The collapse of Bonza is yet one more episode in a badly controlled and monopolised industry

Photo from the Herlad Sun

Contributed by Joe Montero

Bonza is the Latest cut price flight airline to go down. This was in many ways inevitable. Difficulties faced by its parent American owned company 777 Partners in the United Kingdom combined with Australia’s domestic factors to produce the result.

Boeing 737-8 Max Aircraft lay idle waiting to be repatriated back overseas, as company executives talk to administrators. There is a hope that someone will but Bonza and put it back in the air. But the chances are slim. Even if this does happen, it will not last, Parade of failing cut price airline will continue.

The problem is that Australia is a small market, centered around Sydney and Melbourne. It means that in a high operating cost industry this is a natural monopoly, made even smaller with the existence of other overseas airlines using the two cities as transit points.

Qantas dominates, and virgin and Jetstar have an arrangement for a small piece of the pie. There is little real competition. Outsiders are relegated to the sidelines in airports. Airport fees are substantial. The dominant airlines can enter favourable arrangements with overseas airlines, cutting their operating costs and boosting their profits. Qantas can and does use its monopoly power to ratchet up the price of a flight ticket.

Australian air fares are extremely high. Domestic flights outside the main two routes often cost more than a flight to the other side of the world. This cuts the potential market, and doing this suits Qantas, because it means lowering operating costs, boosting its share, and lifting its profit.

Survival for a low-cost smaller airline in the Australian industry environment is impossible in the long run. If we are to get cheaper airfares, Australia must recognise that this is a natural monopoly that this is a natural monopoly, and that it should not be left in the hands of the private sector.

This is the way it was once upon a time. Qantas was the government owned airline. It developed a reputation as the world’s best airline, scoring highly in terms of cost to the passenger, efficiency, safety, and service. The government decided to sell Qantas, and it was downhill from here. The airline has declined in all categories.

Qantas is now infamous for poor service, price gouging, and one of the biggest recipients of huge government cash handouts. Qantas is cast as too big to fail and must constantly be fed taxpayers’ money. This is the company that rorted covid related government handouts more than any other.

Smaller players like Bonza can be sacrificed. No government handouts go this way. Through this, and favourable arrangements in securing terminals ensures that Australia’s airline routes are in the hands of this private monopoly.

The industry needs urgent reform by way of ending the private Qantas monopoly. Either it be outlawed from the most lucrative routes, or the government takes a controlling interest in the company. A second justification is on the grounds of the need to regulate strategic infrastructure.

The Australian government once set up Qantas to achieve these ends. It can do so again. The alternative is to keep on going through cycles of similar collapses as he policy of pretending to introduce competition continues.

Be the first to comment on "The collapse of Bonza is yet one more episode in a badly controlled and monopolised industry"

Leave a comment

Your email address will not be published.


This site uses Akismet to reduce spam. Learn how your comment data is processed.