The start-up airline hopeful eyeing off Australia’s market

The mind behind Zinc Airlines, a proposed new domestic airline, says he has received interest from UAE investment groups since revealing plans for the ultra-low cost carrier.

Despite Australian aviation historically being a tough market for new challengers, Zinc Airlines aims to take advantage of the opening of Western Sydney International airport to build out an ultra-low-cost carrier. Its goal is to bring meaningful competition to the market, dominated by Qantas-owned Jetstar and Virgin.

Peter Kelly, a consultant and previous Qantas loyalty boss, said he had been inundated with queries from investors in Australia and overseas in his bid to raise $225 million to launch Zinc, a plan that first emerged publicly last month. The capital-raising effort was “going very well,” he said, though he emphasised it had not received offers of funding.

Parties based in the US, Europe and the Middle East, specifically, from Abu Dhabi in the United Arab Emirates (UAE), have been in touch. They are the “people who are behind the airlines, and people who are involved with the sovereign wealth funds there”, he said.

Kelly, who helped start Qantas’ loyalty program and has consulted to airlines in Asia, Europe and the Middle East, describes himself as a “mainly a commercial person” who would structure Zinc with ultra-low cost carrier “cost discipline” from inception.

The plan for Zinc was first written about The Australian Financial Review.

Asked to describe the size of the investment interest, Kelly said some was on the small side, $10 million being the smallest, and some involved larger figures. He said he had heard from “family offices” and “small financial entities”.

“We’re looking for a cornerstone investor,” said Kelly, who would ideally fund half of the $125 million in equity capital. The airline would require another $100 million as a standby liquidity facility to help it weather “stressed downside scenarios” like fare weakness, adverse fuel and currency movements, and delays in card payment.

“Under-capitalisation is a common reason why new airlines fail in this market.”

Once fully funded, Zinc would aim to offer tickets costing less than current low-cost carriers, flying 15 efficient A321neos between Western Sydney International, Melbourne, Brisbane (airports with no curfew), and the Gold Coast. “Later we add Adelaide,” Kelly said.

Kelly, who is working along with his son, Mark, a payments and loyalty consultant, said there was no timeline for the cap raise but it would be in “months, not weeks”.

Zinc, Kelly said, will seek what he described as Ryanair’s