Refunds up in the air as Bonza leaves passengers grounded

Bonza’s administrators have confirmed that the company is not currently in a position to issue refunds to its passengers, as 183 flights with 33,000 passengers scheduled to fly over the next seven days remain in limbo.

Bonza appointed Hall Chadwick as administrators on Tuesday after its aircraft lessor, AIP Capital, tried to seize its fleet. Hall Chadwick confirmed all Bonza flights had been cancelled until Friday at the earliest. It is unclear what will happen to flights due to take off after this date.

Bonza entered administration on Tuesday.

Hall Chadwick said late on Wednesday that it understood passengers’ frustration and that “we appreciate customers patience at this time.”

“The administrators have had meetings overnight and this morning with key industry participants located within Australia and overseas. These meetings are ongoing and will continue tonight and tomorrow,” a statement said, adding that the company had also met AIP Capital.

With two of its purple planes seized and blocked off with huge bollards at the end of Sunshine Coast airport, one stranded at Gold Coast airport, two trapped at the end of Melbourne Airport’s jet base, and the other two long gone to North America, it’s looking unlikely that any of the named aircraft – “Bazza”, “Shazza”, “Sheila”, “Malc”, “Bruce” or “Matilda” – will be taking off under Bonza any time soon.

In addition to the tens of thousands of out-of-pocket customers, millions of dollars are owed to ground handling companies, refuellers and airports that are unsure whether they’ll ever be repaid after Bonza entered voluntary administration on Tuesday.

Bonza is owned by Miami-based private equity business 777 Partners, which launched the airline during the COVID-19 pandemic with long-term leases for six Boeing 737-Max 8 aircraft.

Two of the original planes in its fleet were redirected to other 777 airlines at the end of last year. On Tuesday, Bonza’s remaining fleet was seized by AIP Capital, an investment house owned by the parent company of 777 Partners, ACAP, to recoup money owed to investors.

AIP confirmed the aircraft had been transferred to a new vehicle, Phoenix Aviation Capital, which is owned by insurance giant ACAP, on April 9.

Staff at Sunshine Coast airport, the base of Bonza, were blindsided on Tuesday when engineering administrators stormed its terminal, padlocked the airside entrance to “Shazza” and “Malc” and moved the two planes to the furthest point from the airport.

From there, the aircraft were blocked off with huge bollards, where they remain.

Bonza boss Tim Jordan has apologised to customers and said he was considering the viability of the business.

Bonza chief executive Tim Jordan told staff on Tuesday he and 777 Partners had no knowledge of the plan to seize the planes. The airline’s board held an emergency meeting on Tuesday afternoon to consider their options but entered into voluntary administration soon after. Some sources close to the administrators said the group was hoping to secure new backers, while others have written off any hope of getting the airline back off the ground.

The government, competitor airlines, airports and other members of the broader aviation supply chain met to consider whether mercy flights could be arranged to rescue passengers stranded in locations that no other airline flies to. But, with millions in unpaid bills to service providers, including Ausflight, Menzies, Trident and ISS, there was no guarantee staff would be available to service the planes.

The Bonza administration saga is not unfamiliar to the aviation industry. Virgin Australia, the country’s second-biggest airline, which flies 40 per cent of the domestic market, fell into administration during the depths of COVID-19 before being saved by private equity giant Bain Capital.

Airports across the country lost about $50 million during Virgin’s stint in administration, according to the Australian Airports Association.

At less than 2 per cent of the country’s overall capacity, the impact of Bonza’s collapse will not be anywhere near as severe – but it’s also a lot less likely to be plucked out of administration by a billion-dollar business.

The 32 airports Bonza flies to have yet to receive an update regarding flights scheduled for the rest of the week, but they have contingency plans to wipe all signs of purple from their terminals in the event the decision is made to abolish the airline entirely.

The head of the Australian Airports Association, James Goodwin, said the situation was deeply sad and argued that Bonza had come undone not due to a lack of demand but its overarching operating model.

“It’s disappointing because Bonza had high load factors; there were 150 people on some flights. It was working. What appears to have not worked is its financing and leasing arrangement. With hindsight, they were proving the doubters wrong in terms of growing the pie and creating new routes and demand, but it was let down by a poor company structure,” Goodwin said.

“On routes where Bonza has been competing with other airlines such as Melbourne–Gold Coast, the data is clear: Bonza has been instrumental in improving competition and pushing down airfares.”

Many of the airports Bonza flies to are owned by local councils, which meant the airline was able to negotiate cheaper landing fees in exchange for the tourism and business benefits derived from the additional flight capacity.

But airports often have other hidden costs that are unlikely to be recouped if Bonza goes under.

Bonza only started flying to Launceston Airport in Tasmania at the end of March. To facilitate the airline’s entry, the airport had to gain regulatory approval and modify its landing strips – by redoing the apron and line markings – to accommodate the airline’s 737 Max-8s.

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