. So, what went wrong?

At the time Bonza announced its end, experts pointed to the well-publicised struggles of new air carriers entering the country’s competitive aviation market.

In the case of Bonza, it was argued the airline had made several strategic missteps, beleaguered by periodic routes, and large planes with minimal cost advantage. There was speculation the airline’s app-only approach to booking tickets was also a barrier to success.

Regardless, the airline was scrapped before its first birthday.

A supplied image of the new Boeing 737-8 Bonza aircraft, obtained on Oct. 12, 2021. AAP Image/ Getty, Southern Lightscapes-Australia

Fellow Aussie carrier and well-loved brand Rex remains troubled.

The airline collapsed into voluntary administration in July, and just under 600 staff lost their jobs when Rex’s capital city routes were scrapped.

While regional flights are still available, another 73 of the airline’s remaining 261 staff would be made redundant. All regional service staff have retained their jobs.

Australia’s History of Troubled Airlines

Over several decades, airlines have tried and failed to crack the Australian market.

East-West Airlines folded a year after take-off in 1990 due to a lack of revenue after competitors lowered their prices.

Compass Airlines had to use competitor terminals, which ended its existence in 1991. A year later, the airline re-emerged as Compass Mk II but only survive a few months.

From there, Impulse took off in regional New South Wales, but when Qantas noticed Impulse’s flight route between Newcastle and Melbourne, it fought back with a route of its own.

Impulse dropped the service, followed by Qantas dropping the route shortly after.

Qantas would go on to purchase Impulse, which formed the basis of the QantasLink regional services.

Ozjet launched in 2005 and only made it through a few short months.

Then there’s the behemoth that was brought down by a combination of factors, many of which still plague Australian airlines today.

Iconic Australian airline Ansett went into voluntary administration more than 20 years ago, while losing $1.3 million a day, plus $500,000 in interest payments on borrowings.

Sixty-five years of aviation history ended in 2001.

An Ansett Australia Boeing taxis on the runway against the skyline of Hong Kong Island late July 5 at Hong Kong's Kai Tak airport, Robyn Beck/AFP via Getty Images

How to Keep Planes in the Sky

Times may have changed, but basic airline business principles haven’t.

Griffith University economics expert Graeme Hughes says airlines rely upon numerous factors for success or failure.

“The Australian aviation industry is undergoing a period of consolidation,” Hughes told The Epoch Times.

“The collapse of Bonza and the financial difficulties faced by Rex highlight the challenges of operating in a highly competitive and cost-sensitive market.

“Factors such as fuel prices, labour costs, and intense competition have made it increasingly difficult for smaller airlines to survive.”

Staff costs and inflexible unions were said to have contributed to Ansett’s sad ending all those years ago.

Airlines require a complex formula of support to stay in the air—remove some pillars of support, and they’re at risk; remove them all, and it spells doom.

“While Australia may be able to support multiple major airlines, it requires long-term support from governments, industry, and consumers,” Hughes said.

According to researchers at the University of South Australia, larger airlines like Qantas and Virgin dominate, which means smaller or up-and-coming airlines struggle to carve out market share in the east coast-heavy aviation market.

It’s also difficult for to secure airport slots—available times to land or take-off—when bigger players already occupy so much real estate.

A photo taken on Aug. 22, 2023 shows a Airbus A321 Neo operated by the Qantas low-cost airline Jetstar at Kingsford Smith Airport in Sydney, Australia. William West/AFP via Getty Images

New Sydney Airport the Way Forward?

CQU aviation expert Doug Drury believes the opening of the Western Sydney Airport could alleviate some of these pressures.

“Currently, Sydney West Airport is scheduled to open in 2026, and that will eliminate the issue of Sydney shutting down operations at 11 p.m. due to a curfew,” he told The Epoch Times.

“Adelaide is the only other airport with a curfew. Kingsford Smith can only permit 80 take-offs and landings currently, which is a problem that Australia’s busiest airport is not operating at 100 percent capacity.”

A line of Qantas aircraft sits at Kingsford Smith Airport in Sydney, Australia, on Oct. 31, 2021. James D. Morgan/Getty Images

The “golden triangle” between Sydney, Brisbane, and Melbourne comprise some of the busiest domestic air travel routes in the world with Sydney to Melbourne often ranking in the top five globally.

Australia’s smaller population compared to Asia, Europe, and North America, also means opportunities for airline business revolve heavily around the three population centres, particularly Sydney, the biggest in the country.

“A fair and equitable system for granting premium time slots needs to be addressed and the 80/20 rule, where an airline must operate 80 percent of their scheduled flights with a 20 percent buffer, must be enforced,” Drury said.

“Airlines that do not meet the standards and are cancelling flights must have consequences for future slot assignments. New entrants need to be given a fair go at the premium slots and permitted to adjust to meeting the standards.”