New budget carrier Koala Airlines to launch in Australia in 2026

A new budget airline carrier will be launching in Australia.

Koala Airlines is expected to launch in late 2026 in a bid to break the duopoly Virgin Australia and Qantas have in the local air travel market.

WATCH THE VIDEO ABOVE: Koala Airlines taking on Qantas and Virgin.

The airline says it is going to do things differently compared with other budget airlines that have previously tried — and failed — to break into the market.

“While many new low-cost carriers have entered the market since 1990 and focused solely on offering cheaper fares, almost entirely leading to unsustainable competition, Koala is taking a more innovative route,” it said on its website.

“Our goal is to carve out a unique niche that enhances the industry landscape without disrupting existing standards by creating a lasting impact on the industry.”

Carriers which have previously attempted to compete with Virgin and Qantas have particularly struggled on major routes, Flight Centre Travel Group chief executive Graham Turner told Sunrise on Tuesday.

He said Virgin was now quite strong financially following its new partnership with Qatar Airlines this year.

“Qantas has had a couple of great years financially as well and replacing a lot of their planes with new planes, so it is going to be a tough market for Koala to break into, there’s no doubt,” Turner said.

Koala Airlines acquired Desert Air Safaris Pty Ltd — a charter flight and air tours company operating in Australia, Papua New Guinea and the Pacific Island since 1970 — in 2019.

However, Koala does not yet have a fleet of commercial passenger jets or the relevant aviation certificate.

Turner said this is probably why the airline is not launching until late next year.

“I haven’t actually met with them yet. We have a meeting coming up in the next week or so, so I don’t know all the details but I presume this is why they’re not launching until the end of next year … so that they have time to get these things in play,” he said.

Rex and Bonza, budget airlines that have most recently attempted to cement themselves in the domestic market, both entered voluntary administration in 2024.

Turner said the Australian market is ready to sustain a third airline, but any competition would need some serious financial backing.

“They will need some investors with very deep pockets, I don’t think there’s any doubt about that,” he said.

“We’ve had basically two airlines for as long as I can remember. The Australian domestic market is quite a prolific one. It’s a big market, even by world standards. I think Melbourne to Sydney is the fifth busiest route in the world.

“I think they can (succeed) but the financial aspects of the player will need to be very, very strong.”