Australian start-up Koala Airlines' plans to launch by the end of 2026 with three leased B737 MAX face a regulatory hurdle, with the Civil Aviation Safety Authority (CASA) saying the carrier must undergo an approval process equivalent to obtaining a new air operator's certificate (AOC) before it can operate large jet aircraft.

CASA told ch-aviation that while Koala Airlines holds a valid AOC, it is "subject to a direction not to operate" because "the previous operations conducted under this AOC were considerably different to those which Koala is now proposing - air transport operations with large jet aircraft."

"If Koala Airlines intends to conduct air transport operations with large jet aircraft, they will need to undergo a rigorous approval process and demonstrate compliance with strict safety and regulatory standards to meet the requirements of the Direction – a process that is equivalent to obtaining a new AOC," a CASA spokesperson said.

According to ch-aviation research, Koala Airlines inherited its AOC from Desert-Air Safaris Pty Ltd, a pioneering company in air tours and charter flights that had been operating for over 50 years throughout Australia, Papua New Guinea, and the Pacific Islands. Astling acquired Desert-Air Safaris in 2019 and changed the name to Koala Air. The company was then rebranded to Koala Airlines in October 2022.

New charter plans

CEO Bill Astling told Bloomberg that Koala Airlines plans to avoid competing directly with Qantas and Virgin Australia by focusing on charter flights that feed and de-feed international airlines serving Australia, with domestic sectors bundled into overseas travel itineraries. He claimed to be in talks with more than 10 foreign carriers in this regard.

Astling said Koala's business model differs from traditional domestic carriers, with most traffic expected to come from partnerships with international airlines rather than direct ticket sales. Koala also does not expect to sell tickets through its own website to avoid fare competition with larger incumbents.

The strategy appears to have changed from last year, when Astling said Koala would focus on capturing leisure and business travellers, especially between Sydney Kingsford Smith, Melbourne Airport, and Brisbane International.

The carrier, whose launch plans were delayed by the COVID-19 pandemic after an initial 2020 target, is now considering routes including Adelaide International and tourist destinations such as Uluru (Ayers Rock), Astling said.

Fleet plans

In August 2025, Koala Airlines announced it had secured lease arrangements for three B737 MAX aircraft to be delivered this year, targeting a late-2026 launch for commercial operations. Astling said the plan was to start with three aircraft and add two to three more shortly after. The aim was to grow the fleet to 20 aircraft in a few years.

Details under wraps

In a social media post this week, Astling commented on the renewed media interest in the start-up: "To be clear, Koala has had discussions with a number of key aviation and industry participants as part of developing its plans. We have always had a policy of keeping our progress under wraps, and Koala does not comment on market speculation or confidential commercial discussions."

He added: "What I can say is that we remain firmly committed to establishing a credible third-airline presence in Australia, and we continue to make headway towards that objective."

According to the company website, Astling has more than 45 years of experience in aviation and tourism, specialising in airline management, restructuring, operations, chartering, strategy, and customer service. Since the early 1990s, he and his consultancy team have advised 12 established and start-up airlines across the Asia-Pacific region, including Singapore Airlines, Air India, Malaysia Airlines, SriLankan Airlines, and Vietnam Airlines, and served as aviation consultant to the China Chamber of Commerce in Australia.

ch-aviation has contacted Koala Airlines for more information.