A proposed new low budget airline would bring ticket prices down across Australia’s busiest aviation routes, but faces immense challenges from existing players, experts say.
Former Qantas executive, Peter Kelly is hoping to bring to bear his decades of experience to turn planned new airline, Zinc into a much cheaper alternative for passengers.
Modelled on British ultra low budget carrier Ryanair, Zinc is proposing to offer the cheapest domestic tickets, initially between the “Golden Triangle” of Sydney, Melbourne and Brisbane, and later adding Adelaide and the Gold Coast.
Despite the inevitable challenges, Mr Kelly says the new Western Sydney International Airport presents the opportunity for a high enough volume of flights to be viable.
The Australian domestic market was previously impeded by a limited number of “slots” available for flights through Sydney’s existing Kingsford Smith Airport, which he said were largely taken up by the incumbent airlines, he explained.
Professor Rico Merkert, an aviation industry expert from Sydney University, said an ultra-low budget airline like Zinc has the potential to bring ticket prices down across the board.
“For customers it would be great. More competition means lower prices,” Prof Merkert told AAP.
However, he said low-budget subsidiary of Mr Kelly’s former employer, Jetstar, will push back against another competitor in the market, particularly in its most profitable routes.
“They will do everything they can to make this a failure in my view,” he said.
Now defunct airline, Rex also chose to “poke the bear” by expanding from its regional roots to offering flights in the “Golden Triangle” and ultimately collapsed, Prof Merkert pointed out.
However, Mr Kelly says there is an appetite for more competition in Australia, not least by the Australian Competition and Consumer Commission.
“I don’t think (Qantas chief executive) Vanessa Hudson wants to see Qantas up on the front page of the newspapers with the ACCC filing (against) them for predatory practices,” he said.
Prof Merkert also questioned the timing of the announcement to kick off a new airline, coinciding with a global fuel crisis, and just last week American ultra low cost airline, Spirit, going bust.
“It’s an absolute crazy environment to set up an airline right now, when most other airlines are just trying to understand how they can survive,” he said.
RMIT aviation expert, Chrystal Zhang, agrees timing is critical for new airlines, saying potentially Zinc’s lead-up prior to its launch could make for better conditions in the future.
“New airlines entering the market would face significant and very head on competition from the incumbent airlines,” she said.
“In theory, we need more airlines but in reality, perhaps it’s a different story.”
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