Regional Express, OzJet, Bonza, Tiger, Air Australia, Ansett – all brands that have, over the last three decades, attempted to establish themselves in the Australian domestic market.
The pattern? They all collapsed (Rex, thankfully, has been saved thanks to government intervention).
It is lucky that Virgin Australia is not on this list as well. Thankfully, it is in full swing again and recovering well, but there were tenuous times.
Qantas may also have been on that list if the now infamous rumoured merger between itself and Malaysia Airlines had gone ahead. Or the proposed merger with British Airways, for that matter.
Operating an airline in Australia is risky business, so it is somewhat ironic that the Australian Competition & Consumer Commission (ACCC) continues to softly (and at times quite loudly) call for a third domestic airline in Australia.
In the 2024 Domestic Airline Competition report, the ACCC wrote: “Since Bonza went into liquidation and Rex withdrew from major domestic routes, there is no longer any route on Australia’s domestic network serviced by more than two major airline groups.”
“Qantas Group and Virgin Australia have since serviced 98% of domestic passengers. It may be some time before a new airline emerges as a serious third competitor, which is likely to result in higher airfares and reduced choice for consumers.”
In August 2024, the Australian Government announced its reforms to the aviation sector in its Aviation White Paper.
Some of these aimed to create better competitive conditions for the domestic market, including through reforms to the Sydney Demand Management Scheme.
It was not until 2025 though, that the idea of another domestic carrier surfaced, when Bill Astling emerged as the founder of Koala Airlines, complete with a mocked-up version of a Boeing 737-800 in a striking livery. He even attended the CAPA APAC conference in Cairns.
In August 2025, he told the AFR, “We’re on track to start operations late next year. But we’re not in the business of giving our competitors a 12-month headstart.”
Since then, not much has been heard from Koala. A mooted start date of late 2026 looks like it will come and go. And in that time, a new potential third domestic carrier has emerged – Zinc, led by former Qantas and Ansett senior staff member Peter Kelly.
Travel Daily covered the news extensively this week with interviews featuring both Kelly and industry experts.
I spent more than an hour on the phone with Kelly, who was particularly generous with his time.
Here are the important details that came from that conversation. There’s a lot of detail, but for a true third domestic carrier to work, the devil will more than be in the detail.
Betting on the A321neo
Kelly announced that, with a fleet of Airbus A321neos, Zinc would take to the skies on the east coast of Australia, leaning largely on Western Sydney International Airport (WSI), and flying to Brisbane, Gold Coast, Melbourne and Adelaide.
It would focus on these mainline routes which had proven capacity. Why the A321neo?
“It’s a very fuel-efficient aircraft and it’s the right size to get the unit economics, right,” he said. “We can turn it around quickly, and with 232 seats, it’s bigger than the A320 and the crews are allowed to dual endorse to fly the A320 or the A321, so if we had the A320, the pilots could fly both.”
Kelly suggested the A321neo was the plane of choice because it produces the best unit economics, with great fuel efficiency. He was adamant that new planes were the way to go. To begin with, there will be three aircraft.
“We modelled all sorts of things, and whilst it’s more expensive to get new aircraft, we can get commonality of fleet, commonality of spares, and also the maintenance cycles on the aircraft for the first five years are very low compared to getting older aircraft,” he explained.
Landing in WSI
A large part of the jigsaw hinges on WSI and the opportunity it provides Zinc as a base close to the most heavily populated city in Australia.
With the airport opening in October, and only a few airlines so far committed, it’s a great time for Zinc to be on the scene.
Travel Daily reached out to WSI for its thoughts on Zinc but was yet to hear back at the time of publication.
But Kelly is confident it’s the right and obvious move.
“The biggest impediment with Sydney Kingsford Smith was, as a new entrant, you couldn’t get all the slots you needed to have an efficient operation of your aircraft,” he said.
“In effect, the incumbents were somewhat protected because the barriers to entry were quite substantial – apart from Bonza, which is a separate story, all of the other airlines before largely failed because of the impediment created by Sydney International.”
He added that WSI was the largest piece of airport infrastructure expenditure ever, and the government was very keen to get more competition, meaning the ACCC would be looking at it very closely.
I spoke with Watson Farley & Williams partner Alan Polivnick this week, who also suggested that WSI would provide a unique opportunity.
“New entrants will have the benefit of prime slots and access, but this will not last,” he told me.
“Zinc’s ability to build a hub and viable operation at WSI will also depend on the extent to which JQ and VA integrate WSI into their networks, and Zinc’s ability to operate to slot constrained airports.”
Lightening the load
One could argue that it was flying larger single aisle planes like the Boeing 737 MAX 8 that contributed to Bonza’s downfall.
Kelly pointed to the fact that Zinc would be flying proven main city routes, and that the numbers looked favourable.
Zinc wouldn’t need significant load factors to make the business work, although he wouldn’t be drawn on what those exact figures were.
“I’m not about to release what we modelled the average load factor as,” he replied when quizzed by Travel Daily, “but it’s a load factor in our financial modelling well below what Virgin and Jetstar are achieving, and I know what they’re achieving because it’s available to look at in the annual reports.”
Zinc will be keeping its network “intentionally small to bring up frequency”. Kelly was adamant that “in the five-year plan, there’s no expansion beyond our primary airports”.
Any new aircraft that are added to the fleet will all go onto the existing routes.
And why would a consumer fly Zinc?
“We’ll be a price leader, and we need to be – we’re not positioning ourselves as anything other than that, but our inflight service will still be pretty damn good, I can tell you,” Kelly asserted.
Aussie investment?
But there is no airline without planes and there are no planes without money. Kelly has a plan for that, as exclusively reported in Travel Daily on Wednesday.
He’s looking for four investors including one cornerstone investor, and he is hoping that some of the funding will come from Australia, although he is not overly optimistic that it will happen.
“I’d like to think that [some investors] are Australian and they’ve got skin in the game, they’re supporting a carrier in Australia, but the reality is most of the investment is likely to come from offshore,” he admitted.
Kelly doesn’t believe that the failure of Bonza and Rex will dampen enthusiasm, or that the current conflict in the Middle East will pose many problems either.
The new CEO on the block?
While Kelly has launched the idea of Zinc, he is adamant that despite his leadership credentials in the airline industry, he will not be the CEO if Zinc takes off.
“I’m not going to be the CEO, I’m beyond retirement,” Kelly laughed. But he admitted he did have ideas on who the CEO should be but could not divulge anything.
“We’d bring in the independent person to be the chairman of the board who wouldn’t come from the investors and wouldn’t come from the founder side of the business, but it’s far too premature to be making any announcement of that sort.”
Kelly was stoic about the fact that Zinc would pay its staff well and be able to attract the right talent to ensure the best chance of success.
Timeframe and reality
Will Zinc take off? And if so, when? There was no specific timeline for Kelly. If the funding is reached, it will happen, and he believes it is moving in the right direction.
But there is a stark reality and challenge that Zinc will face. No airline that has targeted being the genuine third domestic player has succeeded.
Virgin Australia was able to establish itself, but it wasn’t without significant challenges, and it was after the demise of what was the second major player in the market, Ansett.
On Tuesday we covered some opinions from industry experts on whether Zinc had a fighting chance or not. In addition to those comments, CVFR Travel Group CEO Ram Chhabra told me, “I definitely believe Australia can do with a third domestic carrier – let’s be honest, we have two players – JQ is simply QF in disguise.”
“VA is not big enough to really give QF too much pressure while a third carrier will provide that balance. But for a third carrier to work, it will need deep pockets, the right airport slots and the right service offering and strategy.”
“Out of the three, deep pockets are the biggest requirement because even with the right strategy and slots, the airline will need to absorb a lot of startup costs and ongoing losses for at least 12 months.”
And finally, the most obvious question. Why the name Zinc? Short and memorable, Kelly told me. Nothing more than that. Up, up, and away…we hope.
The rest of the week
It was a huge week in news and that was a huge round-up of Zinc, so here are the headlines to efficiently wrap the week.
Ariadne Australia’s Portfolio Services – associated with Weiss – and BGH Capital’s Oceania Trust have terminated the alliance, which previously allowed the two investment companies to consult with each other about how they would each vote at Webjet shareholder meetings.
Challenging market conditions also hampered Webjet’s financial earnings for the 12 months to 31 March 2026, with the business posting mild falls across both total transaction value and bookings.
Meanwhile, Virgin Australia announced a return to the holiday packaging market by reviving Virgin Australia Holidays, a brand originally launched in 2003 but later scrapped during the pandemic in 2020.
It was relaunched in collaboration with online marketplace Hopper and offers VA customers the option of purchasing bundled flights and accommodation to select domestic and international destinations, including tourist hotspots like Bali and Cairns.
VA also eliminated a number of corporate roles this week, though it would not specify how many employees were laid off. The carrier described the move as a regular adjustment that is made periodically.
And in rather large cruise news, Royal Caribbean’s Perfect Day Mexico mega-resort project in Costa Maya has been rejected.
The decision from the Secretariat of Environment & Natural Resources (SEMARNAT) follows backlash from local residents and environmental groups over the US$600 million (A$836 million) development’s ecological impact.
That’s it for this week. Enjoy the weekend, wherever you’re planning on spending it.
Damian Francis
Editorial Director
