Koala Airlines is slated to be the next domestic air carrier rising up to the daunting task.
But what are its chances of success?
They’re slim, according to aviation expert and airline site Ratings.com founder Geoffrey Thomas.
“What they’re taking on is almost mission impossible,” Thomas told 9news.com.au.
“Unless you’ve got a massive backing… an investor who’s got a bottomless pit of money, and is prepared to stick for 10 years at it, the track record is not good.”
Thomas has long held hopes for a carrier like Koala, which could be – if successful – a competitive domestic option for Australian airline customers.
He warns Koala will have “significant challenges” taking on the loyal customer bases of Qantas, Jetstar and Virgin.
Qantas and Virgin have a combined 95 per cent share of the domestic market in Australia.
“People just don’t want to go to any other airline because they say, yes, Qantas might be a bit more expensive or Virgin might be a bit more expensive,” he said.
“But I want the points. I want the status credits… frequent flyer programs are incredibly powerful.”
Thomas said Koala chief executive Bill Astling has a big fight ahead of him, but acknowledged that in a David vs Goliath battle, “David sometimes wins”.
Astling, who founded Koala in 2018, is well aware of the punishing road ahead.
He described his endeavour to take on the big airlines as “insane” during an interview with the ABC’s Four Corners.
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But Astling said he hoped customers who are paying too much would embrace a carrier like Koala and welcome a competitive entry into the market.
“It can’t all be done by two airlines,” he said of Australia’s “big two” companies.
Thomas acknowledged that a lot of Aussies are “ticked off” with Qantas and Virgin and there’s a lot of noise about alleged price gouging.
He said, while it’s bad news for the big two, this might not be enough for Koala to cut through and turn a profit.
“Look at all the airlines that have collapsed over the years,” he said.
“It’s a very, very tough business. And in Australia, it’s incredibly tough against two incredibly powerful brands.”
Koala, while yet to launch, is promising a guaranteed cash refund policy for cancelled flights.
It could be a boon for the carrier though Thomas said it’s unlikely to pry loyal customers away from still booking with Qantas and Virgin.
“It would attract occasional travellers. But it won’t be the business passengers, premium passengers,” he said.
“That’s the bread and butter that makes airlines profitable.”
Koala has not confirmed when it will launch, what routes it will fly or what investment will keep the carrier afloat.
There’s an air of mystery surrounding Koala’s entry into the market and Astling’s confidence.
Koala’s website states it is finalising negotiations to acquire a fleet.
“Koala’s strategy will fundamentally differ from previous entrants in a domestic market which has been long dominated by two major airlines since the Australian government first introduced the Two Airline Policy in 1952,” the website notes.
“While many new low-cost carriers have entered the market since 1990 and focused solely on offering cheaper fares, almost entirely leading to unsustainable competition, Koala is taking a more innovative route.”