When the Australian start-up Bonza collapsed earlier this year, I wrote that it was doomed to fail from the start. The low-cost carrier was hampered by a weak strategy, insufficient financing and difficulties in securing a fleet, among other issues.
The Australian aviation market remains largely dominated by Qantas and its low-cost subsidiary Jetstar, with Virgin Australia providing some competition. And in the past few weeks, Rex – the regional turboprop operator that tried its hand at jet operations on key intercity routes – has retrenched to its original focus.
With this backdrop, the emergence of Koala Airlines is an interesting development in the Australian airline industry.
An emerging player with a few hiccups
Koala Airlines first surfaced in 2018 and made a notable move in 2019 by acquiring Desert Air Safaris Pty Ltd, an established charter flight company. This gave Koala access to an air operator’s certificate (AOC) and core capabilities.
But, as of 2024, the new airline still doesn’t seem close to full operations. A website and some hints about its brand identity have gained recent media attention with the company showing an aesthetic rooted in Australian culture, reminiscent of Qantas’s ‘flying kangaroo’.
While the management team includes some notable and highly experienced industry figures, several key positions are still vacant. Koala plans to operate Boeing B737 MAX 8 aircraft, but ongoing supply chain issues could delay this plan.
The airline’s website boldly claims it will “redefine air travel” and “reshape the Australian landscape”, but what that truly means remains vague.
Disruptive or overambitious?
The late professor Clayton Christensen believed that for a business to be truly innovative and disruptive, it needed to find its potential market and successfully deploy technological solutions to provide something new, targeting customers at the lower end of the market that were currently not viable for existing providers.
The low-cost revolution or disruption in the US and Europe was enabled by regulatory reform, but it has been accelerated by techno-socio-economic innovation, through the emergence of everything from apps which personalise the booking, check-in and boarding process, to drones which improve aircraft and engine inspection and systems that optimise crewing and fleet rostering.
It is here that Koala seems to be seeking to focus their differentiation efforts, with a focus on technology, dubbed Koala Tech. The airline’s website hints at an AI-driven platform aimed at optimising aviation logistics, maintenance and customer service – and while this could offer the airline a cost-saving edge and operational efficiencies, the extent of its innovation remains to be seen.
Australia’s aviation market is unlike those of Europe or the US, where high-frequency, short-haul flights to leisure destinations are more viable. I’m reminded of an Australian friend who, after visiting London, spontaneously took a trip to Paris.
Once there, he panicked because “no one speaks English”. It struck me that in Europe, you can hop on a short flight and land in an entirely different cultural and linguistic setting in just a few hours. In Australia, it would take a much longer flight – potentially eight hours to Singapore or Bali – to experience anything comparable. Leisure travel demand and supply in Australia simply doesn’t operate in the same way.
The lessons of Bonza and Rex
The failure of Bonza Airlines underscores the difficulties that come with entering the Australian market. A poorly defined strategy, weak financial backing and issues securing aircraft contributed to its downfall. Rex, while successful as a regional operator, struggled when it expanded into larger markets and has now retreated to its original model.
For Koala Airlines, the lesson here is clear: it’s vital to avoid overreaching and to maintain focus on a coherent, sustainable strategy. Koala’s desire for a brand-new fleet, while admirable, could prove to be a costly distraction. Most successful airlines don’t start with factory-fresh planes.
Additionally, global crew shortages are proving problematic for many airlines, with some even having to ground planes due to a lack of available staff. The shortage of qualified pilots is a global phenomenon with no clear sustainable supply solution in sight.
In the UK, easyJet is currently encouraging people over 50 to take up late-career cabin crew opportunities. Koala Airlines could face similar challenges if it expands too rapidly without a clear route map or staffing strategy.
Optimism for Koala Airlines
Despite the potential roadblocks, I’m cautiously optimistic about Koala’s prospects. The brand feels strong, the management team has the right mix of experience and its focus on innovation through Koala Tech could give it a competitive advantage. However, the airline will need to avoid the pitfalls that have hampered others and remain laser-focused on what truly matters: offering a product that fits the unique demands of the Australian market.
Only time will tell whether Koala Airlines can succeed where others have stumbled, but just how this venture evolves will prove an exciting viewing. If the carrier can stick to its strengths and execute its vision with care, Koala might just achieve what Bonza couldn’t.
Ivan Stevenson is an associate professor of aviation management at Coventry University.
