I also don't understand how they plan to make a profit by, as they claim they will do, offering a premium full-service experience at Jetstar prices.
I guess it depends on how low their cost structure is, what they're paying for the 737 leases, how much they will pay staff and ensuring they avoid building in excessive costs into the structure.
But agree they are most likely to be the casualty. It has never ended well for the 3rd player in the market, except for DJ when AN collapsed. Thinking Compass I and II, Ozjet, Tiger (when it was independent) etc... Perhaps the main difference is that they are already established in SYD and MEL, can leverage infrastructure and staff that already exists but is idle for part of the day.