What Happened To Short-Lived Australian Carrier OzJet?

The history of Australian domestic aviation is littered with airlines that have tried and failed to take on larger carriers over the years. OzJet was one such carrier that tried to compete using all-business class cabins on aging aircraft. The airline lasted a year before throwing in the towel and admitting that its business plan was fundamentally flawed.

Background to OzJet

Australia has seen many domestic airlines come and go over the years. Recently, new carrier Bonza has taken up the mantle as the latest carrier to compete with the majors, in today’s case, Qantas, Jetstar, and Virgin Australia.

OzJet (IATA code O7/ICAO code OZJ) was the brainchild of Melboune-born Formula One entrepreneur Paul Stoddart, owner of the Minardi F1 racing team. His early vision was to start a low-cost airline that would compete on the key Sydney to Melbourne trunk route, undercutting his competitors and providing a better passenger experience.

Sydney-Melbourne has regularly stood among the world’s busiest domestic routes. Given the massive demand for capacity on the route, it offers prime revenue-earning potential for any airline that can get its offering right.

Stoddart was already involved in aviation, owning European Air Charter in the UK, which operated passenger charter flights in its own right but also specialized in wet leasing, aircraft maintenance, and crew training from its Bournemouth Airport headquarters.

However, realizing the huge demand for business class travel between the two Australian cities, Stoddart re-imagined his airline as an all-business-class carrier. The plan was for OzJet to offer simplified flat-rate business class fares that would compare favorably with its main competitor Qantas’ fully flexible economy class fares.

Following the collapse of Ansett in 2001, Qantas remained Australia’s only domestic airline offering business class on this route at the time. Stoddart felt there was enough room in the market to challenge Qantas for the lucrative business travel market, using a unique approach tailor-made for high-flying business travelers looking for something different.

Having originally named his new venture ‘Ausjet,’ this was subsequently changed to ‘OzJet’ before the airline’s official launch. The airline was granted its airworthiness certificate for its first aircraft, a Boeing 737-200 leased from European Air Charter, in October 2005. The airline was subsequently awarded its Australian Air Operator’s Certificate on November 11th, 2005.

Commencement of operation

On November 29th, 2005 OzJet commenced operations, flying eight scheduled return services per day between Sydney and Melbourne, initially using 737-200s, each configured in a 60-seat, all-business class configuration. The fleet eventually expanded to five 737-200s during the airline’s existence.

Stoddart planned for OzJet to expand to eventually operate a fleet of ten 737-200s plus four British Aerospace 146s, operating additional flights from Brisbane, Adelaide, Canberra, and Perth. OzJet aimed to win a limited but lucrative foothold in each market the carrier was to serve, attaining no more than 10% of the business market from Qantas.

OzJet’s marketing slogan was “You’re in Business,” reflecting its marketing and product focus on business travelers. OzJet operated on a ‘turn up and go’ model to suit time-pressed business travelers. This facilitated online check-in facilities and allowed passengers to print their own boarding passes and arrive at the airport as little as 15 minutes before departure.

With only 15 rows of seating arranged in a 2-2 configuration, 47cm between the armrests, and ample legroom for stretching out, OzJet aimed to provide a corporate jet experience to its customers. Once onboard, complimentary hot meals were served on bone china, with free alcoholic and non-alcoholic beverages.

OzJet takes flight

Upon the commencement of operations, OzJet had big expansion plans. However, the reality played out somewhat differently from what Stoddart and his team might have expected. Launching an all-business-class airline in the run-up to the Christmas holidays led to an immediate shortfall in passengers, with astonishingly low numbers on many OzJet flights.

Several Australian newspapers reported that with the high frequency of departures each day, some OzJet services carried as few as three passengers. Having hoped to compete head-on with rival Qantas for high-yield business traffic, the flag carrier barely noticed the arrival of the new challenger on the market.

Two key factors quickly merged that OzJet hadn’t accounted for. Many existing corporate travel policies often prohibited business class bookings on such short sector lengths as Sydney to Melbourne (regardless of how competitive the price was).

Secondly, many government employees were prohibited from booking with OzJet until July 2006 due to existing travel contracts already in place with other carriers. Stoddart and his team also had rejected the idea for OzJet to offer airport lounges or a frequent flyer program, underestimating how much corporate travelers enjoy such add-on perks.

With losses quickly mounting from the get-go, OzJet slashed its one-way ticket prices to just $125 and promptly launched a ‘buy one, get one free’ ticket promotion to attract leisure travelers.

Heading west

While sales on OzJet’s critical Sydney to Melbourne route remained sluggish into 2006, Stoddart fast-tracked plans to add Perth to the OzJet network.

Keen to tap into the lucrative resources business traffic and believing that flights to Perth would be better aligned with the all-business-class model, Stoddart saw the 4.5-hour flight to Western Australia as the route where OzJet’s onboard offering would come into its own.

OzJet’s Perth flights were announced in February 2006, with the first flight scheduled for March 13th. However, with the airline hemorrhaging cash, the writing was already on the wall for OzJet.

The day before the inaugural Sydney to Perth flight operated, Stoddart announced that OzJet would cease operation as a scheduled airline and instead shift its focus to operating on a charter basis only.

Charter-only operations

On May 16, 2006, OzJet announced it would be operating passenger services between several Australian airports to Norfolk Island, replacing Air Nauru on the route. The OzJet aircraft used on this service was repainted into Norfolk Air livery and was re-configured for 108 seats (8 business class and 100 in economy).

The services operated several days a week, from Norfolk Island to Sydney, Melbourne, Brisbane, and Newcastle on behalf of Norfolk Air.

In August 2006, OzJet began operating scheduled flights on behalf of Airlines PNG between Brisbane and Port Moresby, operating three times a week. In February 2007, it re-commenced scheduled flights under its own brand between Perth and Denby, Western Australia.

Sale and subsequent closure

In May 2008, Stoddart announced that he had sold his 97.4% stake in OzJet to Heavylift Cargo Airlines, which planned to replace the OzJet Boeing 737-200 fleet with newer and more fuel efficient 737-300s and 737-400s. Heavylift also planned to end the arrangements with Airlines PNG and Norfolk Air, focussing on its own operations instead.

On February 3, 2009, having failed to remain financially viable with its minimal operations, Heavylift sold its majority share in OzJet to a new owner, the Strategic Group, which operated a limited number of charter flights initially under the OzJet brand and later as Air Australia.

However, Strategic itself became insolvent on February 17, 2012, which finally marked the end of OzJet operations once and for all. While a single OzJet aircraft had already escaped Australia and returned to the UK to fly on with European Air Charter, the four others were parked and effectively abandoned at Perth Airport to await their fate.

The four former OzJet aircraft were lined up for scrapping as the accumulated parking fees at Perth exceeded their value.

However, as reported by Simple Flying last November, two former OzJet aircraft (registered as VH-OZX and VH-OZU) were rescued by a couple in Western Australia, with one acting as the main exhibit in a local aviation-themed museum and event space while the other is in the process of being converted into luxury vacation accommodation.

Do you remember OzJet? Perhaps you even flew on one of their services? Let us know more in the comments.

Sources: Planespotters.net, ch-aviation.com