Australia appears to have a new low-cost start-up vying for entry to the domestic airline market – Koala Airlines.
With the dust still settling on the last resting place of new hopeful Bonza, and the recent demise of Rex Airlines’ domestic sector ambitions, it remains uncertain just how legitimate the new start-up really is.
As far as its website goes, Koala Airlines certainly looks like it is all business. The presentation is slick, and the narrative is ambitious. The potential new airline states that its strategy will “fundamentally differ from previous entrants in a domestic market which has been long dominated by two major airlines.”
The two airlines are of course Qantas and Virgin Australia, who have traditionally maintained a vice-like grip on the Australian domestic air travel market in a longstanding duopoly.
Koala Airlines: Taking an “Innovative Route”
Koala acknowledges that many new carriers have attempted to break into the market since 1990, focusing solely on offering cheaper fares. On this point, Koala Airlines says that it will take a “more innovative route”. Exactly what that innovative route will look like remains to be seen.
Let’s not forget that Bonza also entered the market with an innovative plan to operate on underserved routes. It sought to link key capital cities of Brisbane, Melbourne and Sydney with smaller destinations.
Koala Airlines currently have an Australian Air Operators Certificate (AOC) in place, but it is still unclear just when they plan to commence operations. The aircraft type which the planned start-up will seek to use is similarly unstated, though the website presentation centres around the Boeing 737 MAX 8. The carrier states that it is “currently finalising negotiations to acquire a fleet”.
The Harsh Aussie Landscape
The Australian domestic aviation sector has a history of failed startups; a graveyard of ambitious airlines that couldn’t withstand the fierce well-ensconced competition and the attendant operational challenges.
Recent examples of failed Australian domestic airlines include Bonza and Rex. Bonza, a low-cost carrier that promised to disrupt the market, succumbed to financial difficulties and entered voluntary administration.
Rex Airlines, a major regional carrier, set out with a hopeful goal of securing 30% of the Australian domestic pie. Naturally, the duopoly weren’t open to setting another place at the table. At the end of the day, the pie remained securely on the plates of Qantas and running mate Virgin Australia.
Koala Airlines, despite its innovative outlook and focus on customer satisfaction, similarly faces an uphill battle.
Conclusion
Rightly or wrongly, the Australian domestic market is dominated by two well-established carriers with deep pockets and extensive networks. Breaking into this competitive landscape requires significant investment, operational expertise, and a strong business model. A goodly amount of luck and a four-leaf clover certainly wouldn’t go astray either.
Given the depth of background experience of Koala’s nominated key officeholders, they are no doubt well aware of the jagged Aussie domestic landscape. In Koala’s favour, the experience is certainly there. The operation is headed by Bill Astling, who founded the new venture in 2018. Astling has a noteworthy aviation pedigree including experience with Singapore Airlines, SriLankan and Vietnam Airlines.
With a competent management team and an Australian AOC firmly in place, the next steps remain to be seen.
For the record, the IUCN Red List classifies the koala as a vulnerable species – only one classification above endangered. Let’s hope this sobering fact doesn’t cast a hex on the hopeful new entrant bearing the Aussie marsupial’s name.
Only time will tell if Koala Airlines can defy the odds and become a sustainable player in the Australian skies. Watch this space.
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