Rex launches Sydney-Canberra Saab 340 flights [now axed]

[Must...Fly!]

Rex to challenge ‘fare gouging’ Qantas with Sydney-Canberra flights

Country airline Regional Express (Rex) will launch flights between Sydney and Canberra next month, breaking Qantas’ monopoly on a route the carrier says is rife with “fare gouging”.

www.theage.com.au

Canberra-Sydney on the Saab next. Starting at $99.

Depending on one's point of view this might be considered predatory

 

[AIRwin]

Canberra-Sydney on the Saab next. Starting at $99.

Here is Rex's media release:

https://rex.com.au/BlobViewer/BlobViewer.aspx?attachtype=MR&filename=316871555136492B487146426E4E54513574342B48454252716B5377444F445A6D6D346A55374B4F78635047436749697A37564F414F5A504775654B48486354

 

[Melburnian1]

Rex to challenge ‘fare gouging’ Qantas with Sydney-Canberra flights

Country airline Regional Express (Rex) will launch flights between Sydney and Canberra next month, breaking Qantas’ monopoly on a route the carrier says is rife with “fare gouging”.

www.theage.com.au

Canberra-Sydney on the Saab next. Starting at $99.

Depending on one's point of view this might be considered predatory

I don't want to go 'OT' too much - this is a REX thread - but was the main reason that VAd 2.0 hasn't commenced flights on this super short route that it didn't believe its B738s were suitable, despite historically QFd using them for a minority of such flights?

It's also a route that suffers from very poor timekeeping, not just in winter, and faces severe competition from personal car travel, plus rail and bus. Depending on where one is travelling to in Sydney, using air when it often runs late can be an expensive, poor choice, such as a Canberra to Parramatta or Penrith journey.

 

[henrus]

Interesting them saying they plan to open a lounge in Canberra.

 

[Must...Fly!]

I think I view this as partly an acknowledgement that they need a broader network to fill the 737s. Virgin failed twice over to work regional in to the trunk domestic network. Little reason to believe this will succeed financially at this stage, IMO.

 

[kookaburra75]

I would welcome Rex onto that route - again in the Saabs. They used to run it post Ansett days (as Hazleton did the flights under the Ansett banner), and had a lounge then in the old terminal. At $99 each way it would make it so much easier to get to Sydney, mainly to access the cheap deals onto other major ports that we don't have access to from Canberra. I think it would also help drive the tourist traffic into Canberra at the weekends for the National Gallery etc.

Who knows, they might even run the B737 on the SYD-CBR-MEL route or similar.

 

[aus_flyer]

Depending on one's point of view this might be considered predatory

How? It's busting a monopoly. I would have thought it was the exact opposite of predatory...?

 

[Mattg]

How? It's busting a monopoly. I would have thought it was the exact opposite of predatory...?

I agree.

Except that every time Qantas does this to Rex, Rex cries foul and complains to the ACCC for what they claim to be "predatory behaviour"!

FWIW, the ACCC agrees with you as they recently rebuked Rex's argument.

 

[HappyFlyerFamily]

How? It's busting a monopoly. I would have thought it was the exact opposite of predatory...?

Opposite of predatory - lamb to the slaughter?!?!

 

[dajop]

Interesting move, Rex is suggesting seven return flights a day. At the time Rex is launching the service, QF is operating 7-8 flights a day on the route, with 5-6 hr gaps in between services during the middle of day/early afternoon (and no 737's, 3-4 717's + 4 Q400 or DH3's). Obviously this is not the normal state of affairs, but would also suggest suppressed demand.

 

[muppet]

Interesting move, Rex is suggesting seven return flights a day. At the time Rex is launching the service, QF is operating 7-8 flights a day on the route, with 5-6 hr gaps in between services during the middle of day/early afternoon (and no 737's, 3-4 717's + 4 Q400 or DH3's). Obviously this is not the normal state of affairs, but would also suggest suppressed demand.

So Rex is offering 7 flights x 36 pax

vs

QFs 7-8 flights of 74 to 110 pax

 

[HappyFlyerFamily]

SIGH...REX just start with the 4 per day?!?!

 

[AIRwin]

So Rex is offering 7 flights x 36 pax

$99 fare wouldn't be for all 36 seats per flight...

 

[muppet]

I find the press release interesting.

...
our fares will make a world of difference to the community that routinely sees one-way fares close to $1,000 for this short sector.

There are clearly no published Y fares anywhere near $1,000 meaning Rex is comparing QFs 717 J product to its Saab 340 Y seats?

 

[Must...Fly!]

How? It's busting a monopoly. I would have thought it was the exact opposite of predatory...?

As I said, depending on your point of view. I don't think it is predatory at all - just competition. Someone will likely go broke at the end of the day, as they almost always have in Australian aviation.

Rex seem to hold a view that Qantas coming in to monopoly routes run by them is predatory. Or that lowering prices to come closer (not necessarily match) Rex fares is predatory.

 

[SeaWolf]

Rex seem to hold a view that Qantas coming in to monopoly routes run by them is predatory.

The argument Rex makes is a bit more than just that. They argue that QF is entering routes that are simply too small to support two airlines regularly operating flights and that QF is entering with (almost always) larger aircraft that will never be able to be profitably operated on the route (even if Rex exits) because there simply aren't enough passengers. In essence Rex is arguing that QF is prepared to operate the routes at a loss just to deny Rex the ability to make a profit.
That would be predatory as QF would be using its larger position and capabilities in an attempt to drive the competition out of business so it doesn't have to compete with them.

 

[Must...Fly!]

The argument Rex makes is a bit more than just that. They argue that QF is entering routes that are simply too small to support two airlines regularly operating flights and that QF is entering with (almost always) larger aircraft that will never be able to be profitably operated on the route (even if Rex exits) because there simply aren't enough passengers. In essence Rex is arguing that QF is prepared to operate the routes at a loss just to deny Rex the ability to make a profit.
That would be predatory as QF would be using its larger position and capabilities in an attempt to drive the competition out of business so it doesn't have to compete with them.

I agree with you and the argument is more nuanced, for sure. But what about Rex as an airline threatening small local council operated airports in regional areas with service withdrawal unless they get fees and facilities on their terms? That is just as predatory in my book.

 

[jakeseven7]

Maybe this isn't actually a horrendous move from Rexy.

The route needs competition and VA2 don't have the right aircraft anymore to even try make it work and even when they had the ATR's they barely made a dent in QF's business here. I know they have the partially QF owned Alliance marked for this in the future, but even that will be jets.... they won't the have frequency of QF.

Who knows maybe this one will stick.....

 

[dajop]

The argument Rex makes is a bit more than just that. They argue that QF is entering routes that are simply too small to support two airlines regularly operating flights and that QF is entering with (almost always) larger aircraft that will never be able to be profitably operated on the route (even if Rex exits) because there simply aren't enough passengers. In essence Rex is arguing that QF is prepared to operate the routes at a loss just to deny Rex the ability to make a profit.
That would be predatory as QF would be using its larger position and capabilities in an attempt to drive the competition out of business so it doesn't have to compete with them.

Yes, this is an important point. It's quite a different scenario Rex launching connecting Sydney to a centre with a population of 400,000 and a significant amount of business traffic, to a situation where Qantas launches from Melbourne to an area with a population of 50,000 (through MGB), with far less business traffic.

But nevertheless if you look at QF's recent launches, in some of the routes (MIM) it seems to be a direct competition with Rex whilst with MGB, Rex has 2-3 daily schedule timed with the flights timed towards the end of the workday, whereas QF have a single daily in the middle of the day - perhaps providing less competition than what may initially seem to be the case.

Of course QF's move this year after being happy to leave those routes to Rex for so long, is merely a co-incidence.

 

[wendlle]

Fantastic I’ll take those fights now virgin isn’t flying it