Budget airline Bonza has signalled interest in flying to the Northern Territory, after Qantas recently reduced flights to the region.
Qantas claims the reduction in capacity – of 30,000 seats – is due to an over-estimation of demand. The airline has decreased flights to Alice Springs and Yulara.
“In the future, we’d love to see our purple aircraft in the Northern Territory skies,” Bonza’s chief commercial officer Carly Povey told The New Daily.
“To enable that, we need commercial terms in place with territory airports that allow us to support the wider community and tourism industry, by giving them the ability to travel at low-cost prices.”
Alice Springs deputy mayor Eli Melky has proposed that Central Australian towns form an alliance to push for more affordable airfares.
Bonza has received a tick of approval from the Australian Competition and Consumer Commission, which means the airline represents a “competitive threat to the other airlines”.
“Bonza’s entry to the domestic market provides increased route choice, which is good news for Australian consumers,” ACCC Commissioner Anna Brakey said in the organisation’s March report into airline competition.
“The new budget airline will provide travellers on the east coast of Australia with new and direct connections, as well as competition on certain routes.”
In late January, low-cost carrier Bonza became the first high-capacity passenger airline to enter the domestic market in 15 years.
Bonza predominantly operates on previously unserved routes that connect regional centres to holiday destinations, allowing passengers to travel directly rather than via a major city.
Bonza’s network covers 27 routes across Queensland, NSW and Victoria.
Increased competition
The ACCC’s report found that while Bonza’s stated strategy is to operate on unserved and underserved routes, the airline could expand into more contested routes in the future, including possibly larger inter-city routes.
It said this would represent a more significant competitive threat to the other airlines.
Competition is one of the most important factors determining how much a consumer pays to fly.
Various studies have shown that when the number of airlines increase on a route, prices on average decrease.
Any expansion by Bonza into contested routes could mean cheaper airfares for travellers, with airlines vying for their travel dollars.
It would also be good for regional tourism, with consumers potentially persuaded to travel to other destinations offered by Bonza instead of alternative, more expensive spots offered by its competitors.
Domestic prices fall
More broadly, domestic airfares are getting cheaper, the ACCC quarterly report found.
Fares have declined from historic highs at the end of 2022, but remain above 2019 prices.
“While it’s positive to see airfares fall from record highs in 2022, passengers are still generally paying more to fly today than they were before the pandemic,” Ms Brakey said.
“Airfares typically come down after the Christmas travel peak due to a seasonal decrease in demand, however some of this reduction is also explained by the airlines increasing their seat capacity.”
The aviation industry made 5.9 million seats available for travel in January, the highest in more than six months.
Qantas flew at 102 per cent of its pre-pandemic capacity, Virgin at 96 per cent and Jetstar at 84 per cent.
The ACCC said jet fuel prices are finally falling after Russia’s invasion of Ukraine sent oil prices to record highs in mid-2022.
The price was 35 per cent lower at the end of February than in June 2022.
“The price of jet fuel has been trending down, which should enable airlines to reduce airfares further in coming months,” Ms Brakey said.