Getting regional jets to work on skinny regional routes in Australia is a tough business. The rise and fall of JetGo is an example. Despite an innovative network covering mostly unserved routes across Australia’s eastern seaboard, JetGo collapsed in inglorious circumstances in 2018.
Brisbane-based JetGo started out focused on fly-in-fly-out flying
Based at Brisbane Airport, Jetgo began running charter and fly-in-fly-out (FIFO) flights when it gained its air operators certificate in 2012. JetGo’s first regional jet, an Embraer ERJ 135 that came via Chautauqua Airlines and FlyMex, landed in Brisbane in March that year. At the time, JetGo planned to focus on the revenue-rich FIFO mining markets.
Behind the airline were a couple of private companies, including Redlum Pty Ltd and Shef’s Supermarket Australia Pty Ltd. Dig a little deeper and there were links into the Australian aviation scene. The Managing Director of JetGo until its demise was Paul Bredereck. He is now General Manager at Brisbane’s Airwork Aviation.
Australia’s airline industry is littered with airlines that started small with a focused strategy. But the smell of Avgas is enough to get anyone into an expansionary frame of mind. By March 2013, JetGo had three Embraers and was eyeing regular passenger services to regional centers in Queensland that would operate in conjunction with a mining contract or two.
Australia’s Civil Aviation and Safety Authority (CASA) gave JetGo the green light to begin scheduled passenger services in 2014. Straight away, the airline announced a few new routes – Sydney (SYD) – Tamworth (TMW) and Sydney – Gladstone (GLT), and Sydney – Roma (TMA).
Interesting passenger route ideas that ultimately failed to fly
Sydney to Tamworth was already a Qantas stronghold, and Virgin Australia would start flying the route the following year. The Gladstone route was interesting. Gladstone is one of the world’s largest coal exporting ports, and a direct flight could have potentially worked well for coal corporates and FIFO workers looking to bypass a Brisbane connection. The Roma route was more oddball than interesting.
The Roma route never got off the ground. It was axed just weeks before the first flights, due to lack of demand. The Gladstone flights were axed in February 2015 for the same reason. Demand was highly variable and a JetGo executive at the time said locked in travel contracts with Qantas didn’t help.
But Tamworth proved a better bet. While JetGo ultimately dropped the regional New South Wales city from their network, flights there laid out the passenger route template for the airline – linking regional cities in one state with the capital city of another state. It’s something airlines like East-West did a generation ago with their Fokker Sydney – Devonport – Hobart, Brisbane – Tamworth – Sydney, and Melbourne – Albury – Sydney flights.
In JetGo’s case, the New South Wales regional city of Dubbo (DBO) was linked to both Melbourne (MEL) and Brisbane by jet. Wagga Wagga (WGA) would link to both Brisbane and the Gold Coast (OOL). JetGo’s Embraers would also link Albury (ABX) with the two Queensland cities. Wollongong (WOL), New South Wales’ third largest city, would also briefly see JetGo flights to Brisbane and Melbourne.
But ultimately, an interesting route structure of skinny regional routes operated by Embraer jets did not succeed. Not even the lure of skipping a Sydney connection could make the flights work.
Legal action from a local council is a tipping point for JetGo
From its first scheduled passenger flights, armchair airline CEOS were questioning JetGo’s strategy. After a three-year pause in deliveries, three more Embraers were delivered across 2016 and 2017 – two ERJ 135s and an ERJ 145. The airline built up its network in the four years it flew, dropping some destinations (like Tamworth) in favor of new destinations like Wollongong and Wagga Wagga. The route churn was getting attention.
JetGo went into voluntary administration in mid-2018, canceling all of its passenger services. One of the tipping points appears to be legal action launched earlier that year by Dubbo Regional Council, operators of Dubbo Airport.
The legal action related to allegations of unpaid passenger charges, landing fees, and parking fees at DBO. Dubbo Regional Council has a reputation for being a tough airport operator. Australia’s Rex has a long-running stoush with the council over the cost of flying into the airport. But Dubbo is a major service city in central west New South Wales with plenty of corporate traffic. The revenue opportunities for airlines like JetGo and Rex outweigh the hassle of dealing with the airport operator.
JetGo collapse leaves thousands out of pocket
As administrators began to sift through JetGo’s accounts, there were allegations the airline may have been trading while insolvent for almost two years before it filed for administration. Administrators said creditors owed approximately US$28 million were unlikely to get any money back and queried the accuracy of JetGo’s financial records.
Around 10,000 passengers with useless tickets were out of pocket. Also going unpaid were JetGo employees (who were owed US$1.84 million), suppliers and airport operators. Dubbo Regional Council was owed around US$200,000, and the council owners of Wollongong Airport were owed around US$297,000.
It also emerged JetGo’s CEO, Jason Ryder, had previously operated four failed aviation and tourism businesses. According to the Daily Liberal newspaper, JetGo’s directors could have breached Australia’s Corporation’s law, including “a breach of their obligation to keep financial reports, breach of directors duties and the failure to prevent insolvent trading.”
In the weeks running up to June 2018, JetGo was canceling flights owing to a lack of cash to operate them. The airline was down to flying two Embraers. Lessors had already repossessed two planes, and the remaining aircraft had no real value.
Airlines running out of money isn’t a new phenomenon, and it isn’t restricted to Australia. However, Australia is a bit of a Bermuda triangle for airlines in expansion mode. JetGo made quite the splash with their Embraers and interesting routes. On the surface, at least, it was an interesting business idea. But as JetGo learned in 2018 and airlines are still discovering right now, it takes deep pockets to keep flying in Australia.
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