Rex in voluntary administration, ending all 737 services

[RSVKanga]

Except for those in regional towns that will get absolutely fleeced by Qantas or lose services completely

Qantas has not axed any new regional destination they introduced in the pandemic. There have been minor modifications to some routings and frequency but overall in a positive way (eg: Griffith flights started in 2021, just recently got upgraded from Q200/300 to Q400). Qantas has even introduced jet service to one regional destination (ABX).

 

[MooTime]

Qantas received close to $0 during the pandemic. They utilised JobKeeper, but there was no Qantas-specific bailout, and virtually every business in Australia utilised JobKeeper.

Rex was the airline the received the most taxpayer money from the former government during the pandemic with an extraordinary bailout. More money than Qantas and Virgin combined. Likely due to political reasons with John Sharp being from the same party as well as longtime friend and ally of then transport minister Michael McCormack. Corruption at its finest.


Agreed! Who wouldn’t want to fly with an airline with larger, younger regional aircraft from those regional destinations with connections to over 60 domestic destinations and international flights to every continent? Who wouldn’t want their regional town to become a oneworld O/D? Who wouldn’t appreciate being able to earn FF points and status on travel to/from those communities?

Let Rexy fold and collapse. Let a real airline fill the void and do the job. Australia will be better off in the long term.

Keep telling yourself the same story.
It works hook line n sinker.
Everytime.

 

[elanshin]

Qantas has not axed any new regional destination they introduced in the pandemic. There have been minor modifications to some routings and frequency but overall in a positive way (eg: Griffith flights started in 2021, just recently got upgraded from Q200/300 to Q400). Qantas has even introduced jet service to one regional destination (ABX).

Ill buy your arguments if you can confidently come out and say that once QF takes over the routes, has a monopoly, they won't jack up the prices because they have a monopoly.

 

[N860CR]

Except for those in regional towns that will get absolutely fleeced by Qantas or lose services completely

And they weren’t getting fleeced by Rex?

 

[elanshin]

And they weren’t getting fleeced by Rex?

Yes many were until QF started competing in the market which has also in part led to rex's current problem granted the jet program is the biggest offender.

So then the question for the government to sort out is if there needs to be another big regional presence and how to go about that.

Doesn't necessarily have to be ReX - but i imagine that's part of the scope of work that needs to be done now.

 

[RSVKanga]

Ill buy your arguments if you can confidently come out and say that once QF takes over the routes, has a monopoly, they won't jack up the prices because they have a monopoly.

Are high prices a problem, or are they only a problem when Qantas is involved?

Look no further than this thread. Rex charges more for a 30min flight from Sydney to Orange than what Qantas charges for a SYD-SIN flight.

And no, that's not an anomaly. Rex is notoriously known for price gouging across regional communities nationwide to the point where they are loathed by many regional councils, whose councillors face ban threats for speaking out against this daylight robbery. That particular case is one of many. This kind of behaviour and actions have been occurring ever since Rex's inception.

 

[dajop]

And they weren’t getting fleeced by Rex?

To be fair (or is it fare? ), Rex at many ports did have a community fare program in place, that provided lower cost fares for advance (and sometimes last minute ) bookings, and these fares were entirely reasonable, not dependent on "sales" during specific periods. Lower than I ever saw QF , for example, selling BXG-SYD even when sales are on.

It's all very well that AFF's most fierce QF advocate to quote anecdotes about a fare from OAG-SYD on Rex being greater than SYD-SIN. flight. So what? This Tuesday BXG-SYD is $676 whilst MEL-SIN is $704 one way (or $484 if you fly on JQ). Or indeed BXG-SYD-SIN for $836 on the same day, meaning that it's only costing $160 more to fly from Bendigo to Sydney and on to Singapore, than just taking the first secor alone Again so what?

Supply and demand. You look at every airline and every airport, it's not hard to find anomalies like this.

 

[elanshin]

Are high prices a problem, or are they only a problem when Qantas is involved?

Look no further than this thread. Rex charges more for a 30min flight from Sydney to Orange than what Qantas charges for a SYD-SIN flight.

And no, that's not an anomaly. Rex is notoriously known for price gouging across regional communities nationwide to the point where they are loathed by many regional councils, whose councillors face ban threats for speaking out against this daylight robbery. That particular case is one of many. This kind of behaviour and actions have been occurring ever since Rex's inception.

High prices across the board are a reasonable problem be it rex or QF for regional.

I'm not saying that rex isn't guilty of it. Im asking going forward if we eliminate competition like it used to be that QF also won't just crank up the prices to levels much higher than today.

 

[Must...Fly!]

Nexus has already offered to pick up WA routes.

Problem with nexus (who as a new operator seem to be doing OK) goes back to other talk in this thread about regional services. They have a small fleet, so will need capital to expand and only Q400s - quite possible that ALH & EPR will see a reduced frequency as a consequence.

 

[drron]

Qantas received close to $0 during the pandemic. They utilised JobKeeper, but there was no Qantas-specific bailout, and virtually every business in Australia utilised JobKeeper.

Rex was the airline the received the most taxpayer money from the former government during the pandemic with an extraordinary bailout. More money than Qantas and Virgin combined. Likely due to political reasons with John Sharp being from the same party as well as longtime friend and ally of then transport minister Michael McCormack. Corruption at its finest.


Agreed! Who wouldn’t want to fly with an airline with larger, younger regional aircraft from those regional destinations with connections to over 60 domestic destinations and international flights to every continent? Who wouldn’t want their regional town to become a oneworld O/D? Who wouldn’t appreciate being able to earn FF points and status on travel to/from those communities?

Let Rexy fold and collapse. Let a real airline fill the void and do the job. Australia will be better off in the long term.

I think your facts are from fairyland.
The article you quoted says Rex received $67 million under 3 packages 2 of which were for regional aviation.
However this article reports QF received $2.7 billion from the Government of which only $900 million was from Jobseeker.

Qantas should not have to pay back billions in COVID-19 aid, Treasurer says

After Qantas posted record profits, Treasurer Jim Chalmers says the airline should not have to pay back the money it received during the height of the pandemic.

www.sbs.com.au

 

[eastwest101]

False information, Rex barely serve 40 destinations, and there are only 8 markets that are served by Rex only in 2024.

Moruya
Parkes
Narrandera
Ceduna
Monkey Mia
Albany
Esperance
Carnarvon


Yes, there is the QLD “Milk Run” network, but they are not Rex services. They are Queensland Government services outsourced to Rex. Almost 100% subsidised.

Sorry but you don't get to unilaterally decide that all the "milk run" destinations in QLD don't exist just because the QLD Government contracts them, sad to say but these communities still do exist despite your assertions that they have somehow magically vanished from the face of the earth.

Count all the Rex destinations (excluding capital cities) and note that I did not say that they are only served by Rex so next time don't try to put words in my mouth:

Carnarvon
Monkey Mia
Esperance

Albury
Cooper Pedy
Ceduna
Port Lincoln
Mt Gambier (from Adelaide)
Broken Hill (from Adelaide)

Burnie
King Island
Devonport
Mt Gambier (from Melbourne)
Wagga Wagga
Mildura
Merimbula

Moruya
Merimbula
Albury
Narranderra
Griffith
Broken Hill (from Sydney)
Parkes
Orange
Dubbo
Armidale
Coffs Harbour
Port Macquarie

Toowoomba
St George
Cunamulla
Thargomindah
Roma
Charleville
Quilpie
Windorah
Birdsville
Bedourie
Boulia
Mt Isa
Longreach
Winton
Hughenden
Julia Creek
Doomagee
Burketown
Mornington Island
Normanton
Cairns
Townsville



Feel free to count them up - here's a hint though - its more than 40.

The common experience is that regional fares are always fairly expensive whether its Fly Pelican, Link, Rex or Qantaslink when there is no competition. That is just the inescapable economics of operating smaller aircraft and capitalism doing its thing maximising profit. If/when a competitor enters a route, usually airfares drop on the competitive route and most likely rise on other monopoly routes until one of the competitors leaves and then airfares rise again. That's the common lived experience of people in regional towns whether its a Rex or Qantaslink monopoly. As other posters have pointed out - some regional routes are large enough to support two competitors long term - possibly Canberra-Sydney, Mildura-Melbourne, Sydney-Dubbo, Townsville-Cairns might be good examples where the market is large enough to support 2 competitors.

The policy challenge is to support and allow competition as much as possible, and to limit predatory competition practices (predatory pricing using scale to drive out competitors) and also to identify routes that maybe aren't economic and have subsidies/contracts/other mechanisms to maintain vital services to smaller towns, as others have said - does not necessarily have to be Rex but someone large enough and with enough capital to operate the Saab 340 fleet now, and also to have capital to re-fleet in the future. At the moment the issue is that Rex, Skytrans, FlyPelican and Link have aircraft that are smaller and can operate profitably to smaller towns that cannot support larger aircraft such as a Dash 8-200-300 or an ATR42 and certainly the Dash-8-400 is too big an aircraft for some routes. Thats a simple operating economics of different aircraft at work and a historical oddity that the Dash 8-100/-200 and -300, Saab 340 and various Jetsream sized aircraft are aging and no longer in production so all options will always be used/secondhand aircraft.

There are also competition concerns that any bailout/assistance/equity stake solution would have competition problems if there was a mandate that the reborn Rex or [insert new operator name here] was only allowed to fly regional routes and not fly larger aircraft between capital cities. That would fall foul of the competition law, and would be an unnecessary impost on any airline to tell them that they must fly to Boulia but cannot fly between Sydney and Melbourne. No rational investor is going to sign up to any ridiculous conditions like that.

 

[jb747]

For the sake of country folk we need competition in the country market. No matter what or who you think has contracted or whatever.

Money will absolutely be coming from gov coffers & rightly so.

Competition, or services. The government should not be supporting any routes that have sufficient business to support competition. That’s the problem, many of these country areas simply do not have sufficient business to support any air service at all.

It’s a nice idea but it’s not practical.

There’s really three tiers of regional routes -
1. Routes that can support competition between two or more airlines
2. Routes that can barely support one commercial operator without subsidy. Any competition will be short lived and force one (or sometimes both) out.
3. Routes that can’t support commercial operations and can only survive with subsidies.

Trying to lump everything in the first group is completely misunderstanding the complexities of regional aviation. Sad to say but most regional flights are expensive and always will be.

Well summed up.

There is no economy of scale for many of these areas. Comparisons with fares to Singapore, or on the east coast, are not apples vs apples, but are simply wish lists…you wish it was that cheap.

High prices across the board are a reasonable problem be it rex or QF for regional.

I'm not saying that rex isn't guilty of it. Im asking going forward if we eliminate competition like it used to be that QF also won't just crank up the prices to levels much higher than today.

What would be a reasonable level for the pricing? Break even? A profit, or a loss? There are many reasons that low density flying is appreciably more expensive to provide than is high density, but if you have a solution to reduce the cost, then everyone would like to know.

I rail against the terrible QF timetable on Albury-Melbourne, compared to what Rex provided, but the reality is that that is probably what they have calculated will be at least break even. A new player, thus providing ‘competition’ would not make the cake larger, but would simply be turning it into a loss maker for all, with the attendant risk that all of the flights would disappear.

 

[RSVKanga]

I think your facts are from fairyland.
The article you quoted says Rex received $67 million under 3 packages 2 of which were for regional aviation.
However this article reports QF received $2.7 billion from the Government of which only $900 million was from Jobseeker

I do accept that saying “Qantas received close to $0 during the pandemic” can be misleading as the pandemic can include 2020 up to end 2022. I should have said “Qantas received close to $0 during the onset of the pandemic when other airlines across the world were being bailed out”. I will edit the post.

During the onset of the pandemic, Rex received more taxpayer funds than Qantas and Virgin combined. Qantas had around 300 aircraft while Rex had around 60 and yet Rex received more than Qantas and Virgin combined.

Quite clearly corruption for political reasons, but even that former government said that the money was meant for regional routes. The problem is that they were only words. There were no conditions or postrequistes attached to that, and Rex quite clearly misused that taxpayer money for propping up that 737 operation while cutting regional routes, including leaving communities like Grafton without an air service. Grafton still does not have an air service today, and it had nothing to do with QF as they did not start flights there. The former government didn’t intervene in this misuse, and they probably supported it after Rex’s decision to name a 737 after Michael McCormack.

 

[drron]

Though in April 2020 right at the start of the pandemic the Government announced the Qantas and Virgin Support package of up to $165 million. That to me is not close to $0.

Australian government to pay Qantas and Virgin to keep flying during Covid-19 pandemic

Deputy PM says a domestic aviation network servicing capital cities and major regional centres is ‘critical to Australia’s success’

www.theguardian.com

And in the previous link QF received $1.8 billion in addition to jobseeker funds of $900 million.

And your repeating of the Rex received more than QF and VA combined is referring to the funds ear marked for regional services of which Rex at the time had 60% of that market meaning it should have received more than QF and VA combined.
Your whole argument is the classic example of misinformation and disinformation. Your research is as usual very selective.

 

[UP4014]

Problem with nexus (who as a new operator seem to be doing OK) goes back to other talk in this thread about regional services. They have a small fleet, so will need capital to expand and only Q400s - quite possible that ALH & EPR will see a reduced frequency as a consequence.

I don’t disagree that no other airline has the same fleet make up of REX, small or large, fat and thin body.

I also think that other airlines should be given a go to think outside current box REX has created.

REX should only be saved if the current board, owners and management are moved on. They tried to expand on the profits of govt subsidies and failed.

Maybe the REX model of operation and assets is wrong not everyone else who wants to try other aircraft. In fact we can confirm REX had it wrong by what has happened.

Just thoughts while I was driving to Sydney this morning.

 

[RSVKanga]

And your repeating of the Rex received more than QF and VA combined is referring to the funds ear marked for regional services of which Rex at the time had 60% of that market meaning it should have received more than QF and VA combined.

Correct!

But they didn't use that extraordinary bailout for regional services, did they?

Why were regional routes cut despite taking millions in packages meant for regional services?

'Bloody terrible': Mayor bemoans loss of Rex regional flights

A decision by Regional Express to scrap five routes at the end of March is described by one regional mayor as "bloody terrible".

www.abc.net.au

That hard-earned taxpayer money package, with no postrequisites or conditions, was quite clearly misued to finance the 737 operation at the expense of regional communities, some of which do not have an air service now. You're right in that the former government earmarked those funds for regional services, but the problem is they were earmarked without enforcement that led to this misuse. And the former government did nothing about the misuse, likely due to political reasons and Rex naming a 737 after Michael McCormack. Corruption at its finest.

 

[Rabs97]

Though in April 2020 right at the start of the pandemic the Government announced the Qantas and Virgin Support package of up to $165 million. That to me is not close to $0.

Australian government to pay Qantas and Virgin to keep flying during Covid-19 pandemic

Deputy PM says a domestic aviation network servicing capital cities and major regional centres is ‘critical to Australia’s success’

www.theguardian.com

And in the previous link QF received $1.8 billion in addition to jobseeker funds of $900 million.

And your repeating of the Rex received more than QF and VA combined is referring to the funds ear marked for regional services of which Rex at the time had 60% of that market meaning it should have received more than QF and VA combined.
Your whole argument is the classic example of misinformation and disinformation. Your research is as usual very selective.

The issue isn’t who got more money, because all airlines got government money during Covid.

It’s what they did with that money. Rex made a poor choice and decided to start a jet operation in the vain hope their competitor would collapse. With that money they could have re-invested in their core business, invested in a fleet of 20-30 ATR-42s to begin their fleet renewal (or a larger number of smaller aircraft) and increase wages and conditions for their staff to prevent large turnover.

If they had done that they’d be in a much better condition now.

 

[MEL_Traveller]

I don’t disagree that no other airline has the same fleet make up of REX, small or large, fat and thin body.

I also think that other airlines should be given a go to think outside current box REX has created.

REX should only be saved if the current board, owners and management are moved on. They tried to expand on the profits of govt subsidies and failed.

Maybe the REX model of operation and assets is wrong not everyone else who wants to try other aircraft. In fact we can confirm REX had it wrong by what has happened.

Just thoughts while I was driving to Sydney this morning.

I dunno if rex got the business model wrong, I think they just got ‘loyalty’ wrong. As in we, as aussies, just can’t bring ourselves to relinquish the golden handcuffs of status and FF programs.

On paper, it’s unbelievable that rex couldn’t maintain intercity operations. Same planes as their competitors, cheaper fares, higher reliability. free bags and onboard snacks.

Lack of advertising maybe too.

 

[MEL_Traveller]

Correct!

But they didn't use that extraordinary bailout for regional services, did they?

Why were regional routes cut despite taking millions in packages meant for regional services?

'Bloody terrible': Mayor bemoans loss of Rex regional flights

A decision by Regional Express to scrap five routes at the end of March is described by one regional mayor as "bloody terrible".

www.abc.net.au

That hard-earned taxpayer money package, with no postrequisites or conditions, was quite clearly misued to finance the 737 operation at the expense of regional communities, some of which do not have an air service now. You're right in that the former government earmarked those funds for regional services, but the problem is they were earmarked without enforcement that led to this misuse. And the former government did nothing about the misuse, likely due to political reasons and Rex naming a 737 after Michael McCormack. Corruption at its finest.

The very article you linked says the five services were only scrapped at the end of march, the same time the regional funding was due to run out.

Funding = provision of services.

End of funding = services discontinued.

The article doesn’t support your claims.

 

[Rabs97]

Rex has a Howeller - what's the scam? - Michael West

What's the scam with Rex suddenly upgrading the employment contract of its chief executive Neville Howell a few days before it bit the dust?

michaelwest.com.au

Wow. Unbelievable they can do this and seemingly get away with it. While Rex staff made redundant are not getting owed wages or redundancy payouts. The corruption is insane.


On 25 July 2024, six days before the bankruptcy procedure began, the Board of Rex notified the ASX that it had upgraded the CEO’s employment agreement. Previously, the CEO Neville Howell was entitled to 5 weeks’ notice. The Board changed 5 weeks; notice to 12 months’ notice. They also added that the CEO would be immediately terminated and receive a payment in lieu of 12 months’ notice if something significant happened to degrade the CEO’s position, for example, entering voluntary administration in six days’ time.