Samantha Donovan: Bonza has become the latest airline to try and increase competition in Australia's aviation industry only to run into financial trouble. The first new local airline since Tiger Airways launched 15 years ago, Bonza started flying regional routes from the Sunshine Coast last year. But it cancelled all its flights today, stranding thousands of passengers, and it's now in voluntary administration. David Taylor reports.
David Taylor: As one social media user put it today, Australia's airline curse strikes again. Or as aviation analyst Geoffrey Thomas put it, Bonza's financial troubles are simply very sad.
Geoffrey Thomas: A great operation, great business model, terrific team of people, very dedicated, passionate, professional but it appears as though the rug has been pulled from underneath them.
David Taylor: Geoffrey Thomas is referring to a significant change in Bonza's cash flow. You see the airline, the brainchild of former Virgin Blue boss Tim Jordan, was leasing four planes with the private equity firm 777 Partners and AIP Capital. Phoenix Aviation Capital has since taken possession of all planes under new leasing arrangements and grounded the entire fleet.
Geoffrey Thomas: It appears as though the ownership of the aircraft has changed, so the leasing arrangements have changed and on the surface of it, it would appear that Bonza's business model and the financial arrangements that they had come to with their original backers don't meet the criteria for the new owners of the aircraft.
David Taylor: That's another way of saying Bonza can't afford to fly its fleet under the new leasing arrangements. Geoffrey Thomas thinks it's sad because in what's been a historically very difficult industry to crack in Australia, Bonza appeared to have found some clear air.
Geoffrey Thomas: They had plans to go to 20 or maybe even 30 planes. They were following a business model that was pioneered in the United States by an airline called Allegiant and it's all about connecting airports and cities that are not connected.
David Taylor: Bonza was given the go-ahead to start flying regional routes from the Sunshine Coast in January last year. The company established a base in Melbourne two months later. Its business model aimed to link regional centres, often ignored by the larger carriers. Today CEO Tim Jordan apologised to affected customers and said the airline was trying to find a way to continue operating in the Australian aviation market. But Transport Workers Union National Secretary Michael Kaine says Bonza doesn't stand a chance as long as Qantas dominates Australia's airways.
Michael Kaine: What we have in aviation right now is Qantas when times are tough going cap in hand to the government asking for bailouts and when times are good like they are now for Qantas telling everyone get your hands off our profits. That has to stop. We have to even out these peaks and troughs. We have to support companies that are trying their best to carve out a good future for Australia in the aviation sector, servicing regional communities.
David Taylor: But is that a fair assessment? Fund manager Roger Montgomery says the airline industry is one of many in Australia with too few competitors, ultimately boosting profits for incumbents and leaving consumers worse off.
Roger Montgomery: We see monopolies and duopolies form quite regularly across various industries. You look at the supermarkets, you've got two main players. Airlines, two main players. The banks, it's an oligopoly. There's four. Packaging, only a couple of players. Building materials, a couple of major players. So across a variety of industries what tends to happen is the point of stability in an industry seems to occur in Australia where two dominate and then everybody else is really fighting for the scraps and for decades, for as long as I've been alive, that's five decades, we've seen a situation in airlines where there's only been two major players and everybody else struggles.
David Taylor: Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King, issued a statement earlier today saying she'd spoken to Qantas and Virgin CEOs and they had agreed to assist stranded Bonza passengers needing to get home. As for what happens next for Bonza, late this afternoon the company formally entered voluntary administration with accounting firm Hall Chadwick, giving the airline the opportunity to be restructured or sold.
Samantha Donovan: David Taylor reporting.