Australians are not holding their breath when it comes to a long-awaited third airline. As one poetic Reddit user cheerily noted on the news of Zinc launching into the Australian market this week: “Australia is littered with the graves of start-up airlines.”
And he’s not wrong. Tiger, Bonza, Rex…the list goes on. It’s little wonder Adam Schwab joked at IMM that he had no desire to become “Australia’s third airline”. At this point, the role has become aviation’s equivalent of teaching Defence Against the Dark Arts at Hogwarts.
And yet, the gain for Australia and the travel industry is high, something Peter Kelly, founder of Zinc is quick to point out in an exclusive interview with Travel Weekly.
A former Qantas executive, Kelly is pitching his proposed new airline, Zinc, as a cheaper alternative for Australians.
Speaking on Australia’s ‘budget’ airline Jetstar, Kelly said: “A 22 per cent operating margin – that is stratospheric in the airline market globally. Right?”
He’s not wrong, according to IATA, the global average operating margin for airlines was around 6.4 per cent in 2024.
Whilst Jetstar’s head of commercial strategy & systems cheerily noted that more than half of its domestic customers flew for under $150 – alongside its 22 per cent domestic operating margins (H1 2026) – Kelly points out that this means the inverse is true: 50 per cent flew for more than $150.
Kelly doesn’t need to spell out the benefits of a third airline for travellers and the wider industry. The Australian government and ACCC have already done that.
A landmark study by the price elasticity in the aviation sector released by the Australian treasury in November 2025 found that when airfares rise by 1 per cent, passenger numbers fall by about 0.5 per cent in the short run and by 2.5 per cent in the long run.
It continues ‘We know from a previous study that when an airline enters a route, ticket prices usually drop by 5–10 per cent.’
It is little wonder that the ACCC has continued to push for a third airline, citing the lack of competition in Australia as a direct cause for rising costs.
Simon Westaway, CEO of the Australian Airport Association, echoed the importance of a third airline:
“Airports have been consistent supporters of greater competition in the domestic airline market to ensure Australian aviation continues to flourish,” he said. “New domestic entrants have previously delivered more choice for travellers and helped put downward pressure on airfares.”
Now is the time
Kelly acknowledges that creating a third airline in Australia is decidedly tricky but notes that something key has changed: Western Sydney International Airport.
“Absent Western Sydney Airport, we would not contemplate starting up a new airline in Australia,” he tells Travel Weekly.
Western Sydney Airport changes that dynamic entirely, he says, removing the structural barriers that protected the incumbents.
“The most major impediment to a new airline starting up was the scarcity of slots at Kingsford Smith Airport. A start-up could never get the required slots to get the utilisation of their aircraft.”
Aside from easing slot competition, Kelly notes that Western Sydney could also provide an untapped customer base.
Increased demand for takeoff and landing slots at Sydney Airport
“Western Sydney has about 3 million people,” he says. “That’s bigger than the greater Brisbane catchment. It’s the largest piece of aviation infrastructure ever developed in Australia. Twenty-five billion dollars.”
Not everyone is convinced the Western Sydney opportunity is as immediate as Kelly suggests. Bill Astling, the industry veteran behind rival proposed carrier Koala Airlines, says the airport’s potential is real but urges caution on timing.
“There’s no doubt it will help – but I’m not sure how soon it will build up the numbers to become a real competitor to Mascot. It’s going to take a little bit of a while,” he told Travel Weekly.
Western Sydney International is scheduled to open to passenger services in October 2026 and will operate without a curfew or slot controls.
Keeping costs down: cutting GDS
When it comes to strategy, Kelly is clear: it is all about costs. Rather like Ryanair founder Michael O’Leary, Kelly is competing on price.
On distribution, Kelly is characteristically blunt. “I would love to distribute via GDS. But the costs are prohibitive – can you believe $12 per passenger per segment, US dollars?”
On a $60 fare, he notes, that’s simply not viable.
Kelly is careful to stress the decision is economic not ideological.
“We’re not trying to inhibit travel agent bookings whatsoever – not zero,” he says. “But it’s not just the segment fees. The integration costs from our passenger service system to connect to GDS are quite substantial – and that gets passed on to us on top of the segment fee.” For ultra low cost carriers, he notes, that combined cost structure simply doesn’t stack up against a $60 fare.
It’s why, as Kelly points out, virtually no ultra-low-cost carrier globally distributes via GDS.
“Not because they don’t want to,” he says. “But because they can’t afford to.”
Instead, Zinc will offer direct API links to key agency groups and an agent portal for bookings.
The A321 NEO – the same aircraft type Jetstar operates – anchors the fleet strategy, chosen specifically for fuel efficiency on short high-frequency hops where most fuel burns on take-off. The aircraft will operate in a 232-seat all-economy configuration – dense by design, keeping complexity and costs low.
Even the crew model is engineered for efficiency.
“Crews return to their home base each night. No overnighting, no deadheading.”
Less disruption, lower costs – and happier pilots.
Clear focus on the Golden Triangle
Zinc’s focus area is deliberately narrow: it’s the golden triangle on a budget.
Kelly is targeting the thick trunk routes – Melbourne, Sydney and Brisbane at launch – with Gold Coast and Adelaide to follow. But don’t expect rapid expansion beyond that.
“Additional aircraft will go on to those routes to bring up frequency, not to expand the footprint,” he says. One aircraft, he notes, will fly into an airport around eight times a day. Perth is explicitly off the table. “It’s not a market where we’d compete.” The strategy is depth over breadth – and on those core routes, volume.
His strategy got the green light from James Goodwin who was CEO of the Australian Airports Association between 2020 and 2024.
“It appears the Zinc model will concentrate on the Golden Triangle, a more sensible approach where you follow the leaders rather than Bonza which was aiming to create new markets,” Goodwin said.
First stop: Funding
For now, Kelly’s singular focus is funding. Zinc is raising $100 million in equity capital to cover pre-operational costs and aircraft deposits – and until that’s secured, along with Civil Aviation Safety Authority approval, no one is booking flights. “The most critical thing is for us to raise the capital – otherwise we won’t be there,” he says plainly.
The sentiment is agreed by Astling.
“You can have all these wonderful plans – unless you get the backing and the support. Right now that isn’t easy, because globally the industry is in a bit of a mess.”
Still, like Kelly, he is positive: “I’m sure there will be a third airline here,” he says.
Kelly will also have to find a CEO. At beyond retirement age, he’s clear he won’t be taking the CEO seat. “I’ll be on the board. I’m the founder – my job is to get the money.”
The Bonza lesson looms large. “Bonza collapsed not because of their own making – their finances were the problem. They never got to prove whether they were right or wrong.” Zinc, he says, won’t make the same mistake. And once the money is in place? Kelly is under no illusions about what the existing players will do.
“They won’t be benign,” he says.
Whether Zinc turns to gold or rusts in the graveyard, one thing is certain – Australia’s aviation sector just got interesting again.
