Although Surf Air (US West Coast) and Beacon (Boston/NY) are owned by the same mob, this business model seems to represent that of the latter rather than the former.
With the Beacon model, the company doesn't own the aircraft, they are operated by a contracted aviation company with an existing AOC. Thus vastly reducing costs and complexities in the legal and administrative areas, i.e; dealing with CAsA.
It sounds very elitist too and not sure how elite you can make the King Air look
'Elitist'? If people can afford something better, with a more convenient offering that provides them with a business or lifestyle advantage (in this case the convenience and comfort of private air travel, curfew free operations, an alternative to the congested major airports - and being apart from travelling throngs of Bogan masses as a bonus) , they will pay more for it. A few savvy individuals who took the risk may then (hopefully) make some money, and others will therefore have jobs.
Second, anyone who's had the good fortune to be up close to a current model Kingair 350 would know they aren't yo' grandpas Kingair. As nice, if not nicer than many biz jets (stick a five blade prop on and they could almost be competitive in the noise department as well).
I don't see a lack of lounge quality or access being too much of a hindrance, as the general idea is to minimalise time spent on the ground at the airport. Get there and get going.
It'd be great to see this lot do well out of this venture but its possible the sector lengths (yes, even in a 350) may be just a tad too long, and the population density not quite what it needs to be for the 'must go, and go now' scheduling requirements of the target audience. The advantage of curfew free operations in and out of Sydney may be their best selling point.
Time will tell. Good luck to them.