'Cost savings': Newcomer Koala Airlines will use AI to take on Qantas

A new airline is set to fly into the Australian market, and will reportedly slash costs - but will it thrive where others have failed?

There is little information available about the new Melbourne-based company, Koala Airlines, but here's what we know.

The organisation plans to fly Boeing 737s and compete with the big players in the market, Qantas and Virgin Australia.

Koala Airlines has a website and social media presence, the logo has been finalised and a management team appointed, but no flights have been scheduled at this stage.

The Koala Airlines website states the carrier will streamline operations and "transform how aviation businesses operate, driving efficiency, accuracy, and smarter management across the board".

"This platform represents a significant leap forward in leveraging AI to optimise every facet of aviation business, from logistics and maintenance to customer service and beyond," the website states.

"The result is significant cost savings and enhanced operational efficiency, giving us a leading position in the market."

Koala will go head-to-head with Australia's domestic air space duopoly - Qantas and Virgin Australia - particularly on intercity routes.

The market hasn't been great for new entrants. Budget player Rex Airlines entered voluntary administration in 2024, grounding capital city flights and leaving customers fearing for the future of regional operations. Fellow low-cost airline Bonza, which launched regional routes in early 2023, collapsed 18 months later.

The Australian Airports Association has highlighted the need for new entrants in the domestic airline sector to drive down prices.