Zinc Airlines - prospective ULCC out of WSI

[Chatswood]

Another one giving the Australian domestic market a crack? Wants $200m to start but interestingly already outlined its intentions.

Zinc Airlines

Australia's first ultra low-cost carrier. Purpose-built for Western Sydney International Airport.

www.flyzinc.au

Former Qantas insider wants to build the Ryanair of Australia

Peter Kelly is looking to raise $200 million to launch Zinc, an ultra-low-cost carrier based at Western Sydney International, to break the domestic duopoly.

www.afr.com

Peter Kelly says he wants to raise $200 million to launch Zinc, an ultra-low-cost carrier based at Western Sydney aiming at breaking the domestic duopoly.

A third airline to bust the cosy Qantas and Virgin Australia duopoly? It’s a hope that, over the decades, has lured many dreamers and hundreds of millions of dollars, but has proven elusive. And yet – even as fuel prices rise, and economic uncertainties grow – there is another contender.

Peter Kelly ran Ansett’s Golden Wing Club before being poached to run Qantas’ frequent flyer program. That was in the nineties and noughties. Now he wants to raise $200 million to fund a new airline known as Zinc, modelled on the world’s most profitable low-cost carrier, Ryanair.

Kelly, who has run an aviation consultancy since leaving Qantas and was involved in the founding of now-defunct Cypriot carrier Cobalt Air, is banking on the opening of Western Sydney International Airport this year to change the economics of flying, and give his new airline a chance to succeed.

“One of the main features of an ultra-low-cost carrier model is its efficiency,” says Kelly, who was part of the team that set up Jetstar. “Some think it’s about not paying staff and low costs; it’s not. Our model is about sweating the assets and running the planes for 12 hours a day minimum.

“Jetstar is operating a larger model with the number of places they fly to – the type of network they have, with a large number of aircraft and places, they can’t apply the same model,” he says, adding that Zinc would fly between Sydney, Melbourne and Brisbane, and later expand to the Gold Coast.

 

[FlyingKangaroo]

What a dumb name. Not that I think we'll ever see it again.

 

[SYD]

What a dumb name. Not that I think we'll ever see it again.

Especially since IATA code “ZN” is already taken…

 

[SCM]

Zero chance of success, bankrupt within 11 months.

 

[Saab34]

They said they will raise $100m of debt.

Nobody is going to give them 5 cents, unless one is 777 partners!

 

[anat0l]

In theory, it's the same story. "We need more competition! This will lower fares!" So everyone wants this to succeed. (Some people also want to promote entrepreneurship and taking calculated risks, because living life as someone who shoots down everyone else is a sad life.)

In practice, it's a damn hard uphill battle. I don't think basing in WSI will be the magic key to making this finally work.

Australia can't have an exact Ryanair here. The market is not even close to the same, let alone the relative geography for the market. Maybe if they could really exploit WSI, AVV, OOL and maybe CBR (if they can get much lower landing fees), maybe, maybe they could make a Ryanair model work.

Jetstar only works because it has significant backing from a legacy carrier with financial strength. That helped prop it up and sustain its existence until it became incumbent in the market.

I often don't know who is to blame when a new entrant goes down: the government and big wigs for not doing enough to sustain the business of a fledging airline, or the hypocritical customers who demanded competition but just won't fly the new entrant (or won't fly them enough).

 

[jakeseven7]

I often don't know who is to blame when a new entrant goes down: the government and big wigs for not doing enough to sustain the business of a fledging airline, or the hypocritical customers who demanded competition but just won't fly the new entrant (or won't fly them enough).

I’m not so sure it’s driven mostly by hypocritical non-passengers but I do take your point.

Bonza had a very questionable marketing strategy - extremely low awareness on top of a highly questionable business model.

Tiger was a disaster from a service point of view and because known as ‘worse than Jetstar’, then VA2/3 (whatever version!) inherited them and they had terrible safety issues plague them too. Their brand was toxic.

 

[Quickstatus]

IDK but if the lack of slots at SYD is the issue and WSI is a greenfield for slots, the problem is not solved regarding slot incumbency because the aircraft has to land somewhere which are often also slot contrained.

 

[dajop]

Bonza had a very questionable marketing strategy - extremely low awareness on top of a highly questionable business model.

It also was a vehicle for crooks, and it kicked a massive own goal at Christmas time with the whole OOL/Flair sh##show which destroyed any chance of it ever not just haemorrhaging cash.

The story of 3rd (jet) airlines in Australia (apart from VA for obvious reasons) is of criminals, super-egos, own goals and/or complete ineptitude when it comes to marketing. That coupled with probably only enough room for 2 competitors.

 

[anat0l]

IDK but if the lack of slots at SYD is the issue and WSI is a greenfield for slots, the problem is not solved regarding slot incumbency because the aircraft has to land somewhere which are often also slot contrained.

True, but SYD is the most notorious. The only way any new entrant has a chance of making viable inroads is for the authorities to literally take slots at various viable times throughout the entire day from incumbents and give them to the new entrant for a decent amount of time. Naturally, the incumbents will complain that this is anti-capitalist and unfair, not in the least because of the 80-20 rule.

Other airports may be slot constrained, although how tight is that compared to SYD. And again, likewise, it may require government intervention so that an incumbent can have a chance. But having said that, the mere suggestion that it requires something as absurd as I suggested is another reason why this idea may be doomed to fail.

Naturally, flights to places which aren't major capital centres may have a lot more time to offer a new entrant, at the cost of not targeting the key markets.