Can Rex win the business class battle against Qantas, Virgin?

Seats, meals, WiFi and lounges are all part of the Regional Express business class playbook.

By David Flynn, December 2 2020
Can Rex win the business class battle against Qantas, Virgin?

Australia’s busiest and most competitive airline route will host an epic dogfight as ‘country airline’ Regional Express challenges Qantas and Virgin Australia for the hearts, minds and wallets of business travellers – at least those who fly in business class.

Armed with a fleet of Boeing 737 jets, Rex will launch flights between Sydney and Melbourne on March 1, 2021.

It’s the opening gambit in a network which will extend to Brisbane from April, and could eventually bring most of Australia’s capital cities under its wing by late 2022.

But right now all eyes are on Sydney-Melbourne, which in normal (read: pre-Covid) times ranks among the world’s business domestic routes.

The three-horse race

To carve out its own slice of this lucrative market, Regional Express has pegged its lowest Sydney-Melbourne business class fare at just $299, with standard business class at $399 and a fully-flexible business fare at $599.

Despite the sweeping price variance each business class fare offers the same core experience, including no fee for moving onto an earlier flight did your schedule changes or your meetings run short.

Rex's three-tiered Boeing 737 business class fare structure.
Rex's three-tiered Boeing 737 business class fare structure.

By comparison, for the same period in early March 2021, Qantas charges a flat $715 for its Boeing 737 business class, with Virgin Australia’s two-tier business fares at $450 and $600.

(These prices, while correct at the time of writing, may well change if Qantas and Virgin decide to meet Rex’s challenge and match its fares.)

Rex’s business class passengers will be served a full meal alongside Australian beers, red and white wine, with free WiFi also on tap.

Read: What you need to know about flying Rex business class

Rex Deputy Chairman John Sharp says the airline's business class is "a Qantas offering with a Jetstar price."
Rex Deputy Chairman John Sharp says the airline's business class is "a Qantas offering with a Jetstar price."

As Regional Express Deputy Chairman John Sharp puts it to Executive Traveller, this is “a Qantas offering with a Jetstar price.”

“For the first time (travellers) don’t have to choose between low fares with minimal service and premium pricing for more reliable flights.”

But while Sharp didn’t name-check Virgin Australia, there’s no doubt that the resurrected airline is also in his crosshairs.

That won’t be helped by Virgin’s adoption of a similarly mid-market position nestled between Qantas and Jetstar, or that Rex’s Boeing 737s were aircraft previously leased by Virgin – meaning they are crowned by eight of Virgin’s familiar leather-clad business class seats.

Rex' Boeing 737s come from Virgin's former fleet, complete with eight business class seats.
Rex' Boeing 737s come from Virgin's former fleet, complete with eight business class seats.

Ironically, while Rex is best known as a regional airline connecting 59 destinations across all six Australian states, it has capital cities and business class seats buried in deep in its DNA.

The airline was founded in 2002 by merging two regional subsidiaries of Ansett Australia –  Hazelton and Kendell – after Ansett famously collapsed in 2001.

Rex has its roots in Ansett Australia.
Rex has its roots in Ansett Australia.

Now, almost 20 years later, Ansett’s distant descendant will once again throw down the gauntlet to incumbent heavyweight Qantas.

Cut-price fares aren’t the only arrow in Sharp's quiver. New and improved lounges at both Sydney and Melbourne will bookend the 90-minute journey.

To cope with the added load from nine daily Sydney-Melbourne flight “we’re building a brand new lounge at Sydney Airport,” Sharp tells Executive Traveller, adding that this should be ready by March 2021, “and we’ll also expand our existing lounge at Melbourne Airport to make it much bigger.” 

“We (also) plan to build a new lounge at Brisbane Airport to accommodate our flights between Sydney and Brisbane, and ultimately between Brisbane and Melbourne.”

Read: Rex to open Brisbane Airport lounge, eyes Brisbane-Melbourne flights

Still to come: Rex Flyer

However, noticeably absent from Rex’s capital city launch will be a frequent flyer program. 

Sharp is willing to gamble that, in at least the short term, the lure of low fares will outweigh collecting points and status credits.

“We’ll look at developing our own multi-faceted frequent flyer program in the future, but at this stage, we’re just focusing on getting the airline up and running,” Sharp tells Executive Traveller.

That program will be a revamp of the Rex Flyer loyalty scheme, which previously ran on a 'coffee card' concept of buying nine flights and getting the tenth free; speculation is that could skew towards a more conventional points-based system.

Also on the cards is “a new and improved” version of the Business Flyer program, which lets businesses claim two free flights for every eighteen Rex flights.

“Historically, we’ve awarded benefits to the person who pays for the ticket, rather than the passenger who takes the trip,” Sharp explains.

“When you think about it, that’s a better deal than most, because the two tickets that you get after the 18 are treated as fully-paid ticket, so there’s no limit on the number of seats available… and you’ve got full flexibility in terms of changing the time of flying or the date of flying.”

Additional reporting by Chris Chamberlin.

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Virgin Australia - Velocity Rewards

06 Mar 2015

Total posts 230

They probably won't  beat Qantas but they as sure as anything will destroy VA's pathetic Business Class.

VA have well and truly lost the PR battle and by the looks of it the service battle as well as they are still only giving pathetic in flight food service.

20 Oct 2015

Total posts 150

Rod, you do realise that Virgin's current business class offering is still a short-term 'stop gap' measure and and that the whole business class proposition is undergoing a review ahead of Virgin relaunching business class early next year? It's simply too early to make sweeping calls on Virgin's business class.

The new owners of Virgin only took over few days ago, given them a break.

Think initially Rex business class will be 100% full with upgrades & am sure if corporates buy a bunch of tickets (like 100) at one time, am sure a certain number will be business class upgradeable, or standby business class/confirmed economy.

11 Jul 2020

Total posts 70

Qantas will match or better the Rex fare. If Rex thinks for one minute Qantas is going to surrender the business class sector to Rex, they are gravely mistaken. Virgin wont really care about the business class battle, it will leave that fight to Qantas and both Qantas and Virgin Australia will market competitively against Rex with economy seats. People need to remember that Virgin Australia is positioning itself as a value based carrier. To the victor goes the spoils or whoever had he deepest pockets or can raise equity through low cost loans to kill off the competition, both Qantas and Virgin  (Bain) are in a position where they can do this. Also I wouldn't be surprised if overseas international flights start and ramp up from May 2021  as the world gets inoculated against covid-19 and this allows international flights to restart world wide. Time will tell I guess.

.

Qantas

19 Apr 2012

Total posts 1263

Oz Rex with its Singapore owners also has deep pockets. Let the games begin!!!

Qantas - Qantas Frequent Flyer

21 Jan 2014

Total posts 307

With all of these cheaper fares starting up across all fare types makes you wonder who would even bother jumping on a Jetstar flight and get absolutely nothing when you can fly business class for $299.

think those trying to use Qantas ff pts, will end on Jetstar rather than Qantas much of the time, as am sure Qantas will make that happen esp. to places like Cairns, as they want to sell seats that cost more to produce.

AT
AT

Qantas - Qantas Frequent Flyer

14 Sep 2012

Total posts 347

This "win the business class battle...." headline eludes to Rex securing the number one position for business class traffic over Qantas & Virgin which is simply not a realistic outcome, sounding a little too Daily Telegraph here. REX can compete but they need to differentiate their premium product from especially what Qantas offers and new Virgin, otherwise REX business class will always be considered a little low rent.

20 Oct 2015

Total posts 150

As I see it, Rex 'winning' the business class battle will come down to the same 'value' proposition as Virgin is promoting, which is mainly about price but not entirely about price. Nobody is suggesting that Rex will ever take #1 spot for business class compared to Qantas or even Rex, but if Rex can fill most of its eight business class seats on most flights then that's a win for sure. I don't see that Rex can do much to differentiate its business class against Qantas or Virgin except in price, really, because we are talking about a 90 minute flight after all, so things like meals and even lounges just need to be good enough rather than knocking it out of the park. That said, if Qantas flew SYD-MEL from its international terminals with access to the Qantas First lounges, well that would knock it out of the park as far as lounges go, although it'd also become a very expensive proposition because the cost of the traveller's lounge visit would probably eat up most of the profit from their business class ticket LOL!

GOLD4L

SYD/MEL is really a 60 min flight (as is BNE/SYD). The extra 30 mins is just padding for congestion/delays & so airlines can take off late & land on time.

International terminals are very time consuming to get in & out of.

05 Mar 2015

Total posts 247

I think everyone's aware that the actual SYD-MEL flying time is more like 60 minutes but you generally spend closer to 90 minutes on the plane as per the schedule. Either way, it comes back to what's really important on that 60-90 minute flight, WiFi is good to have although we survived without it for a long time, so really if Rex can keep the business class price down and give passengers the option of a decent meal, nothing fancy needed here, then that will be their biggest advantage.

Qantas

19 Apr 2012

Total posts 1263

AT Rex probably has regional corporates from Wagga or Dubbo but they won’t have the Sydney Melbourne corporate accounts.

this is where you are wrong. Many corporates already fly Rex cos they have to, cos Rex is only airline that flies to many regional ports.

Corporates don't just fly BNE, SYD, MEL, CBR, PER.

05 Mar 2015

Total posts 247

Agreed, corporate travellers are not only found in the capital cities or only flying between those cities. There are a LOT of companies in regional centres, a lot of them actually pretty big in terms of revenue and involved in agriculture, machinery etc, who do a lot of trips back and forth to Sydney Melbourne and Brisbane, and there are also corporates in those cities who have to travel to regional centres. This is where Rex can pick up a lot of business by having people flying from say Wagga to Sydney to Brisbane do the whole trip with Rex, instead of the regional leg with Rex and then the inter-city leg with Qantas or Virgin like they currently do.

17 Jun 2020

Total posts 227

$299 on Rex versus $715 on Qantas. I guess Rex catering will be worse, but last I checked $416 can get a decent enough meal in Melbourne or Sydney.

I'm sure Qantas will have to lower pricing, and the winner here is the consumer. And it is about time too!

12 Jul 2013

Total posts 22

When flying resumes to the level it should and business travel is for business, flyers would want a more frequent service. So with 9 flights a day vs nearly 3 flights an hour on QF to MEL (early morning) I know who I would fly with. Disruption management is what will stand out.

20 Oct 2015

Total posts 150

It's about time that an airline looked more carefully at the costs of business class on SYD-MEL and brought them down to be more realistic for what is a 90 minute flight. There's no fancy lounge experience, there's no fancy five-star inflight dining, there's barely an hour to actually do any work even over wifi and that's also assuming you don't take a meal. I was hoping it would be Virgin which reviewed things and delivered a more realistic 'everyday business class' price but looks like this job fell to Rex. Qantas needs to get its pricing down to $500-$550 and even then how many people can justify $1000 on a SYD-MEL return flight?

Qantas - Qantas Frequent Flyer

25 May 2017

Total posts 79

I will definitely be trying Rex business class product given the price points they have released on the website today. This is a very attractive option.  Given QF announcement of reducing service to totp tier FF members such as no more service desk I may as well move my business away to support a new entrant. VA totally moved away from service and never recognised it high value clients. So I am looking forward to trying Rex.

QF Plat

14 Jul 2014

Total posts 26

Bain looks like being the next Babcock & Brown, which would leave REX with a home run the same as when Ansett went down and VA took up the slack.

Qantas - Qantas Frequent Flyer

14 Sep 2016

Total posts 29

Great article.... (hoping Qantas is monitoring this!)

Just booking our tickets MEL to BNE - for Xmas beak; and as a loyal Platinum Qantas member have been constantly horrified with their prices! It’s always about $3k for 2 passengers one way.... we could go on a 5/6 hour Bali flight in business for LESS on Qantas! (Before CV19) .... and get first lounge etc... 

The American market does this well domestically “First Class” our business class (far cheaper than Australia), then economy “X” or longer leg room/ sometimes blocked middle seats for a couple rows; and then basic economy. Their “business class” is incredibly cheap/ corrected for domestic travel! Here we are totally screwed!

Australian domestic would benefit with this lower cost on business class travel; as most passengers in business class are either government MP or approved Biz allowed, CEO level, COO, large corps to pay the hefty fares! 

OR 

many use points....

Qantas has dominated this market of business class; with government, CEO levels large corporations whom don’t “care” on the ticket costs... times are changing and purse strings tighten in corporate world - they best step up their game and agree with @Goldlife - Drop their domestic biz fares! It will lure the leisure travellers etc... 

Example Melb-BNE 17-20 Dec:

- Qantas Biz - $1150 - $1650 at the moment!

- Virgin Biz - $550 - $799 (no lounge here in Melb) 

- Qantas “flexible fares economy” which are personally quite useless - are $550 plus! 

Qantas must be seeing a loss of PAX?? We are seriously thinking of using VA as 2x passengers equals the exact same price as 1 person on Qantas! 

I know the catering is an issue on most networks and having not seen much updates on this not sure what Qantas is offer for $1200 vs VA $550 .... is there “food box” a Montroche’ $300 meal??? Thinking not.....

Qantas

19 Apr 2012

Total posts 1263

Shannon COVID prices are completely one-off and are based on filling as few aircraft fully as they don’t want to stand down too many planes and crew when the next wave hits. I have found in the US American that their business class fares for the same flight time are as equally outrageous as ours. Maybe American is the best comparison.

Qantas

19 Apr 2012

Total posts 1263

Shannon the flexible economy fares are for return flights when the business meeting runs over time (most business travelers by far fly economy) has saved me many a time.

shannonbarry51

Did some strategising for a travel wholesaler last year, who have contacted us regarding fares to USA in late DEC 2021/early JAN 2022, asking our thoughts.

In the past, they had fantastic deals, which some seemed to think were too cheap, so we told them to put their prices up, but then have (price reduction sales) for slow selling dates.

They were buying seats well in advance on fixed dates, so airlines loved them, as the wholesaler carried 100% of the risk (airline didn't really care if they on sold the tickets or not)

The wholesaler followed our advice & their margins & profits increased without selling any more airfares/packages & without spending more on advertising.

They have just been offered some very low fares. not flying Qantas eg. return to LAX on a better airline, for less than 1 way business class BNE/CBR(Canberra) on Qantas.

The only catch is they have a minimum selling price, so they must include ground content (hotels, cars etc.)

So, as long as you are happy with their dates & don't want to change them, you will probably get return airfares, weeks accom & weeks car hire for less than the airfares on those "other" airlines.

It seems many airlines are very concerned about how soon & how well the market will bounce back internationally, so they are prepared to offload a small percentage of seats, up to 14% by our calculations, depending on actual aircraft seating capacity, at loss leader rates, rather than have them go empty or rather than get into a race to the bottom (they don't want to spend big dollars advertising low fares, when they can sell them quietly, without bastardising the price)

The fares are also upgradeable as well.

Despite talk today in news of being out of recession technically, head of ANZ bank said last week, that the recession will really kick in middle of next year, few months after jobkeeper/jobseeker end & shit hits the fan in households with mortgages/car payments/credit card bills etc. etc.

For this reason think Qantas are in trouble with their very high costs, with Rex & a revitilatized Virgin, with much lower costs, who only need to be say $200 cheaper than Qantas on eg. a return business class SYD/MEL or similarly in economy & still making higher margins than Qantas.

Qantas might be stuck between a rock & a hard place. If they dump too many fares to try to match Rex/Virgin their profits will plummet. If they try to stick the high ground with fares, they might have many empty seats, which they might have to let go at Jetstar prices on a use it or lose it basis (no changes whatsoever).

Everytime Qantas trys to reduce labour costs, to be closer to Rex/Virgin, they'll have unions & obviously overpaid employees screaming in the media, which is never good PR.

Virgin Australia - Velocity Rewards

06 Mar 2015

Total posts 230

Gold4Life / regular flyer 

I realise that  VA are reviewing their Business Class Model ( it's quite a way off though ) but surely they can do better than a snack box , they have had months to think about it.

The thing that annoys me is that the excuse VA offer for a service reduction  is " We have simplified our inflight catering to reduce contact between guests and our crew during the COVID-19 pandemic."

If Qantas can offer full service and still remain Covid safe then surely this is a rather lame excuse by VA for such a reduction in meal service.

They seem to me to not really care about Business Class passengers that they currently fly because if they really did they would do better than they currently do. This is not a very good way to keep loyalty amongst Business Class Travellers who currently fly with them.

(Sorry about the different type size , don't know why that is.)

Qantas - Qantas Frequent Flyer

26 Nov 2012

Total posts 75

So I’ve bought my first REX $299 Business fare for week one. I’m looking forward to it. 

I’ll be flying QF Y back (platinum status is seductive). However I’m a self funded small biz owner and $299 with the option to change if I get to the  airport early is very seductive. I make my QF platinum status travelling overseas J (and really work it hard to maintain it) but fly domestically Y on QF. It’ll be interesting to see how this stacks up. I could become a polygamist if $299 J fares stay and the experience is OK. All QF needs to do is come close and that race will be over, but I doubt they will.   I never eat on the plane because I do it in the lounge but if the REX meal is OK I’ll be all in and I usually travel lunch or dinner time. 

Brave new world. 

XWu
XWu

09 May 2020

Total posts 385

Not sure which lounge you are thinking of when you eat in the lounge since even in the heyday when REx was chasing government business with their noice looking REx CBR lounge in mid 2000s all they had was tibbits and self serve bar fridge full of drinks and desserts in a bowl.

Whether they would ever move to self serve meal or plated dishes in the new lounge experience, it’s a big spend for them to move towards anything like VA or QF and it would be a chicken or the egg situation whether they would wait for j class business to take off or provide the J class experience first hoping the clientele will come later attracted by the service

QF

11 Jul 2014

Total posts 598

Paul Scurrah was doing $299.00 fares on VA and also REX has organised discounted lease repayments that go up after a time period. I really can't see 3 airlines surviving long term, people will do the 100 status challenge with Qantas, try REX out,  and can VA fill that gap of lower market share while being run by accountants with no expansionist marketers in the senior managers.

BNE, SYD, MEL can easily support 3 airlines.

Doubt Rex will be flying jets to Townsville, Cairns, Albury & other large regional airports.

(Virgin will probably have Alliance jets flying to Albury under Virgin flight numbers)

Interesting to see what qantas group does with jetstar on triangle.

Virgin Australia - Velocity Rewards

21 Feb 2017

Total posts 35

If Rex enforces the business class only front toilet rule with virgins little white rope system, I'd fly them over Qantas on principal. Keen to try them out if that's the case

XWu
XWu

09 May 2020

Total posts 385

Wonder if Rex is selling business seats only because it’s already there in the VA 737 equipment and they probably treat it more like premium economy with fancy food box and throw in a bottle of alcohol of your choice (a bit like scoots biz rather than Jetstar business class) rather than a full J class experience 

Thai Airways International - Royal Orchid Plus

15 Jan 2013

Total posts 351

will people easily be fooled this time around.lets not forget when qantas domestic was australian in the eighties and prior to 1989 that was the only domestic business class around.the ansett commercials telling us their economy was just as good was short lived.that was the era when we had the best economy class products around.


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