Stuck in economy: No Qantas-style bailout for Bonza as more than 300 staff stood down

More than 300 employees of budget airline Bonza have been dismissed because the government leaves the financially struggling airline without a life raft.

Thousands of passengers were stranded in Australia when Bonza flights were canceled without notice on Tuesday morning. The airline was placed under administration hours later.

Many of the stranded people were allowed to buy tickets after the company was warned it would have to ground its planes.

In a further update late on Friday, Hall Chadwick confirmed that 302 employees had been made redundant out of a total workforce of 323 people. They were informed on Thursday evening during a virtual meeting.

The collapse of Bonza and confirmation that there will be no government bailout is a further blow to hopes for greater competition – and affordability – in Australia’s highly concentrated aviation sector.

Qantas, subsidiary Jetstar and competitor Virgin serve approximately 95 percent of all domestic passengers.

During the Covid-19 pandemic, the government came to the rescue of Qantas, which received $2.7 billion from taxpayers, including $900 million from the JobKeeper program.

The airline’s chief executive, Alan Joyce, said it was just eleven weeks away from bankruptcy at the time.

Virgin did not receive the same treatment and was only rescued after US company Bain Capital stepped in with a buyout.

Despite Qantas posting a profit of $2.47 billion in 2023, the airline refused to refund any of the money.

Bonza administrators Hall Chadwick revealed that notices of default were sent to the airline on April 17, almost two weeks before customers started looking for alternative flights.

Bonza leased its entire fleet of Boeing 737-8 aircraft and those agreements were terminated late Monday night.

Company executives claimed the landlords’ actions forcing them to ground flights “was not predicted or expected in advance,” Hall Chadwick said in a statement.

Insufficient cash flow and financing prevented Bonza from continuing its activities, the manager said.

The administrators were in discussions with government organizations about supporting workers, they said.

Transport Minister Catherine King previously ruled out providing financial support to Bonza, saying the government’s priority was ensuring stranded travelers could get home.

But Cabinet colleague Bill Shorten later said the government would arrange transition support to ensure workers received the wages they were entitled to if administrators were unable to pay their entitlements.

“It’s unfortunately a terrible time for these workers,” he told ABC Radio.

‘As a trade union representative I lived through the collapse of Ansett and saw what happened to Virgin.’

All planes will be grounded at least until Wednesday, five days more than previously expected.

Passengers with arriving flights have been told not to travel to an airport unless they have secured a seat on another airline.

“The administrators recognize that this is not the news that employees, customers and other key stakeholders would like to hear, but there is no alternative course of action available to the administrators at this time,” Hall Chadwick said.

Transport Workers Union official Emily McMillan called on Bonza to “strain every sinew” to ensure workers were paid.

“These are hardworking people who have bills to pay and families to feed,” she said.

“This is a devastating blow and a cause for great concern in a cost-of-living crisis.”

Refunds will not be processed and customers have been asked to contact their bank or travel insurer.

The Sunshine Coast-based company was unveiled in October 2021, with the first flight taking off in January 2023.

It originally flew 27 routes to 17 destinations, but began cutting services during its first six months.

The 95 percent market dominance of Qantas, Jetstar and Virgin is virtually unheard of in similar high-traffic areas – as is the case with the routes to Sydney, Melbourne and Brisbane.

By comparison with the airlines, Woolworths and Coles, which have been the focus of several investigations into concentration in the supermarket sector, control about 65 percent of that market.

The Transport Minister said the government is committed to increasing competition, reliability and affordability in the aviation industry.

“It has been clear in recent years that the industry has not met the expectations of Australian travellers,” a spokesperson told AAP.

She said recent changes to slot availability at Sydney Airport have helped increase competition and further measures will be unveiled in the Aviation White Paper, which is expected to be released in mid-2024.