Rex to fly between Australian capital cities

[dajop]

It’s not the price war with VA that will kill Rex. It’s the poking of the bear that caused QF to suddenly move onto ZL’s route network that will do it.

Thw end result is not going to be good for the Australian public, much weakened or destroyed VA and ZL but will be fine for the QF-cultists .

 

[muppet]

It’s not the price war with VA that will kill Rex. It’s the poking of the bear that caused QF to suddenly move onto ZL’s route network that will do it.

Thw end result is not going to be good for the Australian public, much weakened or destroyed VA and ZL but will be fine for the QF-cultists .

Agree but I will add that I think QF encroaching on ZL’s turf was inevitable given the market has completely changed.

There are fewer high-yield opportunities for QF’s regional fleet - so may as well use them wherever they can turn a buck.

 

[AIRwin]

There are fewer high-yield opportunities for QF’s regional fleet - so may as well use them wherever they can turn a buck.

And kill the other bird with one stone...

 

[Indiana]

Headline is presumptuous, but REX today publically floating the possibility of operating between state capitals using aircraft no longer required by other/former airlines...
Deputy Chairman John Sharp suggesting $200 million (capital raising from shareholders?) would do it

REX airlines to commence flying capital city routes

At a time of great uncertainty for the aviation industry, regional airline REX is announcing a surprise plan to start flying capital city routes.

www.abc.net.au

Excellent if so! I see the discount flights from Syd to Melb for only $49 and now Virgin has jumped on board as well. Of course qantas is offering discounted flights but only slightly and their business class is still up around the $900 mark. I wonder if people would jump ship and fly Virgin or Rex just to save money rather than spending it with Qantas?

 

[jakeseven7]

Excellent if so! I see the discount flights from Syd to Melb for only $49 and now Virgin has jumped on board as well. Of course qantas is offering discounted flights but only slightly and their business class is still up around the $900 mark. I wonder if people would jump ship and fly Virgin or Rex just to save money rather than spending it with Qantas?

I imagine lots of churn between Jetstar / Virgin2 / Rex will be happening.

 

[muppet]

Excellent if so! I see the discount flights from Syd to Melb for only $49 and now Virgin has jumped on board as well. Of course qantas is offering discounted flights but only slightly and their business class is still up around the $900 mark. I wonder if people would jump ship and fly Virgin or Rex just to save money rather than spending it with Qantas?

Qantas now has $499 business fares. Still more than double.

Post automatically merged: Feb 11, 2021

I imagine lots of churn between Jetstar / Virgin2 / Rex will be happening.

Hmmm i must admit..... I’m tempted. A $49 fare at 5pm Friday vs $200+ on QF .... hard to justify.

 

[Carrots]

Qantas Group appears to have returned serve. They're now advertising $29 fares one way with Jetstar.

 

[dk4]

It’s not the price war with VA that will kill Rex. It’s the poking of the bear that caused QF to suddenly move onto ZL’s route network that will do it.

Thw end result is not going to be good for the Australian public, much weakened or destroyed VA and ZL but will be fine for the QF-cultists .

I think it was General Electric in the USA, which more than 100 years ago, came up with the basis for how to operate a "monopoly", without "looking like you are a monopoly", and therefore facing regulation and forced divestitures. The concept was to ensure that in any market where they were approaching monopoly status, and therefore at risk of government intervention, ensure that there were exactly 2 other minor competitors in the market.

The 1st - eeking out a profit, but not enough to warrant their investment in expansion, and encroachment.
The 2nd - borderline basket case, that keeps going but demonstrates to anyone outside the market, there is no potential for any additional new entrants.

I wonder if people would jump ship and fly Virgin or Rex just to save money rather than spending it with Qantas?

If we assume that Qantas risks government intervention and regulation if it goes too far above its two thirds domestic market share, then perhaps Qantas would be quite happy to shed its less valuable price sensitive customers and swap them out for (previous) Virgin's quality oriented customers, who are prepared to pay a premium, and are more valuable to their bottom line?

 

[HappyFlyerFamily]

I think it was General Electric in the USA, which more than 100 years ago, came up with the basis for how to operate a "monopoly", without "looking like you are a monopoly", and therefore facing regulation and forced divestitures. The concept was to ensure that in any market where they were approaching monopoly status, and therefore at risk of government intervention, ensure that there were exactly 2 other minor competitors in the market.

The 1st - eeking out a profit, but not enough to warrant their investment in expansion, and encroachment.
The 2nd - borderline basket case, that keeps going but demonstrates to anyone outside the market, there is no potential for any additional new entrants.

If we assume that Qantas risks government intervention and regulation if it goes too far above its two thirds domestic market share, then perhaps Qantas would be quite happy to shed its less valuable price sensitive customers and swap them out for (previous) Virgin's quality oriented customers, who are prepared to pay a premium, and are more valuable to their bottom line?

Haha, but even in the premium sector there are people looking for value.

 

[jase05]

Qantas Group appears to have returned serve. They're now advertising $29 fares one way with Jetstar.

For no luggage

 

[jakeseven7]

Bain did not budget for this.... and they did not budget for state borders playing open shut them for months on end too.... wonder how long Bain/VA2 or Rex will last....

 

[Carrots]

For no luggage

Now now, don’t ruin the headline grabbing number.

 

[jase05]

Now now, don’t ruin the headline grabbing number.

I apologise
What is it these days for luggage on JQ, $30 or $40?

 

[AIRwin]

Only 5 flights on 1 March now with retimed STD, most of which are still on sale for $79/$299:

Now only 3 daily flights scheduled in the first week of March...

 

[Mattg]

Now only 3 daily flights scheduled in the first week of March...

Wow, so after Rex boasted about its superior reliability back when it put its SYD-MEL flights on sale, it's already cancelled 2/3 of the flights originally scheduled to operate in the first week. And the flights haven't even started yet.

 

[eastwest101]

By going for one mainline route (SYD-MEL) Rex are just asking for predatory pricing to take place from competitors, the Qantas Group and Virgin simply raise fares where there is less competition and these slightly higher fares elsewhere cover the losses sustained in the SYD-MEL route.

In a purely price driven market - when you are a new competitor in a market you need economy of scale and market reach to prevent your larger established competitors doing this. Its been done numerous times in the airline industry before and I don't know how anyone who has been alive for the last 30+ years would be surprised by this. The end result is that passengers who fly on non-competitive routes essentially subsidise cheap flights for pax who fly on competitive routes until someone blinks and either reduces or moves capacity elsewhere..

Maybe Rex don't need a huge amount of frequency within the golden triangle, they just need to use their B738s to link up to their hubs that link their Saab 340 network so that its practical for passengers to choose Rex for pairs that even QF cannot do, e.g. DPO-SYD or MEL-ARM for instance.

I get that SYD-MEL is normally a profitable city pair but maybe Rex needs to think about what product differentiation and what routes they should select for their B738s, obviously their Saab 340 network is the right size for its market and reach and is a proven business model.

The stupid thing is that there is so much synergy now between the relaunched lower cost VA business, and the regional network of Rex (even more now with VA's restructure and the post Covid travel market) but because they refuse to co-operate with eachother and utilize their competative strengths they are endangering their own buinesses, and make a Qantas/Jetstar monopoly even more likely. They even have a permissive ACCC and Fed Govt environment, airport owners and leasing companies totally over a barrel, cheap finance, and a large skilled available workforce at call in which they could do this right now, but have wasted this once in a lifetime opportunity to co-operate and both survive.

 

[ANstar]

By going for one mainline route (SYD-MEL) Rex are just asking for predatory pricing to take place from competitors, the Qantas Group and Virgin simply raise fares where there is less competition and these slightly higher fares elsewhere cover the losses sustained in the SYD-MEL route.

In a purely price driven market - when you are a new competitor in a market you need economy of scale and market reach to prevent your larger established competitors doing this. Its been done numerous times in the airline industry before and I don't know how anyone who has been alive for the last 30+ years would be surprised by this. The end result is that passengers who fly on non-competitive routes essentially subsidise cheap flights for pax who fly on competitive routes until someone blinks and either reduces or moves capacity elsewhere..

Maybe Rex don't need a huge amount of frequency within the golden triangle, they just need to use their B738s to link up to their hubs that link their Saab 340 network so that its practical for passengers to choose Rex for pairs that even QF cannot do, e.g. DPO-SYD or MEL-ARM for instance.

I get that SYD-MEL is normally a profitable city pair but maybe Rex needs to think about what product differentiation and what routes they should select for their B738s, obviously their Saab 340 network is the right size for its market and reach and is a proven business model.

The stupid thing is that there is so much synergy now between the relaunched lower cost VA business, and the regional network of Rex (even more now with VA's restructure and the post Covid travel market) but because they refuse to co-operate with eachother and utilize their competative strengths they are endangering their own buinesses, and make a Qantas/Jetstar monopoly even more likely. They even have a permissive ACCC and Fed Govt environment, airport owners and leasing companies totally over a barrel, cheap finance, and a large skilled available workforce at call in which they could do this right now, but have wasted this once in a lifetime opportunity to co-operate and both survive.

Perhaps they need to relook at the initial business case. It seems intrastate routes seem to be the boom at the moment. Why not upgauge SYD-Ballina to the 737. Wasn't SYD-BNE supposed to have started by Easter? Seems as though that won't be happening given seats aren't even on sale yet. Looks like they will have a lot of planes and staff sitting on the ground. Missing the Easter school holidays is a mistake in my opinion.

 

[Melburnian1]

Yes although Rex is also starting from a low-cost base. Chances are they're paying the same as VA for the aircraft, crew etc so it's really just QF who's at the disadvantage in terms of costs. Perhaps it's been mentioned somewhere already but QF keeping the A380's, A330's, and B787's lying around must be costing something.

Surely ZL would have far lower 'add on' costs like head office staff than VA 2.0?

VA 2.0 has sacked staff from VA 1.0 but I bet my bottom dollar not all. It'd still be a large bureaucracy, although QFi/QFd would be another step above.

 

[AIRwin]

Less than 4 weeks to the launch!

1 week to the launch...

 

[HS-TQE]

As widely expected, REX didn't change the interior much on the ex-VA leased 737s, only changing the branding.

REX removed the upholstery that had "Virgin" branding stamped into the J seats. Only to be replaced with the same material with "REX" branding stamped into the new 'J' seat upholstery, as well as removing the "Economy X" branding on the Extra Legroom economy seats.

First photos: Rex Boeing 737 business class

Regional Express brings competition to the business class skies, using the same seats (and planes) as arch-rival Virgin Australia.

www.executivetraveller.com