How OzJet challenged Qantas with an ‘all business class’ airline

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

By Chris C., September 4 2023
How OzJet challenged Qantas with an ‘all business class’ airline

Sydney-Melbourne is among the world's busiest domestic routes, and a highly profitable corridor for airlines – one largely built on the back of business travellers shuttling between Australia's two largest cities, to the benefit of Qantas and Virgin Australia.

In pre-pandemic times, there were almost 150 flights per day carrying some 10 million passengers each year between these state capitals.

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.

And the way he'd do that would be to start an all-business-class airline offering flat-rate fares comparable with flexible economy tickets 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.

05 Sep 2023

Total posts 1

OzJet was a slot play with a trade sale exit.

As a new entrant had we had slots:

     SYD-MEL at 6:00, 7:00, 8:00, 9:00, 15:00, 16:00, 17:00, 18:00, 19:00

     MEL-SYD at 6:00, 7:00, 8:00, 9:00, 15:00, 16:00, 17:00, 18:00, 19:00

Paul met with Geoff Dixon in London, Qantas seriously looked at purchasing the AOC and slots but concluded that the pilot union would kill them (after Impulse became JetStar). So, after running the numbers they passed. Qantas's only competitive option was to introduce a yield managed business class fare. 

The real target was Virgin. The interior of their terminals had fixed advertising such as "You're in Business" and "3 minutes Car to Plane". In Melbourne there were 4 business class seats people could sit in. On the Friday before we closed down RPT operations we signed 32 corporate travel agreements. 

A week later Paul shut down RPT ops and we became an ACMI operator. It was so frustrating as aircraft 4 had just arrived which is the minimum number to operate the schedule. Aircraft 4 had a U/S APU which needed to be replaced before it could operate but otherwise the schedule would be implemented.

The much-reported flight with 3 passengers was on a positioning flight with one family (it included a baby). Why would you put a (free) reporter on a sold-out flight? The reality was that most of the Friday and Sunday flights were sold out. Starting at the quiet time was about having the pilot's trained to support an upturn in traffic with the Commonweath Games.

I'm still proud of OzJet, we operated 155 flights "on-time" through Sydney (that's in-a-row to IATA standard) ...a record that will never be beaten and never will! It was still the first High-Capacity AOC issued on the first proving flight. The AOC start-up budget was 3.5m (yes really V Australia, Tiger and JetStar).  We also had the first kiosks. These are never reported.

I often feel the reporting of OzJet is because reporters are playing checkers and we played chess. The fatal flaw was we had only one potential buyer...and they said no. I wished Paul had suck to the plan and bought B737-300s with 90 seats.

BTW, I have never been contacted by a reporter about OzJet. So, I have no idea where people get their opinions.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 711

Weird thing is, I reckon today it'd be a roaring success.  I'd certainly look to schedule my travel around its flights in the BNE-SYD-MEL corridor.  


Hi Guest, join in the discussion on How OzJet challenged Qantas with an ‘all business class’ airline