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REX: How is their foray into interstate domestic capital city flying going?

REX: How is their foray into interstate domestic capital city flying going?

Way back in March 2021, Regional Express, better known as REX, picked up a few of Virgin’s Boeing 737s after it went into administration to use to launch capital city to capital city flying in Australia, moving the former regional airline to take on the big boys of Qantas, Jetstar and a soon to be reborn Virgin Australia.

I was booked on a flight on launch day 1 March 2021. Unfortunately, it was between Sydney and Melbourne, but due to COVID-related restrictions, I risked being stranded in lockdown in Melbourne. I reluctantly cancelled the flight.

COVID

REX has been battered by the pandemic as much as any other airline but has also benefited from federal government handouts to keep flying to regional areas during the same period.

So, over a year down the track, how is it going?

Well, the answer, in short, is ‘not bad’. It’s adding another aircraft to its fleet of six Boeing 737s this week, and it has sourced another 2 it hopes to take delivery of before the end of this year.

Its income on regional routes has returned to pre-pandemic levels, and it ran at 86% of capacity on its interstate capital routes in July after running load factors that even according to the airline’s Chairman John Sharp, were not “where we want them to be” according to a Lucas Baird article in the AFR.

On the latest statistics, it has cancelled way fewer flights than its competitors (REX=1%; Virgin Australia=5.8%; Qantas=7.5%), and its on-time performance of 80% beats the other airlines by roughly 20 percentage points (Qantas=60%; Virgin Australia=61.8%).

Staffing

In contrast to Virgin Australia and Qantas, REX has held onto its staff throughout the pandemic. Qantas dumped 8500 of its staff, while Virgin cut 3,000. This was a wise, if expensive move given the extreme problems both Virgin and Qantas are having with staffing issues across their entire operation.

Business Alliances

REX has inked new agreements with major travel agencies such as Helloworld and Flight Centre and has been recruiting new corporate customers, all increasing its passenger numbers.

Aircraft

With three new aircraft set to be in service before the end of the year, REX is looking at new routes and markets. Perth – expect a new service!

Loyalty

ET is reporting that REX is on the verge of launching a new frequent flyer loyalty scheme, which, if designed right, should make them on par with the big boys. It has been running a rudimentary scheme (every 10 flights gets you a free one) and a business loyalty scheme (18 flights and get 2 free).

Qantas and Virgin have huge schemes with 14 and 11 million members, respectively, and massive ancillary services of partner airlines, shops and credit card alliances. It will be hard for REX to be competitive without time and a lot of hard work.

New hybrid domestic/regional low-cost entrant. Bonza

2PAXfly Takeout

I look forward to trying REX in the near future including sampling their inflight and lounge service. The jury is still out whether this ‘third’ full-service domestic airline can survive. History does not give confidence, but the airline industry is constantly changing. It will also be interesting to see what happens when hybrid regional and domestic low-cost carrier Bonza enters the frame in a couple of months’ time. They have taken delivery of their first Boeing 737 Max jet this month, which is good since they are promising to commence at least some of their 27 domestic services in September. But not out of Sydney however.

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