The OzJet story: Australia's short-lived 'all business class' airline

How an upstart airline with all-business-class Boeing 737s challenged Qantas on the lucrative Sydney-Melbourne route.

By Chris Chamberlin, October 9 2020
The OzJet story: Australia's short-lived 'all business class' airline

Sydney-Melbourne has regularly stood among the world's busiest domestic routes, with almost 150 flights per day carrying some 10 million passengers each year, according to data specialist OAG.

This has long made it a highly profitable corridor for airlines – one built on the back of business travellers shuttling between Australia's two largest cities.

Little wonder, then, that in the early 2000s, Melbourne-born millionaire Paul Stoddart – then better known as owner of Italy's Minardi Formula One team and founder of charter airline European Aviation – decided he wanted a piece of the action.

The way he'd do it would be to start an all-business-class airline offering flat-rate fares comparable with flexible economy on Qantas.

His airline was named OzJet – and after launching on November 29 2005, it survived for just 14 weeks.

OzJet founder Paul Stoddart sought to revolutionise the Australian business travel market.. Supplied
OzJet founder Paul Stoddart sought to revolutionise the Australian business travel market.
Supplied

An airline for the business traveller

Following the collapse of Ansett in 2001, and with Virgin Blue and Jetstar both being all-economy budget carriers, Qantas remained Australia's only domestic airline with business class.

Stoddart felt this left room to challenge Qantas for the lucrative business travel market, using a unique approach tailor-made for high flyers.

Central to this was OzJet's fleet of three Boeing 737-200s, each fitted with just 60 business class seats from tip to tail.

OzJet's trio of all-business-class Boeing 737s.. Montague Smith
OzJet's trio of all-business-class Boeing 737s.
Montague Smith

With only 15 rows of seating arranged in a 2-2 configuration, 47cm between the armrests and ample legroom for stretching out, "it’s about the closest (people) will come to a corporate jet," OzJet General Manager Hans van Pelt said at the time.

Those passengers would pay no more than a flexible economy booking on Qantas: which, at the time, meant OzJet pricing was $325 one way or $650 return.

Once on board, complimentary hot meals were served on bone china, with a free pour of alcoholic and non-alcoholic beverages.

OzJet's Boeing 737s sported 60 business class seats, in a 2-2 layout.. Benjamin Freer
OzJet's Boeing 737s sported 60 business class seats, in a 2-2 layout.
Benjamin Freer

Stoddart eschewed airport lounges as costly, capital-intensive frills: OzJet operated on a 'turn up and go' model to suit time-pressed business travellers.

Combined with online check-in and printing your own boarding pass at home or the office, passengers could arrive at the airport as little as 15 minutes before departure and zip straight through to the boarding gate.

There'd be little time lost on arrival, either: a generous cabin baggage allowance of up 20kg, over as many as three pieces of luggage, avoided a pit stop at the baggage carousel.

OzJet takes flight

Ahead of OzJet's inaugural Melbourne-Sydney flight on November 29 2005, Stoddart was already eyeing an expansion to Brisbane – that other corner of the east coast's 'golden triangle' – followed by Canberra and Adelaide, while transcontinental flights to Perth would tap into the lucrative resources boom.

But his ambitions were quickly dashed, and without arch-rival Qantas even having to break a sweat.

Launching an airline for business travellers in the lead up to the Christmas holidays – a time when road warriors are generally wrapping up their travel plans for the year – made for an immediate shortfall in passengers.

With up to eight return flights a day, some OzJet services carried as few as three passengers, several newspapers reported at the time.

Strap in for turbulence.... Peter Bakema
Strap in for turbulence...
Peter Bakema

Corporate travel policies often prohibited business class bookings on such short trips, regardless of how competitive the price was.

Many government travellers – a rich vein for any airline – simply couldn't book with OzJet until July 2006, due to existing travel contracts already in place with other airlines.

Stoddart had also underestimated how much frequent flyers valued airport lounges and loyalty programs – neither of which OzJet had.

As the airline’s losses quickly mounted, Stoddart slashed ticket prices to $125 one-way and launched a 'buy one, get one free' ticket promotion with leisure passengers in his sights.

Go west...

While Sydney-Melbourne sales remained sluggish, Stoddart fast-tracked plans to add Perth to the OzJet network.

For starters, he reasoned, the route would be better aligned with the business-class-friendly travel policies of many corporate clients.

“Perhaps we suit Perth because on a 4.5-hour flight, these seats come into their own,” Stoddart said at the time.

“The longer the route, the more what we’ve got to offer comes into play,” talking up the greater comforts of business class on a flight long enough to appreciate the difference.

Even with headwinds on its launch route, Paul Stoddart remained optimistic on OzJet's success.. Supplied
Even with headwinds on its launch route, Paul Stoddart remained optimistic on OzJet's success.
Supplied

OzJet's Perth flights were announced in February 2006, with the first flight scheduled for March 13. But time was quickly running out.

On March 12 – the day before the Melbourne-Perth inaugural – Stoddart pulled the plug on OzJet as a commercial airline, announcing it would shift to purely charter services. Three years after that, OzJet was wound down entirely.

Flying towards failure

Speaking with media the day after OzJet axed its commercial operations, Stoddart's assessment was frank: "there just isn’t a market for a business class airline between Melbourne and Sydney," he reflected.

OzJet’s plan was “ambitious and overoptimistic”, Stoddart said, but Australia’s inability to support three strong domestic carriers was “a reality that goes back to the old Ansett.”

Come 2009, Strategic Airlines would buy what was left of OzJet, and later, as Air Australia, launch a more well-rounded economy class experience for travellers – but it ultimately met with the same fate.

Feature image courtesy Sheba Also, Creative Commons.

Additional reporting by David Flynn

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller, and lives by the motto that a journey of a thousand miles begins not just with a single step, but also a strong latte, a theatre ticket, and later in the day, a good gin and tonic.

QF

11 Jul 2014

Total posts 502

The Australian population only has capacity for 2 airlines, and that is being optimistic. Once we start flying again people are going to be picking winners and losers, so lean mean ready to go with lounges, loyalty, good customer service and price is going to make an airline survive 

lounges not that necessary, many frequent flyer programs are too complicated & frequent flyer tickets still cost too much in dollars.

Ozjet mistake was it should have gone 2 class, with small premium economy/business class. Those 737-200 were paid for & although thirsty on fuel, could have transported something like 130 in all economy layout & the 1st few rows could have had the middle seats left empty if booked as PE/Business.

actually think exit limit on 732s was 136, not 130

Regular Flyer: The '130' passenger comparison was provided by OzJet, back in the day.

disagree with 2 airline idea, as we have had 3 (QF, JQ, VA). Rex is different, not a true start up as already have large customer base, existing slots & gates & Rex regional pax won't be flying QF or VA anymore. Rex will if they get it right, offer good frequency fast, so they won't be competing with JQ but still might offer some JQ type fares.

An initially very simple frequent flyer program, like buy 10, get 1 free might work for a while, but they should be able to very easily tie up with lots of international carriers who will be desperate for any pax they can get & how hard will it be to sell ff pts or actual flights to banks/retailers ? Not hard at all.

With much lower costs in a recession, when many will be looking for cheapest option, qantas might be stuck between a rock & a hard place.

31 Mar 2014

Total posts 338

Last I checked, there was still one of these planes in full OzJet livery sitting at Perth Airport. One was recently moved to White Gum Air Park. The other was flown to Jandakot many years back for use with Tafe students.

Qantas - Qantas Frequent Flyer

30 May 2013

Total posts 328

You've got to wonder how much fuel those old -200 series 737s would have guzzled. Not exactly the cheapest aircraft to run, even back then.

but virtually no acquisition or holding costs. Unlike new aircraft, which have to be run hard, they could have just run them when demand was there, ie. peak hour Mon-Fri (inc later on Fri night) & Sun afternoon/evening, much like Allegiant did with their very cheap mad dogs, which supposedly cost only USD$1m each.

QF

02 Nov 2012

Total posts 41

Compare the engines on these planes with the engines on the 738s and the Max, it really highlights how much they have changed between the early 737s and the current ones!

United Airlines - Mileage Plus

14 Jan 2019

Total posts 2

Remember Compass Airlines from the early 1990's?

Based in Queensland but both versions never made it.

Compass got screwed from day 1, by not having gates together & went for bigger aircraft A300-600s & A310s, which didn't allow them enough frequency. But Compass did highlight how much the other airlines were screwing us on price.

Virgin Australia - Velocity Rewards

14 Mar 2017

Total posts 149

A business masterclass in why you need to do your research before investing your money. This didn't fail because there was no market, it failed because it didn't give travellers or businesses what they needed and was based on assumptions about how to compete against Qantas, rather than addressing specific customer pain points and buying patterns.

Also, the brand was garbage.

Qantas knew how to kill off Ozjet by offering all sorts of deals to existing corporate customers, who are, in general not so price sensitive, as in many cases not paying their own fares. 

Qantas were offering points, lounge access & deals on fares, to lock pax in, so it didn't matter if corporate were given incredible deals on ozjet, they were locked into qantas.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 343

I'd say they failed because they adopted the 'Telstra philosophy' of "Because we're an Australian business we know what you need better than you do".  Or to put it another way, they simply didn't listen to the customer.

Qantas - Qantas Frequent Flyer

23 Mar 2012

Total posts 212

Never flew OzJet but loved the livery. When I was on the road all the time I knew I was home when I spotted the OzJet frames parked at Perth. 

Qantas - Qantas Frequent Flyer

27 Aug 2014

Total posts 35

agree nice livery.  

Having looked at their history before I wondered if they basically used what European Airlines had already painted eg on VH-OZQ (which was G-GPFI) with minimal changes (ie adding chequered flag and "Oz" ) or whether it was the other way round.   Not sure about the dates.

Ivanb52

Doubt if ozjet spent very much on aircraft, ie.

Minimal paint job

Seats probably came from another aircraft European had acquired

 New carpet maybe.

Flight attendants would have got new uniforms.

Virgin Australia - Velocity Rewards

24 Aug 2011

Total posts 769

Tried it twice (down and back) lots of ex-AN flight attendants. Strategic/Air Australia/Pizza Boy airlines - armchair CEOs with other peoples' money to spend unwisely.

30 Sep 2020

Total posts 3

The airline industry has always been cutthroat and risky. Capital intensive too.  Landing slots on the busy routes are also difficult to obtain.  The important aspect is delivering value for money. Ryan Air in Europe, Southwest in US are delivering value for money. Maybe an airline that delivers value will work.

Jetstar Airways - Qantas Frequent Flyer

16 Jan 2020

Total posts 2

Wot?  No lounge..no points...oh well....


Hi Guest, join in the discussion on The OzJet story: Australia's short-lived 'all business class' airline