When Virgin started Australia was a very different place. We were in the middle of the biggest mining boom in history. They also had the good fortune of Ansett falling over which handed them a market shar un-dreamed of by any start up.
Today the industry is saturated. If the big players cant turn a profit, even with their massive economies of scale, then a stand alone start up has no chance. It's much harder to turn a buck with a turbo prop than a 737 and bigger. The big boys also I imagine pay pump price for their fuel.
As it stands our population is 23.5 million. There is no more room for any new players till we hit 35 million at least and IMHO the key is the very fast train between Brisbane and Melbourne. Only then will regional centres grow to the point where they can sustain an airline service.
Albury/Woodonga with 1000,000+ people is probably the closest to having airline services to capital cities other than Melbourne and Sydney. But its still needs to double in size to at least 200,000.
Ballarat, Bendigo, Shepparton are growing cities that one day may have an interstate airline service but they all need investments in a new airport. There is a large untapped market in those cities. Our government, on both sides of the political spectrum don't seem to be interested in investment that doesn't pay dividends inside the current electoral cycle. Then there is the lack of capacity at the capital city airports. No room for new operators, services from regional centres even if their populations needed it.
Lastly, with a large percentage of young people, who's sole ambibition in life is to join the Centrelink queue, I believe Australia is headed for a large contraction in the economy unless we have a large immigration program of bright and willing workers.
A pretty sad state of affairs overall.