From November 15, Brisbane-based Strategic Airlines will be renamed 'Air Australia'. The re-brand involves a colour change from red, white and blue to Australia’s iconic sporting colours; green and gold.

Air Australia is positioning itself as the new budget airline, promising affordable flights and the first bag free, as well as a highly rewarding frequent flyer program. The program is yet to be implemented, and will allow members to fly nine times and get the 10th flight free.

Speaking at the airline's Brisbane launch on Thursday, Queensland Attorney-General Paul Lucas said the airline's birth should be a warning to Qantas, which has damaged its reputation through debilitating contract negotiations with its workers.

Mr Lucas said Air Australia was poised to shake up the market. "This airline is 100 per cent Australian owned, is hungry, and it is out there wanting to grow its market share... That can only be good for tourism and can only be good for Australian customers," he said.

Michael James, Air Australia Chief Executive, said the airline would not be competing directly with Qantas or Jetstar and would focus on under-serviced routes, particularly direct international flights from Brisbane and Melbourne. "We're trying to offer them a different service to fly directly out of these airports," he added.