Dragging your painstakingly weighed luggage through endless airport corridors to find a faraway gate.

Being herded like cattle onto a packed plane, passengers cramming bags into overhead lockers in a collective show of savagery.

Knowing you’ll sit awkwardly shoulder-to-shoulder with a stranger for the next two hours, wishing the cabin crew would just offer you a glass of water.

For better or worse, we’ve become accustomed to no-frills flying as a necessary alternative to forking out big bucks for shorter flights.

But, as the fall of Bonza has proven, the budget business model isn’t as simple as we may think. 

Several strategic issues have been flagged as the reasons for the low-cost carrier (LCC) entering voluntary administration on Tuesday.

But some analysts argue it never stood a chance in the first place. 

So, is there still a future where new budget airlines in Australia could thrive? 

What are the biggest costs?

Budget airlines need to focus on minimising costs across various aspects of their operations to offer cheaper fares to passengers.

Rico Merkert, professor and chair of transport and supply chain management at Sydney University Business School, says there’s a lot at play to get the balance right.

“The economics of operating a no-frills airline is more complex than many people think, as it is not just about having the lowest cost base in the market,” he told the ABC.

The aircraft 

One of Bonza’s biggest failings has been blamed on its choice to operate a small fleet of large Boeing B737 jet aircraft, which it leased through US company 777 Partners.

Most LCCs will opt to order large quantities in one go and receive substantial discounts.

Greg Bamber from Monash University’s Business School, who has studied low-cost airlines around the world, said it would have made more sense to use smaller planes as it only operated on regional routes. 

“It would have been better for such a budget airline to have leased less expensive and smaller planes,” he said.

“It’s very ambitious to try to always fill a relatively big plane on all Bonza’s regional routes that fly directly between small towns or cities.” 

Fuel 

Fuel costs are a significant expense for any airline.

But Professor Bamber says costs can be higher for budget airlines than established carriers who have long-term contracts for fuel and local flight-handling services.

It may also be more expensive to refuel in the regions due to supply and less competition, he added.

Budget airlines can also be more exposed to fuel and foreign exchange fluctuations.

Professor Merkert said LCCs often don’t have the resources or expertise to financially hedge against such risks.

And if they “sweat out each and every little cost-saving potential,” they have little room to move.

Full-service carriers can still potentially cut costs elsewhere during such periods.

Labour and fees

Employee salaries, including for pilots, flight attendants, ground crew, and administrative staff, make up a significant portion of any airline’s operating expenses.

Often airlines will cut costs by not hiring cleaners to clean the plane between flights and instead get cabin crew to collect rubbish.

Airport fees, such as landing fees, gate fees, and other charges imposed by airports also contribute to the cost of operating flights.

This is why budget airlines often fly at off-peak times or use cheaper airports.

How can costs be cut?

Most budget airlines will focus on cost reduction strategies by:

• Operating point-to-point routes (direct that don’t pass through a major hub) to and from lower-cost small regional airports
• Maintaining high aircraft utilisation rates with rapid turnaround times at airports
• Using fuel-efficient aircraft
• Offering minimal in-flight amenities

Professor Merkert says turnaround times of less than 20 minutes are needed to keep the aircraft at maximum utilisation.

So having ultra-efficient processes, which often means not offering booking classes or a business section, is important.

But many unforeseeable circumstances can impact smooth turnarounds. 

“LCCs want nothing more than reliable flight operations both for their cost structures and passengers,” Professor Merkert said.

What models have been successful?

Professor Bamber says several low-cost airlines have achieved significant success globally.

“These budget airlines have demonstrated that a focus on cost efficiency, streamlined operations, and customer satisfaction can lead to success in the highly competitive airline industry,” he said.

Southwest Airlines (US)

Southwest has a strong focus on domestic routes within the United States and is known for its efficient operations, treating workers well, and a business model that prioritises customer service.

Ryanair (Ireland)

Ryanair is Europe’s largest budget airline and one of the world’s largest international airlines by passenger numbers. It has become synonymous with ultra-low fares and a no-frills approach to air travel, but has a reputation for not treating its customers or workers well. It often flies to secondary airports that have lower fees than the majors.  

EasyJet (UK) 

EasyJet is another major player in the European budget airline market. It operates a large network of domestic and international routes, primarily within Europe, and is known for its affordable fares, user-friendly website, and strong brand.

AirAsia (Malaysia)

AirAsia is a leading budget airline in South-East Asia. It offers a wide range of domestic and international flights and is known for its competitive pricing and extensive route network.

Professor Merkert says some of the more successful budget airlines like Southwest have upgraded their service offerings, but have started charging more.

Other airlines survive by setting up under the roof of a parent or holding company, which helps share some of the costs with the full-service carrier arm of the holding.

But the crucial factor in success is demand for what the carrier is offering.

Bonza didn’t have access to the larger hubs like Sydney, which Professor Merkert says was hard to overcome. 

But Tim Harcourt, airport economist and professor at UTS, said it could have had more regional traction with a model that incorporated a degree of business travel. 

Similar to Rex, which has seen success with regional services which mix services for business and leisure. 

He added that, in general, skimping on services for passengers only makes a difference at the margin. 

Can budget airlines compete in Australia?

It is difficult for new budget airlines to compete on the most lucrative routes in Australia where established airlines already have a tight hold.