Rex in voluntary administration, ending all 737 services

[OATEK]

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.

The "issues" seem to be different for the different "camps" on this issue. I think most are in furious agreement with the notion that Rex pursued a high stakes venture into Jet operations on the golden triangle, and lost. How much of govt vs investor money was lost will probably never be known.

As someone who flew ZL extensively in the 1980s, on everything from six seater Cessnas to the Shorts, I was very aware of the vital role they played in connecting small rural communities to bigger centres. And many of these centres will always be in the category of needing support from govt to maintain services. Close friends in the Central West of NSW are always telling me how hard it is to travel to Sydney for specialist medical services and get back the same day, leading to expensive overnighters - which compares to me who might have to drive for 15mins for the same level of service in SYD. So either someone picks up ZL to continue these rural services, or ZL remain supported, are the likely two alternatives that I see.

 

[jase05]

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.

A strong FFP is a must and they just didn’t have that.
QF and VA have a huge advantage with their programs and most people will pay more to stay with that airline/s for the benefits they bring.
They seemed to go at it half measure too as one or two flights per day between major cities just doesn’t cut it. I know I looked at them a few times and their prices were very good but their timings just didn’t suit me and the others offer better timings and frequencies.
The advertising was very poor too. I mentioned this when they first started jet routes as my parents and family live in regional NSW and the majority of people in their towns still only believed Rex flew turboprops and had no idea they had jets and this was many months after they commenced services.

 

[drron]

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.

Well QF also got money for regional services. I flew into LST in April 2020 from MEL. 3 days later the service cancelled.

 

[RSVKanga]

So either someone picks up ZL to continue these rural services, or ZL remain supported, are the likely two alternatives that I see.

What about the third option; let Rex fold and allow other airlines to simply fill the void on Rex monopoly destinations? In 2024, there are only a handful of Rex-dependent markets. There are so many other turboprop airlines in Australia with the right aircraft for the right destinations. I'd bet that any new government money for Rex will likely be misused again, this time not to finance jet services but probably to prop up their foreign owners PAG and LKH.

 

[oz_mark]

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 jet service funding came from PAG.

REX signs binding agreement with PAG on funding for domestic jet operations | PAG

www.pag.com

 

[RSVKanga]

The jet service funding came from PAG.

REX signs binding agreement with PAG on funding for domestic jet operations | PAG

www.pag.com

The jet service funding came predominantly from the former government in the form of a massive regional package that was misused; Even McCormack has himself admitted that Rex took advantage of his extraordinary bailout to fund the 737 operation.

 

[OATEK]

What about the third option; let Rex fold and allow other airlines to simply fill the void on Rex monopoly destinations? In 2024, there are only a handful of Rex-dependent markets. There are so many other turboprop airlines in Australia with the right aircraft for the right destinations. I'd bet that any new government money for Rex will likely be misused again, this time not to finance jet services but probably to prop up their foreign owners PAG and LKH.

I see this as too speculative and long term.

The key for the govt will be retaining services, not letting ZL fold and wait to see if other small players can scrounge enough planes to fill the gap in a reasonable time frame.

Unless you have lived in rural/remote areas, or travelled there extensively on business it can be hard to understand just how much these communities need these air services. In the good old days of Hazeltons, they would overbook out of Orange and Dubbo, then fly in one of the Cessna 310s from their base at Cudal to take the extra passengers to SYD. It was really oriented towards servicing those rural communities and were very much liked for that reason.

 

[I love to travel]

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.

Disgraceful

 

[MEL_Traveller]

The jet service funding came predominantly from the former government in the form of a massive regional package that was misused; Even McCormack has himself admitted that Rex took advantage of his extraordinary bailout to fund the 737 operation.

The article you linked *doesn’t* say the regional package was misused. At least anywhere I can see.

 

[MEL_Traveller]

A strong FFP is a must and they just didn’t have that.
QF and VA have a huge advantage with their programs and most people will pay more to stay with that airline/s for the benefits they bring.
They seemed to go at it half measure too as one or two flights per day between major cities just doesn’t cut it. I know I looked at them a few times and their prices were very good but their timings just didn’t suit me and the others offer better timings and frequencies.
The advertising was very poor too. I mentioned this when they first started jet routes as my parents and family live in regional NSW and the majority of people in their towns still only believed Rex flew turboprops and had no idea they had jets and this was many months after they commenced services.

I guess this shows the lack of advertising… Rex was offering 5 or 6 frequencies a day between MEL and SYD.

Slots are a big issue here. VA is offering frequencies every 15 mins, but my experience is that many of them were running late or cancelled. Not fair they get to keep them and prevent others using them.

 

[RSVKanga]

The article you linked *doesn’t* say the regional package was misused. At least anywhere I can see.

McCormack said "Rex took advantage" of his package.

 

[jase05]

I guess this shows the lack of advertising… Rex was offering 5 or 6 frequencies a day between MEL and SYD.

Slots are a big issue here. VA is offering frequencies every 15 mins, but my experience is that many of them were running late or cancelled. Not fair they get to keep them and prevent others using them.

From a personal POV, Rex had 2x ADL-MEL flights per day at 0600 and 1730 high are both useless times for me. If it’s for work I have to fly QF and if it’s for leisure then those times just don’t work whereas VA has up to 9 daily with a good spread of times. ADL-SYD Rex only had 1 per day whereas VA had up to 6. I tried to give some money to Rex but they just didn’t have the frequency that suited us unfortunately

 

[MEL_Traveller]

McCormack said "Rex took advantage" of his package.

View attachment 400273

There are two meanings.

The other meaning is to ‘make good use of an opportunity’.

I clearly took it to mean the latter.

Post automatically merged: Aug 3, 2024

From a personal POV, Rex had 2x ADL-MEL flights per day at 0600 and 1730 high are both useless times for me. If it’s for work I have to fly QF and if it’s for leisure then those times just don’t work whereas VA has up to 9 daily with a good spread of times. ADL-SYD Rex only had 1 per day whereas VA had up to 6. I tried to give some money to Rex but they just didn’t have the frequency that suited us unfortunately

Fair enough! Maybe they should have concentrated on the three majors, and linking those into their networks?

 

[UP4014]

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.

I don’t think it’s the loyalty, the self indulgence of giving the CEO benefits while the ship was sinking says it all about REX.

I think a select group of us here on AFF could have improved the situation if asked a year ago to help. When you look at the skill set here and the passion for air travel and making things work. However, refer again my paragraph above, the culture at the top was all wrong.

 

[moa999]

The jet service funding came from PAG.

REX signs binding agreement with PAG on funding for domestic jet operations | PAG

www.pag.com

Exactly... and this was considerably drawn down as the 737 operations started up.

Remember all the airlines suffered real losses over Covid. Almost no income coming in and then a slow recovery, all the time while still paying staff, rent, leases etc. In Qantas and Rex's case much of this was paid by the government which saved the shareholders. In VAs case the shareholders and banks and lessees bore the pain.

 

[Aussie_flyer]

I guess this shows the lack of advertising… Rex was offering 5 or 6 frequencies a day between MEL and SYD.

Slots are a big issue here. VA is offering frequencies every 15 mins, but my experience is that many of them were running late or cancelled. Not fair they get to keep them and prevent others using them.

They had up to 8 a day at times. I've said it before but the service they offered was fantastic, regardless of all the criticism in this thread. It is true management stuffed things up severely, the money they spent flying empty aircraft around for the last couple of years should have been spent up front, early on, marketing and building things like the loyalty program, website, app etc.

I had such wonderful experiences with Rex that I would have moved to them permanently had they managed to survive, got the FF program sorted and perhaps joined an alliance.

I hope they can pull through with new ownership, new leadership and a plan to get the fleet updated.

 

[eastwest101]

I don’t think it’s the loyalty, the self indulgence of giving the CEO benefits while the ship was sinking says it all about REX.

I think a select group of us here on AFF could have improved the situation if asked a year ago to help. When you look at the skill set here and the passion for air travel and making things work. However, refer again my paragraph above, the culture at the top was all wrong.

Absolutely - toxic mismanagement at the top of the company meant that any suggestions would have been ignored. My advice would have been do the opposite with PR and public announcements and make friends with local councils (and hence friends with Regional people), ignore their competitors, and they did have the right idea with their pilot training academy (even if it meant that they were always being poached from by other airlines) and do things in the opposite order that Rex did them (so possibly in this order)

1. Investigate all fleet replacement options for the Saab 340s whether new or used
2. Make serious attempts to co-operate/codeshare with other airlines (Virgin in particular)
3. Restart the Rex frequent flyer program straight away or latch onto an existing one or an alliance.
4. Continue fleet replacement but maintain Saab fleet for smaller thinner routes.
5. Commence jet operations to link hubs of SYD MEL ADL and BNE only if the airline was profitable and post Covid boom allowed.

 

[RooFlyer]

Wow. Unbelievable they can do this and seemingly get away with it.

I don’t think he’s gotten away with it – yet.

 

[RSVKanga]

The key for the govt will be retaining services, not letting ZL fold and wait to see if other small players can scrounge enough planes to fill the gap in a reasonable time frame.

Does it necessarily have to be small players? I’m sure QantasLink, Australia’s largest regional airline, can find enough planes to fill the gap in a reasonable time frame. That section of QF doesn’t have a strained fleet like Qantas international. It’s only a handful of destinations anyway that will be impacted if Rex folds. There are some destinations where the Q300 and Q400 will not be appropriate, and that’s where the smaller players come in to fill the gaps, like the Link Saabs, Pelican Jetstreams or Skytrans caravans.

 

[justinbrett]

Let Alliance take them over. If they can’t merge with QF may as well make them a robust regional airline. Doesn’t stop them wet leasing for QF and VA.