Rex in voluntary administration, ending all 737 services

[Saab34]

That aircraft doesn’t come cheap either. That’s a large outlay for what is marginally thin routes.

I think the government is stuck with this for a long time.

 

[kamchatsky]

To me regional flights are essential services, so it is a no brainer to buy the aircraft when the government owns Rex. No party will oppose it. It is what it is.

 

[eastwest101]

To me regional flights are essential services, so it is a no brainer to buy the aircraft when the government owns Rex. No party will oppose it. It is what it is.

Until a suitable replacement aircraft comes along for the Saab 340 (or the price of used Dash 8s/ATR42s or something else comes down to get over the capital hurdle) that might be the way it plays out as a realpolitik thing.

To be fair Rex had a Covid/VA being bailed out/epically stupid management and a failure to market its B737 jet operations more than anything. As Link has shown - its possible to operate the Saab 340 profitably in Australia, and nothing I have seen from the front-line staff in Rex would give anyone a reason to think that there is some inherent flaw in the cost structure/staff/operational capacity of the airline to be viable if released from the debts/sins of its past.

Just as Alliance proved that its possible to profitably fly E190s in Australia (despite Virgin's failure to do so) it's not often the equipment that sets businesses up for failure, but more likely stupid financial and market decisions by senior management that allow airlines to go to the wall. Similarly, Bonza went broke flying B737s and no one is saying that the B737 is an intrinsically unprofitable aircraft. Ditto for the A320 with Tiger.

 

[kamchatsky]

Until a suitable replacement aircraft comes along for the Saab 340 (or the price of used Dash 8s/ATR42s or something else comes down to get over the capital hurdle) that might be the way it plays out as a realpolitik thing.

To be fair Rex had a Covid/VA being bailed out/epically stupid management and a failure to market its B737 jet operations more than anything. As Link has shown - its possible to operate the Saab 340 profitably in Australia, and nothing I have seen from the front-line staff in Rex would give anyone a reason to think that there is some inherent flaw in the cost structure/staff/operational capacity of the airline to be viable if released from the debts/sins of its past.

Just as Alliance proved that its possible to profitably fly E190s in Australia (despite Virgin's failure to do so) it's not often the equipment that sets businesses up for failure, but more likely stupid financial and market decisions by senior management that allow airlines to go to the wall. Similarly, Bonza went broke flying B737s and no one is saying that the B737 is an intrinsically unprofitable aircraft. Ditto for the A320 with Tiger.

I really don't know what is the suitable replacement aircraft for the Saabs, that would be the government to work out (assuming they will own Rex) as they have responsibility to provide essential services to the regional towns.

I don't know how long those Saabs can be continuingly serviced to provide safe services for the regions. Sooner or later, they will run out of Saab spare parts.

Given it takes ages to tender and procure and deliver aircrafts, it is best to start that process sooner rather than later.

 

[DC3]

Is there any AFFer who doesn’t know how to run an airline?

 

[markis10]

There is a large number of ATR72s (50-60) coming off lease this year and next, could be an ideal aircraft for REX work given its economics on the sub 1000km sectors. Bigger than a SAAB obviously but the lack of a new sub 50 seat aircraft for years has put pressure on operators. It seems to have worked for Loganair who had a large SF340 fleet.

 

[clifford]

Is there any AFFer who doesn’t know how to run an airline?

Me.

 

[clifford]

There is a large number of ATR72s (50-60) coming off lease this year and next, could be an ideal aircraft for REX work given its economics on the sub 1000km sectors. Bigger than a SAAB obviously but the lack of a new sub 50 seat aircraft for years has put pressure on operators. It seems to have worked for Loganair who had a large SF340 fleet.

How about the ATR42, or used Dash8-200/300? I think the ATR72 would be huge overkill.

Last time I was in Arizona I did see a lot of mothballed Jetstreams...

 

[jase05]

Is there any AFFer who doesn’t know how to run an airline?

I’d back anyone on AFF over any of the imbeciles we have in government

 

[Quickstatus]

As Link has shown - its possible to operate the Saab 340 profitably in Australia,

And as Rex had previously shown as well...

 

[N860CR]

To me regional flights are essential services, so it is a no brainer to buy the aircraft when the government owns Rex. No party will oppose it. It is what it is.

To an extent they are… hence the government subsidizes routes. Aside from Parkes and Moruya, what routes does Rex operate under its own steam?

All government subsidized routes can be handed to other players. Airlines that, you know, haven’t gone bust. Link, QantasLink, hinterland, Skytrans, skippers, nexus, maroomba. Have I missed any?

 

[Captain Halliday]

Have I missed any?

Airnorth.

 

[Layslow]

Am I the only one that loathes ATR's? Boarding from the back and having a front row with no exit is incredibly claustraphobic... I almost flipped out when I got in my first one and was give row 1... Yes back rows are where you need to be - but something about the design feels like a lack of interior space compared with the light and airy cabin of the Dash-8's...

 

[Bundy Bear]

should rex really just be operating flights that have no competition.
So routes like SYD-PQQ/SYD-CFS/SYD-DBO/SYD-ABX shouldn't they be dropped.

If Qantas up the price then Link or another company can compete.

 

[markis10]

How about the ATR42, or used Dash8-200/300? I think the ATR72 would be huge overkill.

Last time I was in Arizona I did see a lot of mothballed Jetstreams...

Lack of available aircraft is the problem for the 42s and Dash. The 42s are still being made but the Dash have issues with engine servicing/spares for the PW123 engine. As for Jetstreams, quite a few Australian airlines in the past found they were great when flown in pairs so customers could get their baggage in a timely manner.

 

[dajop]

To an extent they are… hence the government subsidizes routes. Aside from Parkes and Moruya, what routes does Rex operate under its own steam?

ADL-BHQ, MEL-MGB, MEL-MIM, ADL-CED, ADL-CPD.

There are also routes that QF (with it's much bigger aircraft) only offers low frequencies, eg ADL-MGB - 3x weekly vs Rex which operates 3xdaily on weekdays. SYD-GFF - daily on QF vs 3x daily on ZL weekdays. SYD-MIM 4xweekly on QF, up to 3 daily on Rex.

Link with its fleet of 11 Saabs (and 3 metroliners) would seem a logical fit, at least for the non-compete routes, but it doesn't seem to compete with anyone on most of its routes (BNE-BDB being the sole exception I think). Again though, same problem of aging Saabs which eventually will need to be replaced. And it might not have interest in taking on the much larger operation.

I am sure the government, after the QR issues, is somewhat sensitive about offering advantages to QF, so the relatively modest outlay to keep Rex going (which does have a sound regional operation with experienced and competent staff - and was run profitably for many years until management went a bit psycho) could even be sold off again at some point should it return to profitability.

 

[N860CR]

ADL-BHQ, MEL-MGB, MEL-MIM, ADL-CED, ADL-CPD.

There are also routes that QF (with it's much bigger aircraft) only offers low frequencies, eg ADL-MGB - 3x weekly vs Rex which operates 3xdaily on weekdays. SYD-GFF - daily on QF vs 3x daily on ZL weekdays. SYD-MIM 4xweekly on QF, up to 3 daily on Rex.

Link with its fleet of 11 Saabs (and 3 metroliners) would seem a logical fit, at least for the non-compete routes, but it doesn't seem to compete with anyone on most of its routes (BNE-BDB being the sole exception I think). Again though, same problem of aging Saabs which eventually will need to be replaced. And it might not have interest in taking on the much larger operation.

I am sure the government, after the QR issues, is somewhat sensitive about offering advantages to QF, so the relatively modest outlay to keep Rex going (which does have a sound regional operation with experienced and competent staff - and was run profitably for many years until management went a bit psycho) could even be sold off again at some point should it return to profitability.

I’m still not seeing justification there for the government to purchase and run an airline. It’s a minuscule number of routes that could easily be picked up by decent operators. If they elect not to, the government can subsidize and put it to tender.

 

[dajop]

It’s a minuscule number of routes that could easily be picked up by decent operators.

The problem, I think alluded to, is lack of aircraft available of a suitable size, although if they let Rex go, then there will be a reasonable number of Saabs that come available.

In any event it really is the politics that are driving this in an election year. It wouldn't be a good look (politically) to be exposed to continued attacks of being in the pockets of Qantas and at the same time ignoring people outside the capital cities - it's not a good narrative. And TBH, this sort of investment into a sound operation (that got screwed over by egos and inept management), is relatively small amount compared to the billions of dollars that are going to be arguably needlessly thrown around in the next few months by all and sundry (!!) (sorry mods), and could ultimately come out even down the track.

Or the whole thing could be a negotiating tactic on behalf of the administrators.

 

[justinbrett]

Rex should be left to fail. Once other operators are finished picking up anything valuable remaining, the rest of the gap can be covered by government tender for essential services.

 

[moa999]

Rex should be left to fail.

I wouldn't be surprised if the government support is more to ensure no sudden disruption, and they will slowly reduce operations as more of their Saabs go into the not flying pool, meanwhile other operators will have time to ramp up staff and aircraft.