Proposed new airline could face squeeze from giants
Experts say the proposed new low-budget airline will lower ticket prices on Australia’s busiest aviation routes but existing players will face major challenges.
Former Qantas executive Peter Kelly hopes to draw on his decades of experience to turn planned new airline Zinc into a much cheaper alternative for passengers.
Modeled on British ultra-low-budget carrier Ryanair, Zinc proposes to offer the cheapest domestic tickets initially between the “Golden Triangle” of Sydney, Melbourne and Brisbane, later adding Adelaide and the Gold Coast.
Despite the inevitable challenges, Mr Kelly says the new Western Sydney International Airport presents an opportunity to enable sufficiently high flight volumes.
He noted that the Australian domestic market had previously been hampered by the limited number of “slots” for flights via Sydney’s existing Kingsford Smith Airport, which were largely used by established airlines.
Professor Rico Merkert, an aviation industry expert at the University of Sydney, said an ultra-low-budget airline like Zinc had the potential to reduce ticket prices overall.
“It would be great for customers. More competition means lower prices,” Prof Merkert told AAP.
But Mr Kelly’s former employer said the low-budget subsidiary of Jetstar would be pushing back against another rival in the market, especially on the most profitable routes.
“In my opinion, they will do everything they can to make this fail,” he said.
Prof Merkert pointed out that now-defunct airline Rex also chose to “poke the bear” by expanding from its regional roots to offer flights in the “Golden Triangle” and eventually collapsed.
But Mr Kelly says there is appetite for more competition in Australia, particularly from the Australian Competition and Consumer Commission.
“I don’t think (Qantas chief executive) Vanessa Hudson wants to see Qantas on the front page of the newspapers with the ACCC taking action (against) Qantas for predatory practices,” he said.
Prof Merkert also questioned the timing of the announcement that a new airline would be operating; This coincides with the global fuel crisis and last week’s collapse of American ultra-low-cost airline Spirit.
“It’s an absolutely crazy environment to start an airline right now, with most other airlines trying to figure out how they can survive,” he said.
RMIT aviation expert Chrystal Zhang agreed that timing was critical for new airlines, saying Zinc’s leadership ahead of launch could create better conditions in the future.
“New airlines entering the market will face serious and serious competition from established airlines,” he said.
“Theoretically we need more airlines, but in reality the situation may be different.”
