Rex in voluntary administration, ending all 737 services

[henrus]

Last time I flew REX from Sydney to Orange (40mins) I paid more than a flight to Singapore.

I’m curious what the damage was?

Air fares this year have been a little out of control. The worst I’ve personally paid for a flight this year was $300 PPP-BNE purchased 50 mins before departure that being said for work travel a $900 one way fare from TSV to BNE on Virgin (operated by an alliance on a 30 year old Fokker).

 

[MooTime]

Unlike international aviation, Australia’s domestic aviation industry is a free and fair market with regulations to prevent predatory behaviour.

The ACCC ruled that QF’s regional expansion was not predatory.

For far too long, many regional towns and cities like Burnie, Merimbula, Griffith, Cooma, Broken Hill and Mount Gambier were stuck with Rex being the monopoly airline offering expensive, inferior service with ageing aircraft, no loyalty program and no connection network. That all changed from 2021 and it looks like those communities have embraced Qantas’ presence positively. You can’t blame communities for choosing who they fly with, especially in a free and fair market like our domestic aviation sector.

Quite an overnight Rex-expert.

More to it than googling tid bits.

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.

 

[drron]

Unlike international aviation, Australia’s domestic aviation industry is a free and fair market with regulations to prevent predatory behaviour.

The ACCC ruled that QF’s regional expansion was not predatory.

For far too long, many regional towns and cities like Burnie, Merimbula, Griffith, Cooma, Broken Hill and Mount Gambier were stuck with Rex being the monopoly airline offering expensive, inferior service with ageing aircraft, no loyalty program and no connection network. That all changed from 2021 and it looks like those communities have embraced Qantas’ presence positively. You can’t blame communities for choosing who they fly with, especially in a free and fair market like our domestic aviation sector.

Though talking to locals in Burnie they said mainlanders use Qantas but we use Rex.

 

[p--and--t]

I’m curious what the damage was?

Air fares this year have been a little out of control. The worst I’ve personally paid for a flight this year was $300 PPP-BNE purchased 50 mins before departure that being said for work travel a $900 one way fare from TSV to BNE on Virgin (operated by an alliance on a 30 year old Fokker).

I'd have to get onto my finance system on the laptop to look up the actual figure, it was well prior covid. My memory says something around 3-4 times the cost of the same day connecting flight MEL-SYD on QF and I could have flown to SIN for less.

 

[DC3]

Though talking to locals in Burnie they said mainlanders use Qantas but we use Rex.

Why am I not surprised?

 

[justinbrett]

Quite an overnight Rex-expert.

More to it than googling tid bits.

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.

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.

 

[eastwest101]

From a government perspective, its not about whether QF has coverage, but rather if they let ZL fail and none of the other airlines pick up those routes, QF monopoly will destroy those routes (from an increasing price). And we have seen QF monopoly in action so it's not a question of if they will do it but when.

That's the real concern here. As for what the solution is, I'll let those that are being paid to do the job and find out.

Exactly and the simple logistics is right now QF don't even have the aircraft to run their own schedule reliably and its not like Qantas have 20-30 spare Dash-8-200s or -300s sitting idle in the hanger waiting for Rex to fall over either. Qantas indicated they would be retiring their smaller Dash 8-200 and -300 fleet so they don't have the capacity.

Put it this way - it Rex fell over tomorrow and all the Saab 340s went to the scrapyard there would be 20-40 regional communities who would lose any air service immediately, so someone would have to explain why all these small towns will lose their essential services like hospitals/schools and perishable goods/mail & courier services and pathological medical testing etc and their access to state capital city services and their tourism industries.

Do we think that Link or other alternative regional operators could conjure up a fleet of replacement Jetstreams/Metro's/Saab 340s/ATRs or Dash-8s with crew and all associated support overnight? No - that would be unrealistic and impossible due to aviation regulations.

 

[dajop]

Came to say the same thing. It’s going to be challenging for QF or other operators to pick up the slack. Not as if they all have aircraft lying around being unused.

The greatest chance would be for the Rex regional services (aircraft and staff) to be shoe-horned into another Saab operator (Link) but that would have its problems.

In reality I think this all mirrors the genesis of Rex in the first place - time for the relatively low cash needs of the regional ops to be severed from dud jet operations and re-emerge as Rex or a different company altogether.

 

[N860CR]

Put it this way - it Rex fell over tomorrow and all the Saab 340s went to the scrapyard there would be 20-40 regional communities who would lose any air service immediately, so someone would have to explain why all these small towns will lose their essential services like hospitals/schools and perishable goods/mail & courier services and pathological medical testing etc and their access to state capital city services and their tourism industries.

Do we think that Link or other alternative regional operators could conjure up a fleet of replacement Jetstreams/Metro's/Saab 340s/ATRs or Dash-8s with crew and all associated support overnight? No - that would be unrealistic and impossible due to aviation regulations

I don’t think Rex even serve 40 ports.

If Rex fell over tomorrow, I don’t think any community that isn’t already receiving a government subsidized service would be “abandoned”. The SAABs won’t be scrapped. They’re already on the Australian register. They’ll be picked up by another AU or NZ operator who can take over the subsidised services.

I think there is a lot of confusion between the need for Rex as an airline and the need for these government backed services to continue. The former isn’t required, the latter will continue regardless.

For those who are saying “regional services need competition and it’s the governments job to provide that”….

 

[RooFlyer]

For those who are saying “regional services need competition and it’s the governments job to provide that”….

Would 'facilitate' be better?

 

[UP4014]

Nexus has already offered to pick up WA routes.

I say give it to them, REX has lost the moral high ground on retaining subsidies.

 

[MooTime]

I don’t think Rex even serve 40 ports.

If Rex fell over tomorrow, I don’t think any community that isn’t already receiving a government subsidized service would be “abandoned”. The SAABs won’t be scrapped. They’re already on the Australian register. They’ll be picked up by another AU or NZ operator who can take over the subsidised services.

I think there is a lot of confusion between the need for Rex as an airline and the need for these government backed services to continue. The former isn’t required, the latter will continue regardless.

For those who are saying “regional services need competition and it’s the governments job to provide that”….

Not the gov job, I don't believe I've seen a single post stating that.
Albo wont be flying a plane, heavens imagine that.

Just some assistance like is currently happening. That's all, rather simple.

 

[N860CR]

Would 'facilitate' be better?

Not really. It’s not the governments job to put taxpayer money into a failed company so there can be “competition”. If the market warrants competition, competition will come.

Not the gov job, I don't believe I've seen a single post stating that.
Albo wont be flying a plane, heavens imagine that.

Just some assistance like is currently happening. That's all, rather simple.

Assistance has been happening with these routes for years. I have no doubt the assistance will continue regardless of the operator.

Rex took “assistance” during the pandemic. Now we are here. The taxpayer funded a lot of the 737 debacle, it’s not the taxpayers job to then save the company because of their own actions. It would be different if we didn’t have multiple other airlines able to take on these routes.

Post automatically merged: Aug 2, 2024

Quite an overnight Rex-expert.

More to it than googling tid bits.

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.

I read this as the government being expected to throw public funds at an airline so there’s “competition”. Am I reading it wrong?

 

[RooFlyer]

Not really. It’s not the governments job to put taxpayer money into a failed company so there can be “competition”. If the market warrants competition, competition will come.

No biggie, but what I meant by 'facilitate' was to have policy settings that encourage competition - such as funding the ACCC or lowering barriers to entry (such as premium slot allotment). Not meaning to put cash in.

But 'financial assistance' can be other than a straight out $ subsidy. It might be things like loan guarantees or underwritings. I'm not saying that this is what should be done, but governments can financially support private entities that think are worthy (or necessary) other than cash out the door.

I'm in the camp that thinks, absent a basket case scenario, that Rex should be helped to hang on servicing its regional routes, if necessary - although the Administrator's comments that they hope to find a 'buyer' soon may obviate government intervention.

 

[N860CR]

No biggie, but what I meant by 'facilitate' was to have policy settings that encourage competition - such as funding the ACCC or lowering barriers to entry (such as premium slot allotment). Not meaning to put cash in

Oh yes, no issue with that at all. Although the ACCC has to be the biggest waste of taxpayers dollars themselves!

 

[p--and--t]

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.

An excellent summary.

It's a fact of life some of these routes are so costly to provide a regular/ reasonably frequent service they are an unreasonable burden on the people we rely upon to provide for city slickers needs.

The mining companies seem to have sorted out their needs with FIFO etc.

However in primarily industry for example where we expect people to live & work in remote areas to feed us at the lowest cost possible alternate solutions need to be provided

There are essential services that a 1st world country should be supplying on a reasonably equitable basis Eg medical services and transfers et al.

It's not practical nor affordable to provide ad hoc flying doctor type services to the bush for regular GP visits, pathology services, mail deliveries

A middle ground solution is required. A subsidy for some that cannot support a normal provider, & let the market sort out those large enough to support one or more providers.

 

[eastwest101]

I don’t think Rex even serve 40 ports.

If Rex fell over tomorrow, I don’t think any community that isn’t already receiving a government subsidized service would be “abandoned”. The SAABs won’t be scrapped. They’re already on the Australian register. They’ll be picked up by another AU or NZ operator who can take over the subsidised services.

I think there is a lot of confusion between the need for Rex as an airline and the need for these government backed services to continue. The former isn’t required, the latter will continue regardless.

For those who are saying “regional services need competition and it’s the governments job to provide that”….

Approx 41 or 42 ports (excluding state capital cities) on the Rex regional network at the moment and I would say 22-25 of those ports have another competitor (mostly Qantaslink or Link/Sharp or someone else)

I think you have summarized the logic in that the government will need to determine the basic services it wants uninterrupted vs any perception of free money to private equity and looking after taxpayers money and then invent a structure whether its equity or some other form of subsidy to solve the issue. Short term - yes those operational (and donor part Saab 340s exist), right now they need a new operator and owner and for the existing Rex shareholders/lenders to lose their shirt so that more competent management can put the existing and operating Saab regional network and the workforce into action without the baggage of past debts/bad management choices. But that may be a short-term fix that governments have a nasty habit of making short-term fixes become perpetual and problematic long-term headaches

Longer term is a different story without a suitable aircraft to replace the Saab 340, and as other posters have pointed out, some regional routes are strong enough for two or more competitors to survive (e.g. Launceston/Dubbo/Mildura/Byron Bay/Tamworth/Coffs Harbour), some regional markets have marginal economics so can support one operator but another competitor will result in one or both of them leaving the market (e.g. Parkes/Burnie/Port Augusta) and some really small remote stuff that needs some sort of subsidy to exist at all (e.g. Birdsville, Normanton, Thargomindah etc). Might actually get some aviation reform and longer-term policy movement in this often-neglected sector,now that its an emergency and occupying the front page of newspapers. No doubt the opening of Western Sydney Airport will be a good time to have an adult discussion about slots at SYD in particular, and even curfews at Mascot, but I think that would require braver politicians than we currently have now.

 

[RSVKanga]

Put it this way - it Rex fell over tomorrow and all the Saab 340s went to the scrapyard there would be 20-40 regional communities who would lose any air service immediately

False information, Rex barely serve 40 destinations, and there are only 9 markets that are served by Rex only in 2024.

Moruya
Parkes
Narrandera
Ceduna
Coober Pedy
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.

So only eight destinations that will be impacted. As for QLD, the State Government can simply change the contractor to an airline like QF. And as for the other destinations, we have other airlines that can fill the void.

I have to say it’s quite alarming that a lot of the Australian travelling public still think that Rex is some sort of lifeblood saviour when in reality that’s not the case anymore. People need to look at the maps and see how limited Rex’s network is today. It’s QF that serves the largest amount of regional destinations in Australia, and it’s been like that for quite a few years now.

 

[RSVKanga]

Absolutely Gov will assist Rexy with cash. Absolutely no doubt about it. Yes PAG can, but gov will don't worry about that, they'll word it so doesn't sound so obvious but there'll be an assistance / helping hand.

The amount the gov threw at QF during covid again and again, wrongly kept job keeper, paid back nothing, unlike other ASX listed companies volunteered and otherwise did return a portion of funds to feds.

Qantas received close to $0 during the onset of the pandemic when other airlines across the world were being bailed out. 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 onset of 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.

Last I checked Qantas are ASX listed.

Yeah let Rexy fold & collapse. We know damn well what'll happen to regional fares once Qantas only carrier on routes!
More daylight robbery.

QF will enhance regional travel.

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.

 

[jase05]

Australia will be better off in the long term.

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