Is Australia getting a new domestic airline

Following the collapse of Bonza and the 737 division of REX, it's hard to believe what's unfolding.

Australia's domestic aviation scene is set for a potential upheaval as Melbourne-based Koala Airlines steps up to fill the gap left by the demise of budget carriers Rex and Bonza. Industry experts suggest that newcomer Koala Airlines may face challenges breaking into the Australian market and establishing a viable business model.

The company, which is yet to commence domestic operations, has recently put together a management team, revamped its online presence, and announced ambitious plans—though scant on details—on its market entry strategy, a market known for its challenges.

Founded in 2018, Koala Airlines strategically acquired Desert Air Safaris in 2019, securing the necessary Air Operators Certificate (AOC) for operation. Plans are in place to deploy a fleet of Boeing 737 Max 8 aircraft, with specific routes and start dates still under wraps.

Koala Airlines intends to sidestep the pitfalls that befell Rex and Bonza by "carving out a unique niche that enhances the industry landscape," steering clear of direct competition with giants Qantas and Virgin.

"More competition translates to lower airfares; it's that straightforward," stated Natalie Heazlewood, Head of Policy at the Australian Airports Association. "The ACCC's recent report solidly backs this, highlighting the cost to passengers when an airline bows out."

Since the collapse of Rex, airfares have surged by 38%—the most significant hike on the Melbourne to Gold Coast route since Rex and Bonza exited the domestic market earlier this year.

Australia's domestic aviation sector has experienced turbulence with the recent failures of Rex and Bonza, both unable to maintain operations in a market traditionally dominated by Qantas and Virgin. The Australian government's Two Airline Policy, eased in 1990, originally permitted only two major airlines to service key domestic routes, posing challenges for new entrants to gain a foothold.

Details on the launch date and ticket sales remain undisclosed.