Australia's newest airline is set to offer ultra-low-cost flights based on Ryanair model

[Lee]

A prominent Australian aviation figure is fundraising to break the Qantas and Virgin Australia duopoly by creating a budget airline.

Peter Kelly, who worked on Ansett's Golden Wing Club and Qantas' frequent flyer program, is looking to create his new airline, called Zinc, based on the world's most profitable low-cost carrier, Ireland's Ryanair.

Mr Kelly is working to raise $200million for his airline, with $100million of that to be used to pay for aircraft deposits and fund operations.

He claimed the airline would be ready to launch about 17 months after raising the money. 

Zinc would use Airbus A321neo planes, which use less fuel than Qantas' Boeing 737s, and fly between Sydney, Melbourne and Brisbane.

Operations would later expand to the Gold Coast.

Mr Kelly was also part of the team that helped create Jetstar and has extensively analysed Ryanair's operations to understand how they stay profitable while keeping costs low. 

'One of the main features of an ultra-low-cost carrier model is its efficiency... Our model is about sweating the assets and running the planes for 12 hours a day minimum,' he told the Australian Financial Review.

Attempts to introduce a third major airline to the Australian market have claimed several businesses over the last 40 years - including Bonza, Compass Airlines and a failed expansion by Regional Express.

Key to Mr Kelly's plan for budget-friendly fares is use of Sydney's new Western Sydney International Airport, with the airport set to launch operations in October this year.

Documents circulated to prospective Zinc investors, seen by the AFR, said the airport would help free up Sydney's congested airspace.

'Historically, the concentration of traffic at Sydney Kingsford Smith Airport, combined with slot scarcity, peak-hour congestion and a gate shortage, has created high structural barriers to meaningful new entry and has, in effect, protected incumbent operators from sustained new competition,' it read.

'WSI materially alters this dynamic – not only within Sydney, but across the broader national network. The availability of unconstrained access to the Sydney market enables the establishment of a new domestic airline platform that was not practically feasible under a single-airport system.'

Qantas, Jetstar, Singapore Airlines and Air New Zealand have all confirmed flights to and from the new Sydney Airport. 

Mr Kelly added the airport would serve as a base for Zinc, so its planes 'end up in the same place every night, reducing our cost with the overnight maintenance and deep cleaning'.

The plans for Zinc closely mirror former Qantas chief economist Tony Webber's analysis of what a new airline would need to achieve success in Australia.

'It should use WSI as an initial hub,' Mr Webber said in a presentation earlier this year. 

'It shouldn't shy away from the thick trunk routes because they need these routes to build scale and these routes have high leisure content. The new [airline] needs to get its fleet utilisation above at least 10 hours per day.'

Zinc is yet to appoint advisers for its fundraising and hasn't obtained certification from the Civil Aviation Safety Authority to begin operations.

Australia's newest airline is set to offer ultra-low-cost flights based on Ryanair model

[BrettGC]

Why did I laugh at the article?  

• Compass Airlines (Mark I): 1990–1991

• Compass Airlines (Mark II): 1992–1993

• Impulse Airlines: 1992–2001 (Acquired by Qantas)

• Flight West Airlines (AAA Airlines): 1987–2001 (Began interstate jet operations in the late 1990s)

• Big Sky Express: 2004–2006

• OzJet: 2005–2009

• Tigerair Australia: 2007–2020

• Strategic Airlines / Air Australia: 2009–2012 (Rebranded from Strategic to Air Australia in 2011)

• JETGO Australia: 2012–2018 (Company founded in 2011, operations began in 2012)

• Bonza: 2023–2024

• Regional Express (Rex): 2002–Present (Still operating regional routes, though its major city-to-city domestic jet expansion operated from 2021–2024)

For a country of its population, this is a lot of failed attempts to break the population.  Oh, and Ansett Airlines formed in 1931, closed down in 2001. 

 

Edited 6 hours ago by BrettGC

[Lee]

Laugh all you want.

If Zinc were to come to pass then there would be a chance for OZ travelers to save a few $ on airfare.

[BrettGC]

53 minutes ago, Lee said:

Laugh all you want.

If Zinc were to come to pass then there would be a chance for OZ travelers to save a few $ on airfare.

The same premise for every other failed venture in the past.  Great idea, but the execution, no matter how well planned, has failed. It's all unicorns farting rainbows of happiness to begin with, then the reality of the actual market sets in.  The other Aussies on the forum will remember well the previous failures.  I can't see anything in the article that makes me think this will succeed any more than the previous attempts.  No, I'm not an industry expert, but we've seen this time and time again in Australia. 

[scott h]

7 minutes ago, BrettGC said:

No, I'm not an industry expert

Looking at the list Brett I was wondering, how many of those "airlines" were just puddle jumper small firms to service those far-flung mining operations and small towns in the outback? You know just one or two small planes to serve a niche customer base?

 

[GeoffH]

2 hours ago, Lee said:

Laugh all you want.

If Zinc were to come to pass then there would be a chance for OZ travelers to save a few $ on airfare.

 

Jetstar, a low cost carrier owned by QANTAS pretty much has the budget market tied up in most Australian capital cities and QANTAS and Virgin Australia have most of the landing slots tied up at Sydney airport.

Yes I know the new operator is planning to operate out of the new West Sydney airport but that poses it's own challenges, notably the proposed public transport link isn't active yet and when it is active it will be buses not a train, secondly Uber and taxi fares to the new airport will be higher than to Sydney Airport chewing up some of the fare savings.

And they'll be starting at a time of inflated fuel prices and restricted availability and fuel cost is a disprortionate part of LCC operating costs.

Also Melbourne, whilst in theory has a second airport, in practice it's really a Geelong Airport (and transfers are by a long expensive bus trip) as it's 70km away from Melbourne city.  That means they'll need to land and take off at Melbourne Airport where they'll pay full cost landing fees without the ability of QANTAS to share costs between a full service brand and an LCC brand.

If Jetstar didn't exist then maybe, but they do, and QANTAS have exihibited predatory pricing against new entrants to protect their Jetstar market.  They've consistently shown in the past that they'll discount JETSTAR fares, arguably to the point of being loss making, just to drive new entrants out of the market (then they put prices back to pre price war levels).

 

So no... they won't last IMO.

 

So I'm not laughing but I can't see them lasting long either 

Edited 3 hours ago by GeoffH

[GeoffH]

58 minutes ago, scott h said:

Looking at the list Brett I was wondering, how many of those "airlines" were just puddle jumper small firms to service those far-flung mining operations and small towns in the outback? You know just one or two small planes to serve a niche customer base?

 

I'd only really put Bonza in that niche of those listed.

[BrettGC]

4 minutes ago, GeoffH said:

I'd only really put Bonza in that niche of those listed.

Same.  All the others were interstate domestic and a couple even SE Asian routes as well. 

[BrettGC]

1 hour ago, scott h said:

Looking at the list Brett I was wondering, how many of those "airlines" were just puddle jumper small firms to service those far-flung mining operations and small towns in the outback? You know just one or two small planes to serve a niche customer base?

 

The mining companies tend to have set charters for their FIFO routes with already operating specialised providers that don't participate in the greater domestic market - they specialise in mine worker transport.  Either that or the big airlines have specialised subsidiaries.  

[Dave Hounddriver]

7 hours ago, Lee said:

Peter Kelly

So interesting that, according to Google AI, Peter Kelly has a minor, back-end involvement with Spirit Airlines through his role as a professional restructuring advisor.  Interesting because Spirit went broke the this new airline starts with the same format.  History repeating?